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.
XXXX
R.P. Laramy (613) 957-2746
July 8, 1988
Dear Sir:
Re: Paragraph 39(5)(f) and Subsection 112(2.1) of the Income Tax Act (the "Act")
This is in reply to your letter of April 18, 1988 concerning the interpretation and application of the above captioned provisions of the Act.
Subsection 112(2.1) and paragraph 39(5)(f) of the Act provide that a corporation will be a specified financial institution ("SFI") if the principal business of that corporation is the lending of money or the purchasing of debt obligations or a combination thereof. Moreover, any corporation which is associated with or controlled by one or more SFI's is itself an SFI. The word "principal" is not defined in the Act and must be given its usual meaning. Therefore, the nature of a corporation's principal business can only be determined by reviewing all the facts and circumstances of its particular situation. For the Department's views on the criteria considered in determining a corporation's principal business, you may refer to Interpretation Bulletin IT-290 .
If you are contemplating a particular transaction we would be prepared to review it in the context of an advance ruling request.
We trust this information will be of assistance to you.
Yours truly,
for Director Financial Industries Division Rulings Directorate
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© Her Majesty the Queen in Right of Canada, 1988
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© Sa Majesté la Reine du Chef du Canada, 1988
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