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.
| 24(1) |
File No. 5-9848 |
| |
M. Sarazin |
| 19(1) |
(613) 957-2092 |
June 14, 1990
Dear Sirs:
Re: Subsection 245(4) of the Income Tax Act (Canada) (the "Act")
We are writing in response to your letter dated March 21, 1990 in which you requested a technical interpretation on the application of subsection 245(4) of the Act.
You state that the English version of subsection 245(4) of the Act appears to provide that two conditions must be satisfied before subsection 245(4) will apply whereas the French version of subsection 245(4) appears to provide that only one condition must be satisfied before subsection 245(4) will apply. You require clarification regarding which version of subsection 245(4) Revenue Canada intends to apply in determining whether a transaction is caught by subsection 245(2).
It is the Department's position that a transaction must not result directly or indirectly in a misuse of the provisions of the Act or an abuse having regard to the provisions of the Act read as a whole in order to determine whether subsection 245(2) of the Act has application. Since the word "misuse" in English translates into "Abus" in French, we feel that the condition presented in the French version of the Act, literally translated, includes both conditions presented in the English version of the Act. This fact is evidenced by the following excerpt from Page 496 of the French version of the Explanatory Notes to Legislation Relating to Income Tax issued by The Honourable Michael H. Wilson, Minister of Finance in June 1988:
"Cet article fait mention d'un abus en égard aux dispositions de la Loi, lue son ensemble, aussi bien qu'à certaines dispositions précises."
The Department's position is also evidenced in Paragraphs 7, 21 and 25, within Information Circular 88-2, whereby misuses of specific provisions of the Act result in the application of subsection 245(2).
The foregoing comments represent our general views with respect to the subject matter of your letter.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch
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