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: Technical Interpretation
This is in reply to your letter dated February 22, 1993, wherein you requested our interpretation of certain aspects of subsection 74.4(2) of the Income Tax Act (the "Act") regarding an estate freeze involving a family trust. We apologize for the delay in responding to your request.
The situation described in your letter appears to be an actual transaction involving specific taxpayers. As mentioned in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, it is not the practice of this Department to provide opinions with respect to proposed transactions other than in the form of advance income tax rulings. On the other hand, the tax consequences of completed transactions are best determined by our District Offices in the course of tax audits.
Regarding the particular fact situation described in your letter, it is your opinion that both subsections 74.4(2) and 245(2) of the Act will not apply to deem interest income to the individual during the period when the corporation is no longer a small business corporation ("SBC") as this term is defined in subsection 248(1) of the Act. It is your view that during the period in which the corporation is not a SBC, the spouse and the minor beneficiaries are not specified shareholders and that these transactions are not a misuse or abuse of the Act.
This Directorate is not in a position to give a definitive response on the possible application of subsections 74.4(2) and 245(2) of the Act without examining the terms of the trust and all the circumstances upon which the corporation may loose and regain its SBC status. As a result, we invite you to submit an advance ruling request or contact your District Office with all relevant documentation.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts 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