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.
950916
XXXXXXXXXX T. Murphy
(613) 957-8283
Attention: XXXXXXXXXX
May 18, 1995
Dear Sirs:
Re: Subsection 107(1.1) of the Income Tax Act
This is in reply to your letter of April 3, 1995 concerning the application of subsection 107(1.1) in a situation where an individual has made an election under (draft) subsection 110.6(19) with respect to a capital interest in a personal trust. Your concern is that if subsection 107(1.1) has application, then the cost of the capital interest would be nil and the individual would receive no recognition of the subsection 110.6(19) election.
As discussed with you in our telephone conversation of April 19 (XXXXXXXXXX/Murphy), the above-noted anomaly with subsection 107(1.1) has been brought to the attention of the Department of Finance. A recent proposed amendment to that provision provides that the cost of the capital interest will be as determined under paragraph 110.6(19)(a) where the taxpayer elects under subsection 110.6(19) in respect of the capital interest and the trust does not elect under that subsection in respect of any property of the trust. We believe this proposed amendment resolves the problem with subsection 107(1.1).
Thank you for bringing this matter to our attention.
Yours truly,
R.S. Biscaro
Director
Manufacturing Industries, Partnerships
and Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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