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.
5-943297
XXXXXXXXXX B. Rankin
Attention: XXXXXXXXXX
January 31, 1995
Dear Sirs:
Re: Subsections 66(12.66) and 66(12.602) of the Income Tax Act
This is in reply to your letter of December 21, 1994 wherein you have requested our confirmation that we would administer the Income Tax Act (the "Act") as if the anomaly regarding the interpretation of the flow-through share provisions in subsection 66(12.66) and paragraph 66(12.602)(b) of the Act as discussed below, was eliminated.
In accordance with the Act, subsection 66(12.66) does not apply for the purpose of paragraph 66(12.602)(b). As a result, where a corporation incurs specified Canadian development expense ("CDE") within the first sixty days of a calendar year and renounces the specified CDE back to the previous year, the corporation will be required to have in its cumulative CDE account at the end of the previous year, at least an amount equal to the amount so renounced. This requirement results in the 60 day claw-back for specified CDE being unavailable to corporations which do not otherwise have a cumulative CDE account such as new corporations which are obtaining flow-through share financing or corporations which have historically financed through flow-through share offerings.
We understand that further to your request of December 16, 1994 to the Department of Finance for amendments to these provisions in order to eliminate the anomaly, on December 19, 1994, Mr. Len Farber of the Department of Finance, wrote to you indicating that the Department of Finance is prepared to amend subsection 66(12.66) to eliminate the anomaly, by having the 60-day look-back rule apply for the purpose of paragraph 66(12.602)(b) of the Act. We also understand that it is intended that this proposed amendment to the Act will be retroactive and be included in a technical bill that is expected to be introduced to Parliament in 1995. We have received copies of the above-noted letters.
Provided that our above-noted understanding is correct, we would administer the Act as if the anomaly was eliminated.
Yours truly,
for A/Director
Manufacturing Industries, Partnerships
and Trusts Division
Rulings Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995
Email this Content