18 October 1990 Administrative Letter 901436 F - Subsidiary's Expenditure Year where Transfer of Accounts to Parent on Winding-up

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.

19(1)

October 18, 1990

Dear Sirs:

Re:  Technical Interpretation Subsection 88(1.3) of the Income Tax Act (the "Act")

We are writing in response to your letter dated July 10, 1990 regarding the omission in paragraph 88(1.3)(a) of the Act of any reference to the subsidiary's "expenditure year".

Subsection 88(1.3) of the Act applies for the purpose of inter alia, paragraph 88(1)(e.3) of the Act, which provides for the transfer of the subsidiary's investment tax credit accounts to its parent on a winding-up of the subsidiary and which uses the defined term "expenditure year".

You have asked whether the exclusion of the term "expenditure year from paragraph 88(1.3)(a) of the Act was a drafting error arising from amendments made by S.C. 1988, c. 55, subsec. 61(8). You suggest that since the preamble to paragraph 88(1.3)(a) refers to "expenditure year", paragraph 88(1.3)(a) should also contain some reference to this defined term.

We agree that paragraph 88(1.3)(a) should contain a reference to the term "expenditure year" if paragraph 88(1)(e.3) is to have any effect in situations in which the parent corporation as not in existence at the end of the subsidiary's expenditure year.

As it appears that paragraph 88(1.3)(a) should include a reference to the "expenditure year" of the subsidiary, this matter will be brought to the attention of the Department of Finance.

The foregoing expressions of opinion are given in accordance with the practice referred to in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990 and are not binding on Revenue Canada, Taxation.

Yours very truly,

for DirectorReorganizations and Non-resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch