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: 1. Does the asset test in the definition of "share of the capital stock of a family farm corporation" in 110.6(1) include assets used by a corporation related to the corporation under consideration?
Position: 1. No
Reasons: 1. Unlike the definition for the purposes of section 70 (see 70(10)) and section 73 (see 73(6)), the wording of the definition in 110.6 does not support the same meaning.
2001-010821
XXXXXXXXXX Lena Holloway, CA
613-957-2104
January 18, 2002
Dear XXXXXXXXXX:
This is in reply to your letter of October 23, 2001, which requested a technical interpretation of the definition of a "share of the capital stock of a family farm corporation" as defined under subsection 110.6(1) of the Income Tax Act (Canada) (the "Act"). All references herein are to the Act unless otherwise indicated.
Your letter correctly highlights that the definition of "share of the capital stock of a family farm corporation" found in subsection 110.6(1) does not provide for the use of assets by a related corporation, whose shares would otherwise qualify as shares of the capital stock of a family farm corporation. You asked for our comments on this issue and whether the CCRA's current administrative position agreed with this interpretation.
Prior to 1988, the definition of "qualified farm property" in subsection 110.6(1) referred to the definition of "share of the capital stock of a family farm corporation" found in subsection 70(10). Effective for the 1988 and subsequent taxation years, the definition "share of the capital stock of a family farm corporation" was added specifically to section 110.6 and no longer referred to subsection 70(10). In 1992 the definition in 70(10) was expanded to include "property that has been used by (i) the corporation or any other corporation, (emphasis ours) a share of the capital stock of which was a share of the capital stock of a family farm corporation of the person or of a spouse, child or parent of the person...".
A similar amendment to the definition in subsection 110.6(1) was not made at the same time. The current wording of the definition of "share of the capital stock of a family farm corporation" found in subsection 110.6(1) is sufficiently dissimilar to that found in subsection 70(10) so as to not permit the CCRA's interpretation of both subsections as meaning the same.
The role of the CCRA is to administer and enforce the Act as adopted by Parliament. Your letter raised a number of tax policy concerns which may require amendments to the Act. Amendments to the Act are the responsibility of the Department of Finance. Should you wish to pursue these concerns further, you may contact the Tax Policy Branch of the Department of Finance by writing to: L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.
We trust the above comments are of assistance to you.
Yours truly,
Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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