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.
972731
XXXXXXXXXX T. Harris
October 20, 1997
Dear Sirs:
Re: Section 84.1 of the Income Tax Act (the "Act")
We are writing in response to your letter of October 6, 1997 wherein you requested a technical interpretation with respect to the application of section 84.1 of the Act to a hypothetical situation described in your letter.
The situation described in your letter appears to involve an actual proposed transaction. Assurance as to the tax consequences of actual proposed transactions will only be provided in the context of an advance income tax ruling. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R3 dated December 30, 1996 issued by Revenue Canada, Customs, Excise and Taxation. However, as indicated in subparagraph 15(j) of the circular, advance income tax rulings will not normally be provided when the matter involves a question of fact and all of the relevant facts cannot be determined.
The Department's general views on the meaning of arm's length are set out in Interpretation Bulletin IT-419R. While the determination of whether two unrelated persons are dealing at arm's length involves a question of fact, we would generally presume that an individual would not normally be considered to deal at arm's length with a corporation all of the voting shares of which were owned equally by the individual's child and nephew.
These comments are provided in accordance with the guidelines set out in paragraph 22 of Information Circular 70-6R3.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1997
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