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.
Principal Issues:
Whether our response to question 42 at 1981 CTF round table in respect of salaries and bonuses payable to principal shareholders-managers applies where the manager holds all the shares of a holding that owns all the shares of the operating corporation to which the manager is an employee?
Position TAKEN:
Yes
Reasons FOR POSITION TAKEN:
Same position should apply under the circumstances. The result is basically the same as a salary or bonus paid to a shareholder-manager who owns all the shares of the operating corporation.
5-940283
XXXXXXXXXX R. Gagnon
Attention: XXXXXXXXXX
April 20, 1994
Dear Sirs:
Re: Deductibility of Bonuses
This is in reply to your letter of January 28, 1994 wherein you requested clarification of Department's administrative position concerning the remuneration of shareholders-managers.
Our response to the question 42 at the 1981 Canadian Tax Foundation Round Table in respect of salaries and bonuses payable to the principal shareholders-managers of a corporation applies where the salary and bonus are payable by an operating corporation to a manager who holds all the shares of a holding corporation that owns all the shares of the operating corporation to which the manager is an employee.
The foregoing opinion is not a ruling and, in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, is not binding on the Department.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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