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 5-940215
Attention: XXXXXXXXXX
February 2, 1994
Dear Sirs:
Re: Successor Rules
Amalgamation of Two Exempt Corporations
This is in reply to your letter of January 27, 1994, wherein you requested our interpretation of section 66.6 and subsection 66.7(10) of the Income Tax Act (the "Act").
Since the situation described in your letter appears to be related to a situation involving an actual taxpayer, we are unable to provide specific comments with respect to the income tax consequences arising as a result thereof. However, we are providing the following general comments with regard to the issues raised in your letter which we hope will be useful to you.
Where an amalgamated corporation's Canadian resource properties have been acquired by way of an amalgamation, the amalgamation does not meet the requirements of subsection 87(1.2) of the Act and each predecessor corporation is exempt from tax on its taxable income by virtue of paragraph 149(1)(o.2) of the Act, it is our view that section 66.6 of the Act would apply and, consequently, subsections 66.7(1), (2), (3), (4) and (5) of the Act would not apply to the amalgamated corporation in respect of such acquisition of the properties. This would be so irrespective of whether the amalgamated corporation is a "taxable Canadian corporation" or an "exempt corporation" by virtue of paragraphs 89(1)(i) and 149(1)(o.2) of Act, respectively.
Regarding the sale of shares of an amalgamated corporation by a registered pension plan which was referred to in your letter, as explained in Information Circular 70-6R2, it is not the Department's practice to comment on proposed transactions other than in the form of advance income tax rulings. Taxpayers seriously contemplating proposed transactions are best advised to seek a formal ruling, submitting a complete statement of facts and issues as well as copies of all relevant documents.
We thank you for bringing to our attention the anomaly which was described in your letter with respect to section 66.6 and subsection 66.7(10) of the Act in the context of the sale of Canadian resource properties by an exempt corporation versus the sale of the shares of the exempt corporation. We will be forwarding this matter to the attention of the Department of Finance for their consideration.
The foregoing comments represent our general views with respect to the subject matter of your letter. As indicated in paragraph 21 of Information Circular 70-6R2, the above comments do not constitute an advance income tax ruling and accordingly are not binding on the Department.
Yours truly,
for Acting Director
Manufacturing Industries, Partnerships
and Trusts Division
Rulings Directorate
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