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.
XXXXXXXXXX 992857
F. Francis
December 10, 1999
Dear Sir:
This is in reply to your letter of October 27, 1999, wherein you requested a technical interpretation as to whether certain shares of a corporation meet the definition of "qualified small business corporation share" ("QSBC share") in subsection 110.6(1) of the Income Tax Act (the "Act").
Your particular situation involves a corporation which has been in existence for 24 months but has only been carrying on an active business for 22 months at the determination time. You advise that, throughout the 22-month period during which the business has been carried out, more than 50% of the fair market value of the assets of the corporation were attributable to assets used principally in an active business carried on primarily in Canada by the corporation ("qualifying use test"). You further advise that the shareholder has owned all the shares of the corporation since incorporation.
We note that paragraph (c) of the definition of QSBC share requires that the corporation meet the qualifying use test throughout that part of the 24 month period immediately preceding the determination time while it was owned by the individual. Since the corporation that you describe would not appear to meet the qualifying use test for the entire 24 month period that it was owned by the shareholder, the shares will not meet the definition of QSBC share.
We trust that the above comments are of assistance to you. However, as noted in Information Circular 70-6R3 dated December 30, 1996, these comments are not binding on the Canada Customs and Revenue Agency.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings
and Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1999
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1999
Email this Content