Case: HQR0000468
11735-11
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Subject:
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GST INTERPRETATION SECTION 272
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Dear XXXXX:
Thank you for your letter of December 16, 1996, concerning the application of the Goods and Services Tax (GST) to the statutory voluntary dissolution of a subsidiary corporation.
Interpretation Requested
A corporation incorporated or continued under XXXXX may be either voluntarily dissolved or wound-up. A voluntary dissolution under section XXXXX of this Act is separate and distinct from a wind-up. You have requested that we confirm that section 272 of the Excise Tax Act will apply to permit the GST-free transfer of assets to a parent corporation from its wholly owned subsidiary corporation upon the statutory voluntary dissolution of the subsidiary corporation under section XXXXX[.]
Interpretation Given
Section 272 of the Excise Tax Act will only apply where:
• a particular corporation is wound up; and
• not less than 90% of the issued shares of each class of the capital stock of the particular corporation were, immediately before that time, owned by another corporation.
The Excise Tax Act does not define the term "wound up". However, it is the Department's position that where a corporation completes a statutory voluntary dissolution under XXXXX it will be considered to be wound up for purposes of section 272 of the Excise Tax Act. Therefore, we confirm that section 272 of the Excise Tax Act will apply to the transfer of assets to a parent corporation from its wholly owned subsidiary corporation upon the statutory voluntary dissolution of the subsidiary corporation under XXXXX[.] The foregoing comments represent our general view with respect to the subject matter of your letter. Proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and , in accordance with the guidelines set out in GST Memoranda Series (1.4), do not bind the Department with respect to a particular situation.
Yours truly,
M. Dawn Weisberg
Senior Policy Officer
Financial Institutions and Real Property Division
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