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: Paragraph 149(1)(o.1)
We are writing in reply to your letter of June 7, 1993 in which you requested a copy of the complete text of an August 28, 1992 technical interpretation highlighted in `The Tax Window' regarding paragraph 149(1)(o.2) of the Income Tax Act (the "Act").
The August 28, 1992 technical interpretation referred to above was amplified in subsequent correspondence dated November 25, 1992 and February 15, 1993. The applicable text from the February 15, 1993 correspondence is as follows:
"Clause 149(1)(o.2)(ii)(A) of the Act limits the activities of a pension realty corporation to "acquiring, holding, maintaining, improving, leasing or managing capital property that is real property or an interest therein owned by the corporation". To further clarify our August 28, 1992 letter, in our view, the overriding limitation on the activities permitted is that the property remain `capital property'. Activities undertaken to increase the return on investment on the capital property would be acceptable. In this context, the development of capital property may be synonymous with the improvement of capital property as long as the activities are associated with the earning of passive investment income on capital property. However, activities undertaken with respect to an asset that was acquired with the intent to improve and develop for sale at a profit would not be acceptable. Whether an asset is acquired with the intention of holding and managing it as an investment or with the intention to resell the asset itself at a profit is a question of fact. We also refer you to paragraph 3 of IT-218R which lists several factors which would need to be considered in resolving whether in fact the asset was a capital property."
For your information, requests for copies of complete texts of technical interpretations should be addressed to the following:
Access to Information and Privacy 88 Metcalfe Street Room 500 Revenue Canada, Customs, Excise and Taxation Ottawa, Ontario K1A 0L8
We trust that these comments will be of assistance.
Yours truly,
E. Wheeler for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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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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