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:
Whether a Canadian corporation and its wholly-owned U.S. subsidiary are associated for purposes of the Act.
Position:
No definitive comments given.
Reasons:
The taxpayer did not provide the necessary facts as well as the particular provisions which were at issue.
970516
XXXXXXXXXX Jim Wilson
Attention: XXXXXXXXXX
September 30, 1997
Dear Sirs:
Re: Associated Corporations
This is in reply to your letter of February 17, 1997 in which you requested our comments with respect to the interpretation of subsection 256(1) of the Income Tax Act (the "Act"). More specifically, you have described a situation where Canco, a Canadian-controlled private corporation ("CCPC") which is owned 100% by Mr. A, owns 100% of the issued and outstanding shares of Foreignco, a corporation incorporated in the United States which carries on business in the United States. Mr. A is the president and Chief Executive Officer of Foreignco and is responsible for the operation of the business. You wish to know whether Canco and Foreignco are associated for purposes of the Act.
It is generally the Department's view that a foreign corporation is a "corporation" and a "person" for purposes of the Act. When determining whether a provision in the Act applies to a foreign corporation, the Department would generally have to consider all the relevant facts of a particular situation, as well as the particular provisions of the Act which are at issue. For example, whether Canco and Foreignco are associated or not, Canco would not have to share its "business limit" with Foreignco since the latter entity is not a CCPC.
These comments are provided in accordance with the guidelines set out in paragraph 22 of Information Circular 70-6R3.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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