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.
Revenue Canada Taxation
C. Savage (613) 993-6201
November 1, 1985
Dear Sirs:
Re: Transfer of Property to a Sister Corporation --------------------------------------------
This is in response to your letter of September 6, 1985 wherein you requested clarification of our position with respect to the application of paragraph 85(1)(e.2) of the Act where a property is transferred between corporations owned by the same shareholder for consideration less than the fair market value of the property transferred.
Transfers for consideration less than fair value can, inadvertently or intentionally, create opportunities for the inappropriate reduction of capital gains in the event of a future disposition of shares of the corporations involved. Despite the fact that the provisions of paragraph 85(l)(e.2) of the Act are applicable in such situations we have adopted an administrative position not to apply them to transfers between sister corporations where, in our view, the consideration taken back ensures that the accrued gain in the shares of the transferor is not reduced, as a result of the transfer, by more than the accrued gain in the property transferred.
We hope this will be of assistance.
Yours truly,
for Director Specialty Corporations Rulings Division Corporate Rulings Directorate Legislative and Intergovernmental Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1985
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1985
Email this Content