20 March 1997 External T.I. 9706775 - PRINCIPAL RESIDENCE

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 the shares in a corporation incorporated under other than "cooperative legislation" can qualify as a principal residence.

Position:

Must be incorporated under cooperative legislation.

Reasons:

There would be no meaning to the term "co-operative housing corporation" in the definition of principal residence in section 54 if shares of corporations incorporated under legislation other than "co-operative legislation" were accepted as a principal residence.

970677
XXXXXXXXXX J.E. Grisé
(613) 957-2059

March 20, 1997

Dear XXXXXXXXXX:

Re: Principal Residence

This is in reply to your fax of March 11, 1997 concerning the share of the capital stock of a corporation as a principal residence within the definition of "principal residence" in section 54 of the Income Tax Act.

You are particularly interested as to whether or not the amendments made to the Cooperative Association Act of British Columbia (the Cooperative Act) in 1988 would change the opinion given in our letter to you of February 26, 1997. The amendments to the Cooperative Act in 1988 included the addition of Part 2 which deals exclusively with housing cooperatives. The corporation in which your clients have capital stock was incorporated under the Companies Act of British Columbia in 1972.

The above information does not change our opinion that the share of a corporation incorporated under the Companies Act of British Columbia does not qualify as "a share of the capital stock of a co-operative housing corporation." In our view, if a housing association cannot be incorporated under legislation dealing with cooperatives or if there is no such legislation in a particular jurisdiction, the shares of such an association incorporated under some other legislation cannot qualify for the principal residence exemption.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch