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.
Principal Issues: Would single purpose corporations be qualified corporations if their parent corporation is not a qualified corporation?
Position: Question of fact. Insufficient information to conclude. However, generally a subsidiary corporation would not be precluded from being a qualified corporation simply because the parent corporation was not a qualified corporation.
Reasons: Reading of relevant legislation.
2005-015562
XXXXXXXXXX Allan Nelson, C.M.A
(613) 443-7253
December 19, 2005
Dear XXXXXXXXXX:
Re: Canadian Film or Video Production Tax Credit
Technical Opinion Request
This is in response to your letter dated October 18, 2005, and our December 12 telephone conversation with XXXXXXXXXX, of your office. You asked for our opinion concerning whether certain corporations would be "qualified corporations" and eligible to claim the Canadian Film or Video Production Tax Credit contemplated in section 125.4 of the Income Tax Act (the "Act").
As explained in Information Circular 70-6R5, dated May 17, 2002, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. As such, we cannot confirm whether the single purpose subsidiary corporations described in your letter will be qualified corporations. However, we are prepared to offer the following comments, which may be of some assistance to you.
Generally, we agree with your view that one or more single purpose corporations, each of which
i) is incorporated solely to produce one Canadian film or video production, and
ii) would otherwise be a qualified corporation, within the meaning of that term in subsection 125.4(1) of the Act, would not be precluded from being a qualified corporation merely because its parent corporation is not itself a qualified corporation.
In accordance with paragraph 22 of Information Circular 70-6R5, the above comments are only an expression of opinion, and as such should not be construed as an advance income tax ruling, nor are they binding on the Canada Revenue Agency.
We hope the above will be of assistance to you.
Yours truly,
Robin Maley
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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