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: referred writer to new legislation which addresses his concerns
Position:
Reasons:
XXXXXXXXXX 1999-000919
D. Yuen
Attention: XXXXXXXXXX
February 7, 2000
Dear Sirs:
Re: Subsection 251(3) and section 55 of the Income Tax Act1
We are writing in response to your letter of August 22, 1996 wherein you requested our views on the application of subsection 251(3) for the purposes of paragraph 55(3)(a) in a hypothetical situation.
We note that the Legislative Proposals and Explanatory Notes relating to Income Tax published by the Minister of Finance on November 30, 1999 contain an amendment to subparagraph 55(5)(e)(iv) which provides that, in determining, for purposes of section 55, whether persons are related to each other or whether control of a corporation has been acquired, the Act is to be read without reference to paragraph 251(5)(b) and subsection 251(3). This ensures that corporations will not be considered to be related to each other by reason only that they are each related to a third corporation. We trust this addresses the concerns expressed in your letter.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
1 All statutory references in this letter are to the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c. 1, as amended (the "Act").
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.../cont'd
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