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 940245
Attention: XXXXXXXXXX
February 18, 1994
Dear Sirs:
Re: C.I.C.A. 1993 Roundtable held in Edmonton ("Edmonton Roundtable")
Paragraph 85(1)(b) of the Income Tax Act (the "Act")
We are writing in response to your letter of December 15, 1993 wherein you requested that we provide you with the result of our review on the issue referred to in Question 5 of the Edmonton Roundtable.
Question 5 of the Edmonton Roundtable outlined a situation where the mortgage attached to the depreciable property being transferred pursuant to subsection 85(1) of the Act exceeds the undepreciated capital cost ("UCC") thereof. In order to meet the requirement of paragraph 85(1)(b) of the Act that the agreed amount cannot be less than the fair market value of the consideration (other than share consideration) received by the transferor, the transferor issues a promissory note to the transferee corporation, having a principal amount and fair market value equal to the amount by which the amount of the mortgage exceeds the UCC of the depreciable property. The question was whether the provisions of paragraph 85(1)(b) of the Act would apply to deem the agreed amount to be equal to the fair market value of the mortgage assumed by the transferee corporation.
The Department's position with respect to the issue described above is still under review and we expect it to be completed shortly. Once it is completed, our position will be announced publicly.
Yours truly,
for Director
Reorganizations and Foreign Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1994
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© Sa Majesté la Reine du Chef du Canada, 1994
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