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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: XXXXXXXXXX
This is in reply to your letter of November 19, 1992 wherein you asked whether certain cash advances received by the above-noted corporation would constitute an active business asset of the corporation for purposes of determining whether its shares qualify as "qualified small business corporation shares" for purposes of subsection 110.6(1) of the Income Tax Act.
XXXXXXXXXX
Your Position
It is your position that the funds are not property of XXXXXXXXXX as they are held only in its capacity to disburse funds to the physicians taking part in the study.
Our Comments:
It appears that the interpretation you seek relates to completed or current transactions which should be the subject of a written request to a District Office. Requests concerning proposed transactions to be undertaken by a specific taxpayer should be the subject of an advance income tax ruling request as discussed in Information Circular 70-6R2 dated September 28, 1990 issued by Revenue Canada, Taxation. If you wish to obtain an advance income tax ruling for a particular taxpayer with respect to specific transactions which are contemplated, a written request for an advance income tax ruling can be submitted in accordance with the Information Circular. Nevertheless, we can offer the following general comments.
Ownership of property is a determination of fact to be made on the relevant facts of a particular situation at a particular time. However, where a payor advances funds to a taxpayer who is bound by contract to hold the advances for eventual distribution to contractees upon completion of certain services to be performed on behalf of the payor and to return to the payor any excess funds to the payor because of services not performed by contractees, it is our view that ownership of the advances remains with the payor and should not be taken into consideration by the holder in determining the percentage of its assets that are used in an active business.
The foregoing comments are an expression of our opinion only and are not to be construed as an advance income tax ruling and, as such, are not binding upon Revenue Canada, Taxation.
Yours truly,
R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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