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.
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5-932436 |
| XXXXXXXXXX |
D. Duff |
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(613) 957-8953 |
Attention: XXXXXXXXXX
October 6, 1993
Dear Sirs:
Re: Part I.3 Tax and Investment Tax Credits
This is in reply to your letter of July 30, 1993, requesting a technical interpretation of the interrelationship between the provisions in Part I.3 of the Income Tax Act ("Act") and the proposed amendments to the investment tax credit rules in subsection 127(9) of the Act.
The proposed amendments to subsection 127(9) of the Act include three definitions; qualified small business property ("QSBP"), eligible taxpayer, and non-qualifying corporation. For a property to be a QSBP it must be acquired by an eligible taxpayer the definition of which includes a corporation other than a non-qualifying corporation. A non- qualifying corporation is defined to include, among other things, a corporation that in that year would be liable to pay tax under Part I.3 of the Act if the determination therein was done in a different manner. In particular, the determination of the amount, "capital for the year", pursuant to subsection 181.2(3) of the Act, is to exclude amounts described in paragraphs 181.2(3)(a), (b), (d) and (f) of the Act used to acquire what would otherwise be QSBP. Although it would always be a question of fact whether the amounts described in paragraphs 181.2(3)(a), (b), (d) and (f) of the Act were used to acquire a particular property, we would expect that the taxpayer should be able to support a link or connection between the capital and the property.
We would note that the revised calculation of capital under subsection 181.2(3) of the Act is for the purposes of subsection 127(9) of the Act and has no bearing on the determination of the actual tax determined under Part I.3 of the Act.
We trust this is of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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