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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
940429
XXXXXXXXXX J. Brooks
Attention: XXXXXXXXXX
February 22, 1994
Dear Sirs:
Re: Subparagraph 149(1)(o.2)(ii)
This is in reply to your letter of February 21, 1994 in which you requested to be advised of the Department's current interpretation of subparagraph 149(1)(o.2)(ii) of the Income Tax Act.
Following the receipt of concerns which arose in direct response to the Department's position announced at the Round Table held by the Canadian Tax Foundation in December, 1993, we have reconsidered our position on the subject of what activities corporations exempted by paragraph 149(1)(o.2) can engage in without jeopardizing their tax exempt status. This position is as follows:
A pension fund realty corporation may acquire or hold capital property that is real property or an interest therein, whether or not there may be co-owners of the property who are non-qualified persons. Further, where such a corporation owns, say, a 50% undivided interest in real property, it may accept responsibility for 50% of the obligation to maintain, improve, lease or manage the property. As a second example, where such a corporation owns a 50% interest in a property, another paragraph 149(1)(o.2) corporation owns a 25% interest and a taxable entity owns the remaining 25% interest, either one of the two paragraph 149(1)(o.2) corporations concerned may undertake up to 75% of the maintaining, improving, leasing or managing responsibilities associated with the entire property.
I trust that our comments will be of assistance to you.
Yours truly,
R. Albert
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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