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: Whether the tax accounts of predecessor corporations flow through to the merged corporation in a non-qualifying amalgamation?
Position: No.
Reasons: To conclude otherwise would render the rules in subsection 87(2) meaningless.
XXXXXXXXXX 2000-000338
F. Francis
Attention: XXXXXXXXXX
February 2, 2000
Dear Sirs:
Re: Non-qualifying Amalgamations
This is in reply to your letter of January 19, 2000, wherein you requested our comments in respect of the tax implications of an amalgamation that does not meet the requirements of subsection 87(1) of the Income Tax Act (the "Act") ( a "non-qualifying amalgamation"). In particular, you enquire as to whether the tax accounts and other tax attributes of a predecessor corporation would flow through to the merged corporation in a non-qualifying amalgamation where the merger is carried out under a Canadian statute that provides that the predecessor corporations continue their existence in the merged corporation.
It is our position that the tax accounts and other tax attributes of the predecessor corporations are not "acquired" by the merged corporation in a non-qualifying amalgamation. This conclusion follows from the existence of the rules of subsection 87(2) of the Act that provide for the tax accounts to flow through to the merged corporation. Such rules would be redundant if the tax attributes of the predecessor corporations became attributes of the merged corporation in any event.
We trust the above comments are of assistance to you. However, as noted in Information Circular 70-6R3 issued on December 30, 1996, the above comments are not binding on the Canada Customs and Revenue Agency.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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