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.
Principal Issues: What is the relevant time for determining whether a person is a "specified person" for purposes of subclause 88(1)(c)(vi)(B)(I)?
Position: Relevant time is the time any property which is distributed to the parent on the winding up or any property substituted therefor is acquired by that person
Reasons: Question of statutory interpretation
XXXXXXXXXX 1999-000858
D. Boychuk
Attention: XXXXXXXXXX
November 17, 2000
Dear Sirs:
Re: Application of Subparagraph 88(1)(c)(vi)
We are writing in response to your letter of June 28, 1999 wherein you requested our views on the application of subparagraph 88(1)(c)(vi) of the Income Tax Act (Canada) (the "Act"). In particular, you have asked us to identify the relevant time for determining whether a person is a "specified person" for purposes of subclause 88(1)(c)(vi)(B)(I) of the Act.
We apologize for the delay in our response.
In your letter, you have outlined what may be an actual fact situation related to transactions and events which have taken place. The review of such situations is generally the responsibility of the local taxation services offices and, as outlined in paragraph 22 of Information Circular 70-6R3, it is not our practice to provide specific opinions on factual situations otherwise than in the context of an advance income tax ruling. Nevertheless, we are prepared to provide the following comments which we hope will be of assistance.
1. It is our general view that the determination of whether a person is a "specified person" for purposes of subclause 88(1)(c)(vi)(B)(I) of the Act is made at the time any property distributed to the parent on the winding-up or any other property acquired by any person in substitution therefor is acquired by that person.
2. Whether or not a particular transaction or event (such as a transaction or event which is part of a safe income crystallization) is part of a series of transactions or events which includes the acquisition of control and winding-up of a corporation is a question of fact and must be determined on the circumstances of each case. A particular transaction will be part of a series of transactions if that transaction is logically and reasonably connected to another transaction or series of transactions or is a related transaction undertaken in contemplation of another transaction or series of transactions.
We trust that our comments will be of assistance.
The above comments represent our general views with respect to the subject matter of your letter and are provided in accordance with paragraph 22 of Information Circular 70-6R3.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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