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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
932716
XXXXXXXXXX A. Seidel
(613) 957-2120
Attention: XXXXXXXXXX
November 30, 1993
Dear Sirs:
This is in reply to your letter dated September 15, 1993 with respect to the meaning of the phrase "vested indefeasibly" in the case of certain shares which are distributed to a taxpayer's spouse subject to the terms of the buy-sell provisions of a shareholders agreement to which both the taxpayer and his spouse are a party.
The determination of whether or not property has vested indefeasibly in a particular person is a question of fact which can only be made following a review of all relevant information, including the will and any agreements which may have an impact on the manner in which the person may deal with the property. Although we cannot reply to the hypothetical situation described in your letter, we can provide the following general comments on this topic.
In paragraph 1 of Interpretation Bulletin IT-449R , the Department expresses the view that "a property vests indefeasibly in a spouse or child of the deceased when such person obtains a right to absolute ownership of that property in such a manner that such right cannot be defeated by any future event...". As a result of the recent decision of the Federal Court of Appeal in The Queen v. Sharon Boechler, Executrix of the Estate of Alexander Boger, deceased 93 DTC 5276, the Department is currently reviewing its interpretation of this expression. In that case, Heald, J.A. stated at page 5281 "The Trial Judge ... has accurately stated the legal principles determinative of this issue as summarized earlier herein.... He found that "to be vested 'indefeasibly' an interest must not be subject to a condition subsequent or a determinable limitation set out in the grant."
In the situation described in your letter, it would appear that the grant of the shares would be subject to the terms of the shareholders agreement entered into by the parties. Consequently, it would be necessary to determine if any of the terms of the shareholders agreement could be considered as "a condition subsequent or a determinable limitation set out in the grant".
These comments are provided in accordance with the guidelines set out in paragraph 21 of Information Circular 70-6R2.
Yours truly,
for Director Reorganizations and Foreign Division Rulings Directorate Legislative and Intergovernmental Affairs Branch
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