3 September 1992 Income Tax Severed Letter 9222955 - Definition of Eligible Corporation

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.

• 5- 922295 P. Spice (613) 957-8953 24(1)

Attention: 19(1)
September 3, 1992

Dear Sirs:

Re: Definition of "Eligible Corporation" in Subsection 5100(1) of the Income Tax Act Regulations (the "Regulations")

This is in reply to your letter of July 23, 1992, in which you ask whether the underlying partnership interest of a taxable Canadian corporation could be considered when determining whether such a corporation is using substantially all of its property in carrying on a "qualifying active business" (as defined in subsection 5100(1) of the Regulations).

In a situation where the property used in the qualifying active business is partnership property and the corporation's property consists of its share in the partnership, it is our view that the partnership property may be used in determining whether all or substantially all of the corporation's property is used in a qualifying active business.

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If the corporation owns other property, then one must determine if the partnership interest constitutes substantially all of the corporation's property.

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R2. Where the particular transactions are completed, the enquiry should be addressed to the relevant District Taxation Office. The foregoing comments are, therefore, of a general nature only, and are not binding on the Department.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate

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