5 April 2000 External T.I. 1999-0008695 - Corporate Continuance

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: Corporate continuance - qualification as a Canadian corporation

Position: Corporation continued into Canada after 1992 will qualify as a Canadian corporation

Reasons: Corporation will be deemed to be incorporated in and resident in Canada

XXXXXXXXXX 1999-000869
D. Boychuk
Attention: XXXXXXXXXX

April 5, 2000

Dear Sirs:

Re: Corporate Continuance

We are writing in response to your letter of November 5, 1999 wherein you requested our views on whether a non-resident corporation which is continued into Canada would qualify as a "Canadian corporation" and where additional requirements are satisfied, as a "Canadian-controlled private corporation?"

We have assumed for the purposes of your query that the non-resident corporation is continued into Canada after 1992 and did not elect not to have subsection 250(5.1) of the Income Tax Act (Canada) apply.

Our Comments

In your letter, you have outlined what appears to 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. In any event, a request for an advance income tax ruling cannot be considered where the transactions are completed or where the issues involved are primarily questions of fact. Nevertheless, we are prepared to provide the following comments which we hope will be of assistance to you.

A Canadian corporation is defined in subsection 89(1) to include at any time, a corporation that is resident in Canada at that time and was incorporated in Canada. A corporation is deemed by subsection 250(4) to be resident in Canada if, among other things, it is incorporated in Canada after April 26, 1965.

Subsection 250(5.1) sets out deeming rules relating to the jurisdiction and timing of incorporation where a corporation has been continued into or out of Canada. For purposes of the Act, other than subsection 250(4), paragraph 250(5.1)(a) deems a continued corporation to be incorporated in the new jurisdiction from the time of its original incorporation and not to have been incorporated in any other jurisdiction. For the purposes of applying subsection 250(4), paragraph 250(5.1)(b) deems the continued corporation to have been incorporated in the new jurisdiction as of the date of its continuance.

A corporation which is incorporated outside of Canada and which is continued into Canada is deemed to have been incorporated in Canada and will qualify as a Canadian corporation provided that it is resident in Canada. Assuming that the corporation is not resident in another country by virtue of a tax treaty (i.e. subsection 250(5) does not apply), a corporation continued into Canada after 1992 will be resident in Canada on the basis that it is deemed to be incorporated in Canada after April 26, 1965. Accordingly, such a corporation will be deemed to be incorporated in and resident in Canada after the date of its continuance and, therefore, will qualify as a Canadian corporation.

A corporation continued into Canada and which qualifies as a Canadian corporation may also qualify as a Canadian-controlled private corporation as defined in subsection 125(7) where the requirements set out therein are satisfied.

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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