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: Tax consequences of receipt of spin-off shares of U.S. company.
Position: The shares of XXXXXXXXXX are considered to be a dividend.
Reasons: It is a pro-rata distribution by XXXXXXXXXX to its shareholders.
XXXXXXXXXX 2000-004627
F. Francis
October 3, 2000
Dear XXXXXXXXXX:
Re: Spin-off shares of U.S. Company
This is in reply to your letter of September 6, 2000, wherein you requested our comments concerning the tax implications of the common shares of XXXXXXXXXX that you received from XXXXXXXXXX.
You advise that you have been a shareholder of XXXXXXXXXX for many years and that, on XXXXXXXXXX, you received common shares of XXXXXXXXXX through a spin-off distribution by XXXXXXXXXX.
Under Canadian income tax law, any share distributed in such a manner to Canadian shareholders is considered to be a dividend which is subject to tax. Consequently, you should include the fair market value of the common shares of XXXXXXXXXX that you received in your income for the 2000 taxation year. We note that the adjusted cost base of your common shares of XXXXXXXXXX will be equal to their fair market value on the day that you received them.
We trust our comments are of assistance to you.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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