9 February 1990 Ministerial Correspondence 74694 F - Publication of Advance Tax Ruling 3-2141 ("2141")

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.

Subject: Publication of Advance Tax Ruling 3-2141 ("ATR-2141")

We refer to your memoranda of January 31, 1990 in which you requested our comments as to whether the edited version of ATR-2141 was suitable for publication.  We have reviewed the edited version and would like to suggest the following amendments thereto.  All references are to the numbered paragraphs as they appear in the edited version.

Summary of issues

The first three paragraphs under the heading "Issue I" are actually a summary of the facts and proposed transactions which are germane to both issues described in ATR-2141.  Perhaps a separate heading such as "Summary of facts and Transactions" would be useful for these paragraphs.

Facts

Paragraph 6

We suggest that the words "other than shares of subsidiaries" be deleted.  These words were in the original ruling because the operating company owned 50% of the shares of another corporation. As all references to such other corporation have been deleted in the edited version, these words are not required.

Proposed Transactions

Paragraph 2

The last sentence of this paragraph, in both the original version and the edited version, contains some unnecessary words.  We suggest it be changed to read as follows:

      "The purpose of this transaction is to ensure that the transfer of the Real Property, described in paragraph 5 of this Part, will be exempt from provincial transfer taxes on real property."

Paragraph 6

As noted above, the references to Opco owning shares of subsidiaries has been removed from the edited version.  Thus, we suggest that subparagraph (c), which reads, "the property of its subsidiaries will consist solely of business property", be deleted.

Paragraph 11

There should be a vertical line between Holdco Y and Opco to indicate that Holdco Y owns 50% of the common shares of Opco.

Law and Analysis

Issue I

We suggest that the words "The transactions were restructured to ensure that "be deleted from the beginning of the first sentence.

Issue 2

We suggest that the following sentence be added to the end of the first paragraph:

      "This ensures that the Real Property will not be indirectly transferred to Holdco X or Holdco Y, which transfer would not be permitted under paragraph 55(3)(b)."

Other than the above-noted comments, we believe that ATR-2141 is suitable for publication. We are enclosing your copy of the edited version of ATR-2141 on which we have reflected the suggested changes described above, as well as certain other suggested minor changes.

for Director-GeneralSpecialty Rulings DirectorateLegislative and intergovernmental Affairs Branch