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.
REVENUE CANADA ROUND TABLE CTF NOV. 1992
Question # 44
CAPITAL GAINS EXEMPTION - PRESCRIBED SHARES
Please provide some guidelines with respect to the application of subsection 110.6(8) and Regulation 6205. Is it true that all shares of a corporation other than prescribed shares will not qualify for the lifetime capital gains exemption if the corporation does not pay dividends at the specified rate on the non prescribed shares ?
Answer
The Department has not developed any mechanical guidelines as to what constitutes "a significant part of the capital gain" for the purposes of subsection 110.6(8) of the Act. It is a question of fact whether or not a significant part of the capital gain in a particular situation is attributable to the fact that dividends were not paid on a share (other than a prescribed share).
The Rulings Directorate is now prepared to give advance rulings concerning the application of subsection 110.6(8) of the Act to proposed transactions pertaining to the disposition of qualifying small business corporation shares. The first one of these was recently issued. We anticipate publishing a number of these rulings to assist practitioners in this area.
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© Her Majesty the Queen in Right of Canada, 1992
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© Sa Majesté la Reine du Chef du Canada, 1992
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