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.
Issue Sheet
1993 CPTS Roundtable June 17, 1993
RE: Joint Exploration Corporation
Shareholder Corporation
Question #30
Issue
Does a shareholder corporation within the meaning of the expression under paragraph 66(15)(i) of the Act ("Shareholder Corp") have to be a shareholder of a joint exploration corporation ("JEC") at the date when renouncements are made by the JEC under subsections 66(10) to (10.3) of the Act, or is it sufficient that the Shareholder Corp be a shareholder of the JEC at the date that the expenses being renounced are incurred?
Analysis and Positions Taken
When renouncements are made under subsections 66(10) to (10.3) of the Act, the Shareholder Corp does not have to be a shareholder of the JEC at the date when renouncements are made. But, the Shareholder Corp must be a shareholder of the JEC throughout the period (ending before the end of JEC's taxation year in respect of which the renouncements are made) during which the resource expenses were incurred. This is very similar to the flow-through-share rules. Jack Hoye of Audit Directorate agreed that on the date of renouncement in respect of a flow-through share, the renouncee (the previous investor of the share) is not required to remain as the holder of the share).
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