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 certain shares are QSBCS immediately after purification?
Position TAKEN:
General information concerning QSBCS.
Reasons FOR POSITION TAKEN:
Routine.
5-941819
XXXXXXXXXX L. Roy
Attention: XXXXXXXXXX
September 28, 1994
Dear Sir\Madam:
Re: Qualified Small Business Corporation Share ("QSBCS")
This is in reply to your letter of June 30, 1994 in which you requested our opinion as to whether a particular share of a corporation would be a QSBCS as defined in subsection 110.6 of the Income Tax Act (the "Act"), immediately after purification.
The situation described in your letter appears to involve actual proposed transactions. Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R2, dated September 28, 1990. Where the particular transactions are completed, the enquiry should be addressed to the relevant district taxation office. The following comments are, therefore, of a general nature only, and are not binding on the Department.
Pursuant to paragraph (d) of the definition of QSBCS, for any particular period of time in the 24 month period ending at the determination time, where less than 90% of the fair market value of the assets of a corporation or any corporation connected thereto are attributable to assets described in subparagraph (c)(i) or (c)(ii) or any combination thereof, then all other corporations connected with the corporation must, for the purposes of paragraph (c) of the definition of QSBCS, meet the "all or substantially all" test (90%) in that period of time, rather than the 50% test provided in clause (c)(ii)(B). The corporation must be connected as specified in paragraph (d) of the definition of QSBCS.
In the situation where a corporation meets the 90% test during the 24 month period preceding the time of sale, paragraph (d) will not apply to require the connected corporations with the corporation to meet the 90% test.
We trust the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
Policy and Legislation Branch
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