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.
APFF - 1995
Question 27
McAllister Drilling Inc. decision
In McAllister Drilling Inc. the Trial Division of the Federal Court refused to apply the anti-avoidance rule contained in the Act to limit access to the small-business deduction, despite the fact that the separate existence of the various corporations was contested by Revenue Canada.
Does Revenue Canada intend to revise its administrative position in light of the McAllister Drilling Inc. decision? What criteria are currently required by Revenue Canada to apply the anti-avoidance rule to limit access to the small-business deduction?
Answer by the Department of Revenue
The Federal Court Trial Division concluded that one of the primary reasons for the separate existence of each of the corporations involved in that case was not to reduce the amount of taxes, and it quashed the Department’s directive that made the corporations associated in the year under subsection 247(2). The Department decided not to appeal this decision. The Court’s findings are based on facts peculiar to that case, and no general application principle was established. We note that old subsection 247(2) has been replaced by subsection 256(2.1), but that the wording of the new provision is substantially the same as that of subsection 247(2).
In conclusion, the Department does not consider that this decision sets a general application precedent, and the Department does not intend to make any changes as a result of this decision.
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