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: Would two individuals that are trustees of two diffenet trusts be considered, as co-trustees, the same person for the purposes of paragraph 256(1.2)(c) of the Act?
Position TAKEN: Yes
Reasons FOR POSITION TAKEN: If they were not considered the same person then there would not be a need for 256(4) of the Act.
951064
XXXXXXXXXX M.P. Sarazin
(613) 957-2118
Attention: XXXXXXXXXX
June 29, 1995
Dear Sirs:
Re: Paragraph 256(1.2)(c) of the Income Tax Act (the "Act")
This is in reply to your letter dated April 10, 1995 wherein you requested our comments as to whether or not the co-trustees of a trust would be considered to be the owners of any shares owned by the particular trust for the purposes of paragraph 256(1.2)(c) of the Act.
Paragraph 256(1.2)(c) of the Act provides that a person or group of persons will be treated as controlling a corporation where the person or group of persons owns shares representing more than 50% of the fair market value of all of the issued and outstanding shares of the corporation. Since subsection 104(1) of the Act provides that for purposes of the Act a reference to a trust is to be read as a reference to the trustee, it is our view that the co-trustees of the trust are considered to own the shares held by the trust for the purposes of paragraph 256(1.2)(c). Consequently, where the co-trustees of two trusts are the same persons and one of the trusts owns shares representing more than 50% of the fair market value of all of the issued and outstanding shares of one corporation (Corporation A) and the other trust owns shares representing more than 50% of the fair market value of all of the issued and outstanding shares of a second corporation (Corporation B), we believe that Corporation A and B would be associated by virtue of paragraph 256(1.2)(c), unless the conditions described in subsection 256(4) of the Act are satisfied.
We hope that our comments will be of assistance.
Yours truly,
for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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