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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
5-930071
XXXXXXXXXX Adèle St-Amour
(613) 957-8953
Attention: XXXXXXXXXX March 10, 1993
Dear XXXXXXXXXX
Re: Interpretation of "connected shareholder" defined in proposed subsection 4901(2) of Income Tax Regulations (hereafter "the Regulations") This is in response to your letter of January 6, 1993, in which you request our interpretation of paragraph b) of the definition "connected shareholder", as the term is defined in subsection 4901(2) of the proposed Regulations in the December 2, 1992 Draft Legislation on investment in small and medium-sized business.
As mentioned in paragraph 22 of Information Circular IC 70- 6R2 dated September 28, 1990, the Department gives opinions on proposed legislation where the proposals are in the form of draft law, however such opinions are not binding on the Department.
It is proposed that new subsection 4900(12) will be added to the Regulations to allow a share of the capital stock of a "small business corporation" (other than a cooperative corporation) to be a qualified investment for an RRSP or a registered retirement income fund provided that the annuitant is not a "connected shareholder" of the corporation immediately after the acquisition of the share. For purposes of the application of paragraph b) of the definition of "connected shareholder", it is our view that the person's percentage of share ownership in the corporation will be calculated as if each and every shareholder of the corporation has exercised his right to acquire a share of the corporation.
We trust that the above is satisfactory.
Yours truly,
for Director Financial Industries Division Rulings Directorate
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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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