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: Subsection 107(2) of the Income Tax Act (the "Act")
This is in reply to your letter of December 22, 1992 and further to our telephone conversation (Thornley/XXXXXXXXXX) of February 22, 1993 concerning whether a member of an agency co-operative (see Interpretation Bulletin 493), when withdrawing from the co-op, can take as a payment in kind his proportionate share of the machinery of the co-op under subsection 107(2) of the Act.
Our Comments:
Subsection 107(2) of the Act has application only to personal or prescribed trusts. In our view the trust arrangement between the members of the co-op and the co-op is a commercial trust and not a personal trust as described in subsection 248(1) of the Act, thus, any capital dispositions of the kind referred to in your letter would be subject to the rules in subsection 107(2.1) of the Act, that is, the trust is deemed to dispose of the particular property at fair market value and the beneficiary is deemed to acquire the property at that same fair market value.
We trust our comments will be of assistance to you.
Yours truly,
R. Albert for Director Business and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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