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
D. Yuen (613) 957-2111
XXXX
FEB 6 1990
Dear Sirs:
Re: Acquisition of Control Subsections 111(5), 249(4) and Section 256 of the Income Tax Act (Canada) (the "Act"),
We are writing in response to your letter of January 12, 1990 in which you requested our comments regarding the application of subsections 111(5), 249(4) and section 256 of the Act in the following situation.
1.
2.
3. XXXX
4.
5.
6.
XXXX
To the extent that the above facts represent actual proposed transactions, your enquiry should be the subject of a request for an advance income tax ruling. However, based on the above facts, we will provide the following general comments.
It is the Department's view that persons will be considered as having collectively acquired control of a corporation where there is evidence that they have a common link or interest or they act together to control the corporation. Whether control has been acquired by a person or persons is a question of fact which must be determined after a review of the circumstances of each particular case.
It is also the Department's position that control refers to direct and indirect control. Therefore, the acquisition of control of a parent company also results in the acquisition of control of any subsidiary companies.
Subsection 256(5.1) of the Act is applicable only where the expression "controlled, directly or indirectly in any manner whatever" is used in the Act. Whether a person can be said to have de facto control of a corporation notwithstanding that he does not legally control more than 50 percent of its voting shares, will depend on all the circumstances of the particular situation.
The comments expressed are not advance income tax rulings and are not considered binding on the Department in respect of any taxpayers, in accordance with paragraph 24 of Information Circular 70-6R dated December 18, 1978.
Yours truly,
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1990
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© Sa Majesté la Reine du Chef du Canada, 1990
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