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.
Dear Sirs:
This is in reply to your letter of May 9, 1989 wherein you requested our opinion in the following hypothetical situation.
A shareholder ("Mr. A") of a corporation ("Aco") intends to sell, at fair market value, his class A common shares of Aco to Aco in consideration for class B common shares of Aco which have the same fair market value and stated capital as the class A common shares sold. A joint election, pursuant to subsection 85(1) of the Act will be filed by Mr. A and Aco with respect to the sale of the class A common shares. The agreed amount in respect of the class A common shares will be less than the fair market value of such shares and greater than the cost amount of such shares.
We agree with your opinion that subsection 85(1) of the Act would be applicable provided that the share attributes of the class B common shares are not identical to the share attributes of the class A common shares. If the share attributes of both classes of shares are identical, there may not be a disposition of the class A common shares and as a consequence, subsection 85(1) of the Act may not be applicable.
This opinion represents our general view with respect to the subject matter of your letter. The facts of a particular situation may lead to a different conclusion. The foregoing opinion is not a ruling and, in accordance with the guidelines set out in Information Circular 70-6R dated December 18, 1978, is not binding on the Department.
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, 1989
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, 1989
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