Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Technical Interpretation, Income Tax Act111(5)
This is in reply to your letter of November 16, 1992, wherein you requested a technical interpretation regarding the question of whether or not the production of oil or gas from properties located in Saskatchewan will be considered to be the same business as the production of oil or gas from properties in Alberta.
We understand that your question relates to the availability of a pre- change of control non-capital loss related to production operations in Saskatchewan to reduce post change of control income from production located in both Alberta and Saskatchewan.
We are of the view that for the purpose of 111(5)(a) of the Act, the operation of oil and gas wells in Saskatchewan before the change of control is the same business as the post change of control operation of the wells located in Saskatchewan and newly acquired additional wells located in Alberta would be considered as another business substantially all of the income of which was derived from the sale of similar properties for the purpose of subparagraph 111(5)(a)(ii).
We agree that the place of production will not by itself determine whether or not the same business is conducted. However, in our view in order for the pre-change of control non-capital loss to be available after the change of control, it is necessary that the Saskatchewan operations be continued with a reasonable expectation of profit throughout the year the loss is applied.
The above comments are expressions of the opinions of those Revenue Canada officials named herein and as such should not be construed as advance income tax rulings, nor are they binding on the Department. Our practice is to make this specific disclaimer in all instances in which we provide an opinion. We refer you tin this respect to paragraphs 21 and 22 of Information Circular IC-70-6R2.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts DivisionRulings Directorate
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