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.
Audit Technical Support Division Personal and General E. H. Gauthier, Director
Attention: Phil Jolie
Subparagraph 84.1(2)(a.1)(ii) and the Confidentiality Provisions
We are replying to your letter of January 6, 1993 concerning the extent to which tax-related information concerning a vendor can be communicated to a non-arm's length purchaser of shares under the provisions of the Income Tax Actand under paragraph 241(4)(b) of the Act in particular. We apologize for the delay in responding; however, as we understood that you did not have a particular situation under review, other priorities prevented us from responding sooner.
In the situation where a vendor sells shares to a non-arm's length purchaser after 1984, the vendor may realize a tax-free gain on the sale of those shares due to the application of the capital gains exemption. You ask for our views on the circumstances under which the Department can release tax information concerning the vendor to the non-arm's length purchaser. With your request, you submitted a copy of a legal opinion dated November 2, 1992 and a copy of a memorandum from Current Amendments Division dated May 19, 1992. It is your view that the legal opinion does not address your specific concern as to whether taxpayer information concerning the vendor's capital gain and capital gain deduction is necessary in order for the purchaser to determine the amount of tax payable for the year in which the shares so acquired from the vendor are ultimately sold by the purchaser to another party.
The determination of whether a particular piece of information is necessary (or whether it can reasonably be regarded as so) to the determination of the tax payable by a particular taxpayer is a question of fact which can only be determined in light of a specific situation. In our view the legal opinion submitted with your request correctly analyses the relevant provisions as it relates to the issue generally. If you have a specific case in which the vendor's rights to confidentiality appear to conflict with the purchaser's ability to establish the amount of tax payable by him and you are unable to resolve the matter, we would be pleased to consider the technical issues involved in releasing the specific information so requested by the purchaser in further detail.
With respect to your comments concerning the formula for allocating the capital gains exemption suggested in our letter to XXXXXXXXXX we recognize the possibility that in certain instances we may not be able to release information which the purchaser needs in order to calculate the least amount as established by the formula.
XXXXXXXXXX
B.W. Dath DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1993
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1993
Email this Content