12 February 1990 External T.I. 59090 F - Prescribed Property - Provincial Stock Savings Plan

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.

February 12, 1990

Dear Sirs:

Re:  Application of Section 237.1 of the Income Tax Act (the "Act")

We are writing in reply to your letters of November 20, 1989 and January 10, 1990, wherein you requested our comments on whether an offering of common shares which qualifies for inclusion in a prescribed provincial stock savings plan will be considered "prescribed property" as defined in subsection 231(7) of the Income Tax Regulations (the "Regulations").  In a telephone conversation on February 6, 1990, you modified your previous requests to include only the following two questions:

1.     Do the shares of the capital stock of a taxable Canadian corporation held by a taxpayer in a prescribed stock savings plan referred to in paragraph 40(2)(i) of the Act meet the definition of "prescribed property" in subsection 231(7) of the Regulations?

2.     Will the shares of the capital stock of a taxable Canadian corporation which are eligible for inclusion in a prescribed stock savings plan, be considered "prescribed property" if those shares are not held by an investor in such a plan?

Our Comments

1.     It is our opinion that shares of the capital stock of a taxable Canadian corporation which are held by a taxpayer in a stock savings plan prescribed in section 6705 of the Regulations are considered "prescribed property" for the purposes of subsection 231(7) of the Regulations.

2.     It is our opinion that shares of the capital stock of a taxable Canadian corporation which are eligible for inclusion in a prescribed stock savings plan but are not held by a taxpayer in such a plan will not be considered a "prescribed property" for the purposes of subsection 231(7) of the Regulation.

These comments represent our opinion of the law as it applies generally.  As indicated in paragraph 24 of Information Circular 70-6R dated December 18, 1978, this opinion is not a ruling and accordingly, it is not binding on Revenue Canada, Taxation.

We trust these comments will be of assistance.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch