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.
1. Would the XXXXXXXXXX be "similar properties" for purposes of subparagraphs 88(1.1)(e)(ii) and 111(5)(a)(ii), clause 37(6.l)(b)(i)(B) and 127(9.1)(d)(i)(B), and subclause 88(1)(e.3)(ii)(C)(I) of the Act?
1. The wording in all of the provisions quoted above is quite similar. Our position is consistent with prior positions concerning the meaning of "similar properties" (see "Analysis" section of working papers and files
#File #951491, #932984, #931494 and its issue sheet, #9750 and its issue sheet, and #911949 and its issue sheet).
Advance Income Tax Ruling
This is in reply to your letter dated XXXXXXXXXX, wherein you requested advance income tax rulings on behalf of the above mentioned taxpayers in connection with the proposed transactions described below.
Our understanding of the facts, proposed transactions and purpose of the proposed transactions is as follows:
XXXXXXXXXX is a Canadian corporation that is wholly-owned by XXXXXXXXXX
XXXXXXXXXX is a taxable Canadian corporation and a private corporation, both defined in subsection 89(1) of the Income Tax Act (Canada) (the "Act"). It was formed XXXXXXXXXX as a result of an amalgamation of XXXXXXXXXX. The authorized share capital of XXXXXXXXXX consists of an unlimited number of common shares. There are XXXXXXXXXX common shares issued.
XXXXXXXXXX is located in XXXXXXXXXX and is served by the XXXXXXXXXX Tax Services Office. Its corporate account number is XXXXXXXXXX.
The majority of XXXXXXXXXX business (as described in this paragraph and hereinafter referred to as "XXXXXXXXXX Business") relates to the
Approximate revenues earned by XXXXXXXXXX are as follows (XXXXXXXXXX):
XXXXXXXXXX has entered into negotiations to acquire all of the shares of XXXXXXXXXX.
XXXXXXXXXX was XXXXXXXXXX incorporated on XXXXXXXXXX and is a "taxable Canadian corporation" and a "private corporation", both defined in subsection 89(1) of the Act. Its shares are owned as follows:
XXXXXXXXXX operate at arm's length to XXXXXXXXXX.
XXXXXXXXXX business is that of
As at the end of its XXXXXXXXXX taxation year, XXXXXXXXXX has non-capital losses of about $XXXXXXXXXX investment tax credits of about $XXXXXXXXXX and unclaimed scientific research and experimental development ("SR&ED") costs of about $XXXXXXXXXX. The non-capital losses expire as follows:
XXXXXXXXXX losses arose from the business described above in paragraph 8.
On or before XXXXXXXXXX, XXXXXXXXXX purchase all the outstanding shares of
be referred to as the "Change of Control".
Subsequent to the Change of Control, XXXXXXXXXX will take steps to wind-up XXXXXXXXXX in a manner which complies with subsection 88(1) of the Act.
After the Change of Control, XXXXXXXXXX business will still be carried on with a reasonable expectation of profit.
PURPOSE OF THE PROPOSED TRANSACTIONS
The purpose of the proposed transaction is to allow
The deductibility of the non-capital losses, undeducted SR&ED and investment tax credits after an acquisition of control is relevant to the determination of a final selling price.
To the best of your knowledge and that of the taxpayers involved, none of the issues involved in this ruling are being considered by a Tax Services Office or a Taxation Centre in connection with a tax return already filed, and none of the issues are under appeal or objection.
Provided the above statements of fact and proposed transactions are accurate and constitute complete disclosure of all of the relevant facts and proposed transactions, and assuming the proposed transactions are carried out as described above, we confirm the following:
Provided (i) XXXXXXXXXX Business is carried on throughout the particular year which ends after the Change of Control and (ii) XXXXXXXXXX continues to only earn XXXXXXXXXX revenue from XXXXXXXXXX for the particular year ending after the Change of Control will be considered to substantially all be derived from the sale of similar properties as those sold by XXXXXXXXXX (as described above in paragraph 8) prior to the Change of Control, for the purposes of subparagraphs 88(1.1)(e)(ii) and 111(5)(a)(ii), clauses 37(6.l)(b)(i)(B) and 127(9.1)(d)(i)(B), and subclause 88(1)(e.3)(ii)(C)(I) of the Act.
This ruling is given subject to the general limitations and qualifications set forth in Information Circular 70-6R2 issued by Revenue Canada, Taxation on September 28, 1990 (as amended by Special Release dated September 30, 1992) and is binding provided the proposed transactions are completed by XXXXXXXXXX. These Rulings are based on the Act in its present form and do not take into account the effect of any proposed amendments. Except as expressly stated, our Rulings do not imply acceptance, approval or confirmation of any income tax implications of the facts or proposed transactions.
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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