12 June 1990 Internal T.I. 900769 F - Review of Corporate Reorganizations Course Material

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: Review of Corporate Reorganizations Course Material -  Introduction and Lesson 1

This is in reply to your memorandum dated April 3, 1990, whereby you requested our technical review of the above-noted material.

Our comments are as follows:

A.     Code: E/COR/PRE/90  Page: 38

     We would suggest that the chart be replaced with one similar to the chart attached.

B.     Code: E/COR/PRE/90 Page: 80

     We would suggest that the definition of amalgamation be replaced with the following.

Amalgamation

A merger of two or more corporations ("the predecessor corporations") resulting, for purposes of the Income Tax Act, in a new corporation, where all the property and liabilities of the predecessor corporations become property and liabilities of the new corporation, and all the shareholders of the predecessor corporations receive shares of the capital stock of the new corporation.

C.     Code: E/COR/PRE/90 Page: 85

     We would suggest that the definition of wind-up be replaced with the following.

Winding-up

The winding-up of a corporation involves the distribution of all of the net assets of the corporation to its shareholders, following which the corporation is dissolved.

D.     E/COR/100/90/AN/1.6

     We would suggest the following modifications:

     d.1 -  Answer to Question 6.1

     Portfolio investment dividends received.  Part IV tax is paid on dividends received from corporations with which the recipient is not connected, and on dividends received from connected corporations if the payment of the dividends results in a dividend refund to the payer.

     d.2 - Answer to Question 6.2

     A payer corporation is "connected" with a recipient corporation where:

(a)     the payer corporation is controlled (within the meaning of subsection 186(2)) by the recipient corporation, or

(b)     the recipient corporation owns

(i)      more than 10% of the issued voting shares of the payer corporation, and

(ii)      shares of the payer corporation representing more than 10% of the fair market value of all of the issued shares of the corporation.

for DirectorReorganization and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch