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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Whether various securities will qualify for an investment allowance under Part I.3
Position: None
Reasons: Question of fact.
XXXXXXXXXX 2001-011578
K. Cooper, LL.B.
April 4, 2002
Dear XXXXXXXXXX:
Re: Part I.3 Tax
This is in reply to your facsimile of December 19, 2001 wherein you requested our views as to whether various assets qualify for an investment allowance under Part I.3.
Whether a particular asset would be eligible for the investment allowance under subsection 181.2(4) of the Income Tax Act depends on the legal nature of the asset. Such a determination can only be made after a review of all of the relevant facts and documentation, including the prospectus for the particular instrument. Generally, interests in a trust, including units of a mutual fund trust, do not qualify for an investment allowance. If the investments are not interests in a trust they may qualify if they constitute loans or advances, bonds, debentures, notes, mortgages or similar obligations of a corporation that is not a financial corporation, or the long-term debt of a financial institution. It appears from a cursory review of the information available on the internet that the various investments listed in your facsimile constitute interests in a trust.
Since your situation seems to involve specific taxpayers and completed transactions, you may submit the specific details, including the prospectus, to the appropriate tax services office for their consideration. As explained in Information Circular 70-6R4 dated January 29, 2001, it is not this Directorate's practice to comment on transactions involving specific taxpayers other than in the form of an income tax ruling with respect to proposed transactions.
We hope that our comments will be of assistance.
Yours truly,
F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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