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.
XXXXXXXXXX 5-933619
Attention: XXXXXXXXXX
March 24, 1994
Dear Sirs:
Re: Subsections 127.1(2) and 256(2) of the Income Tax Act (the "Act")
This is in reply to your letter dated December 2, 1993, wherein you requested our opinion on the interaction between the above named subsections of the Act.
In conformity with subsection 256(2) of the Act, corporations A and C mentioned in your letter would not be associated for the purpose of section 125 of the Act. Furthermore, to determine if a given corporation is a "qualifying corporation" for the purpose of the refundable investment tax credit provided in section 127.1 of the Act, we must establish the aggregate of the "business limits", as determined under section 125 of the Act, of the given corporation and the corporations associated with it. Since for the purpose of section 125 of the Act, corporations A and C will not be associated because of the election under subsection 256(2) of the Act, which deemed the "business limit" of corporation B to be nil, we are of the opinion that corporations A and C will each have a "business limit" of $200,000 for the purpose of the definition of "qualifying corporation" provided in subsection 127.1(2) of the Act. Consequently, the aggregate of the taxable income of corporations A, B and C for their preceding taxation year should not be greater than $400,000 so that corporation C can be considered to be a "qualifying corporation".
We trust these comments will be of assistance to you.
Yours truly,
for Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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