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:
Where Aco and Bco are amalgamated ("amalgamation") to form Amalco pursuant to the provisions of the Canada Business Corporations Act ("CBCA") and Bco was involved in a subsection 97(2) transfer ("Transfer") prior to the amalgamation, whether a valid subsection 97(2) election can be filed by Amalco on behalf of Bco with respect to the Transfer.
Position:
Yes
Reasons:
Amalco would be treated as a continuation of Bco with respect to that subsection 97(2) election under the CBCA and paragraph 87(2)(a) of the Income Tax Act.
2003-004601
XXXXXXXXXX Daniel Wong
(613) 954-4949
December 3, 2003
Dear XXXXXXXXXX:
Re: Technical Interpretation Request of November 17, 2003: Subsections 97(2) and 87(1) of the Income Tax Act ("Act")
This is in reply to the above-captioned request wherein you described the following facts. Aco and Bco are taxable Canadian corporations (as defined in subsection 89(1) of the Act) and are governed by the Canada Business Corporations Act ("CBCA"). Bco is a subsidiary wholly-owned corporation of Aco. Bco transferred its capital property to a Canadian partnership ("Transfer") of which Bco was a partner. The Transfer qualified as a subsection 97(2) transfer. Following the Transfer, Aco and Bco were amalgamated to form Amalco pursuant to the provisions of the CBCA ("Amalgamation"). The Amalgamation qualified as a subsection 87(1) amalgamation. You requested our opinion as to whether under the circumstances a valid subsection 97(2) election could be filed by Amalco on behalf of Bco with respect to the Transfer.
In your letter, you outlined what appears to be an actual fact situation related to transactions and events that have taken place. The review of such situations is generally the responsibility of the local taxation services offices and, as outlined in paragraph 22 of Information Circular 70-6R5, it is not our practice to provide specific opinions on factual situations otherwise than in the context of an advance income tax ruling. In any event, a request cannot be considered for a ruling when the transactions are completed or where the issues involved are primarily questions of fact. Nevertheless, we are prepared to provide the following comment that we hope will be of assistance to you.
In our view, Amalco can file a valid subsection 97(2) election on behalf of Bco with respect to the Transfer, provided that such election is filed within the time frame prescribed in subsection 96(4) of the Act.
The above comments represent our general views with respect to the subject matter of your letter and are provided in accordance with paragraph 22 of Information Circular 70-6R5.
Yours truly,
David Palamar
Corporate Reorganizations Section II Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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