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 a labour-sponsored funds tax credit is available in respect of a share of a labour-sponsored venture capital corporation registered under the Act to Establish the Fonds de solidarité des travailleurs du Québec acquired by a person over 65 years of age.
Position: The labour-sponsored funds tax credit is available.
REASONS: Section 127.4 of the Act.
Bob Naufal, CMA
XXXXXXXXXX (613) 957-2744
2003-000629
April 15, 2003
Dear XXXXXXXXXX:
Labour-Sponsored Funds Tax Credit
We are writing in response to your email dated March 4, 2003 wherein you asked if a taxpayer over 65 years of age, or at least 55 years of age and retired or on pre-retirement leave, is eligible for a labour-sponsored funds tax credit in respect of a share issued by a corporation established by the Act to Establish the Fonds de solidarité des travailleurs du Québec ("FSTQ").
Section 127.4 of the Income Tax Act (the "Act") generally provides for a federal tax credit in respect of an "original acquisition" of an "approved share" of a prescribed labour-sponsored venture capital corporation ("LSVCC"). This tax credit is available to an individual, other than a trust, up to a maximum of $750 per year to reduce tax otherwise payable under Part I. The credit is available if the individual acquires the LSVCC share personally or through a registered retirement savings plan under which the individual is the annuitant.
An "approved share" does not include a share issued by a LSVCC, if, at the time of the issue, every province under which the corporation is an LSVCC, has suspended or terminated its assistance in respect of the acquisition of shares of the capital stock of the corporation.
While it is our understanding that Quebec's Taxation Act specifically excludes persons that are at least 65 years of age or at least 55 years of age and retired or on pre-retirement leave from obtaining a provincial credit, we do not consider that this restriction results in the province suspending or terminating its assistance such that a share issued by a corporation established under the FSTQ would not be an approved share. Therefore, the labour-sponsored funds tax credit provided in section 127.4 of the Act would still be available to those persons provided all other conditions relating to the credit are satisfied.
We trust our comments will be of some assistance.
Yours truly,
Daryl Boychuk, LL.B
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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