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.
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9101-6 |
| Corporation Reorganizations I |
Mark Symes |
December 18, 1989
ISSUE
Does an estate which acquires shares of a deceased person under a testamentary trust acquire the shares from a person with whom it was not dealing at arm's length, such that the estate's adjusted cost base of the shares of purposes of section 84.1 of the Act is subject to reduction under paragraph 84.1(2)(a.1)?
Decision
Yes. An estate which acquires shares of a decease person under a testamentary trust does acquires the shares from a person with whom it was not dealing at arm's length. This position applies for purposes of section 84.1 and other provisions of the Act where the issue is relevant, such as paragraph 39(1)(c), subsection 69(1), paragraph 88(1)(d.2) and ITAR 26(5).
Background
In 1984 the Review Committee considered the above issue (D.S. 5021-5) and adopted the position that a deceased person and his estate are not non-arm's length for purpose of section 84.1. This position was apparently based on two considerations:
23
21(1)(b)
As a result of 1985 amendments to section 84.1 which have removed the policy concerns referred to above, and the 1988 Tax Court of Canada decision in Estate of Karna Mav v. M.N.R. 86 DTC 1189 23
Rationale for Decision
23 21(1)(b)
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