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.
M.F. Symes (613) 957-2110
Attention: XXXX
Jan 12 1989
Dear Sirs:
Re: Share Purchase Warrants Subsection 85(1) of the Income Tax Act (Canada) ("the Act")
This is in reply to your letter of July 6, 1988 in which you requested our views concerning the above-noted matter.
The expression "share purchase warrant" as used in this letter means an instrument issued by a corporation entitling the holder of the instrument to subscribe for shares of the capital stock of the corporation at a specified price.
It is our view that a share purchase warrant issued by a corporation would not constitute a "... right to receive ... shares ... " of the capital stock of the corporation for the purposes of subsection 85(1) of the Act.
In a telephone conversation on September 20, 1988, you asked whether our views concerning this matter would be different if the instrument in question were one issued by a corporation certifying that the bearer of the warrant is entitled to the shares of the corporation specified therein without any payment by the bearer (a "share warrant"). In our view, it is not possible to comment upon whether such a share warrant would constitute a "... right to receive ... shares ..." of the capital stock of the corporation for the purposes of subsection 85(1) of the Act, without a review of all of the terms of the particular share warrant in question, and of the circumstances in which the share warrant arises.
These opinions are provided pursuant to the practice referred to in paragraph 24 of Information Circular 70-6R.
Your truly,
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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