12 December 1989 External T.I. 58895 F - Interpretation of subparagraph 50(1)(b)(iii)

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 19(1)

We are writing in response to your letter of October 11, 1989 wherein you have requested our interpretation of the words in subparagraph 50(1)(b)(iii) that precede clause (A) of the subparagraph.

In your view there are two possible meanings that can be applied to the words preceding clause (A) as follows:

(i)     the corporation must cease to carry on all of its businesses and become insolvent in the same year; or

(ii)     ceasing business and becoming insolvent need not occur in the same year as long as the corporation satisfies both conditions in the particular year.

In our view the interpretation in (ii) is the correct approach.

The comments set out in this letter are of a general nature only and do not take account of considerations that might arise in the context of specific transactions or events.  In accordance with paragraph 24 of Information Circular 70-6R, the comments expressed herein do not constitute an advance income tax ruling and consequently are not binding on the Department.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate