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.
922891
XXXXXXXXXX
J.D. Brooks
(613) 957-2103
Attention: XXXXXXXXXX
January 8, 1993
Dear Sirs:
Re: The Enhanced Capital Gains Exemption
- This is in reply to your letter of September 29, 1992 in which you made an enquiry concerning the enhanced capital gains exemption provision in the Income Tax Act. Specifically, you are concerned as to whether large seasonal cash balances would be considered to be used in the active business of a corporation.
Our Views
- The situation you outlined is apparently a factual situation involving a specific taxpayer and possibly recently completed transactions or transactions contemplated for the near future. The Department does not provide binding opinions on proposed transactions other than by way of advance income tax rulings. If you wish an advance ruling, we refer you to Information Circular 70-6R2. If you have questions regarding completed transactions, you should contact your local District Taxation Office. Nevertheless, we provide the following general comments.
- Cash balances which accumulate and are then depleted in accordance with the annual seasonal fluctuations of an ongoing business will generally be considered to be used in the business, but a permanent balance in excess of the company's reasonable working capital needs will generally not be considered to be so used.
- These comments are general in nature and do not specifically take into consideration the facts in the hypothetical situation which you outlined. As stated in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, these comments are not binding on the Department.
Yours truly,
E. Wheeler
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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