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.
CTF - 1990 Conference Report
QUESTION I 85
Purchase of Shares - Open Market Test
In Interpretation Bulletin IT-300, dated April 2, 1976, which was cancelled in June, 1982, some indication was given of the Department's view as to when shares are considered to have been purchased in the open market "in the manner in which shares would normally be purchased by any member of the public in the open market" for the purposes of former section 181 and subsection 84(6) of the Income Tax Act. What is the Department's current view of this phrase for the purposes of subsection 84(6), paragraph 183.1(1)(b) and subsection 183.1(6) of the Income Tax Act?
DEPARTMENT'S POSITION
It is the Department's opinion that the phrase "in the manner in which shares would normally be purchased by any member of the public in the open market" for the purpose of subsection 84(6), paragraph 183.1(1)(b) and subsection 183.1(6) of the Income Tax Act, means that the shares must be purchased on a stock exchange or over the counter through an independent middleman in accordance with the procedures and requirements of the relevant securities legislation and the by-laws of the relevant stock exchange. If the vendor and the purchaser have made an arrangement with respect to the purchase and sale of the shares in question, the purchase would not be considered to be carried out in the manner in which any member of the public would normally purchase shares in the open market.
Prepared by: S. Leung
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