26 May 1997 External T.I. 9708585 - Amalgamation

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:

Timing of Amalgamation

Position:

Where no time stamp taxpayers can pick order.

Reasons:

Paragraph 9 of IT-474R states that, in the absence of a particular time stated on the certificate of amalgamation, the time of an amalgamation is the earliest moment on the effective date of the amalgamation.

A review of the history of the bulletin shows that this comment is based on a number of court cases from the 1800s and early 1900s dealing with the effective time for judicial acts. Given the nonspecific basis underlying the position in the bulletin, we agreed that, provided that it did not lead to illogical results, we would respect the ordering of an amalgamation within a series of transactions entered into by taxpayers.

	                         		5-970858
XXXXXXXXXX	                            D.A. Palamar
(613) 957-2127

Attention: XXXXXXXXXX

May 26, 1997

Dear Madam:

Re: Technical Interpretation Request - Effective Time of Amalgamation

This is in response to your letter of March 26, 1997 in which you requested our opinion regarding the effective time of an amalgamation.

Paragraph 9 of IT-474R states that, in the absence of a particular time stated on the certificate of amalgamation, the time of an amalgamation is the earliest moment on the effective date of the amalgamation.

In your view, there is no policy reason that this position should not be varied to be consistent with our response to question 9 of the Revenue Canada forum at the 1996 Corporate Management Tax Conference where we stated that in the context of an "arrangement" we would ordinarily respect the ordering of a series of transactions where the ordering is specified in the arrangement.

Our Views

We agree with you that, generally, in the absence of a time stamp on a certificate of amalgamation, there is no reason that we should not respect the ordering of an amalgamation within a series of transactions on the effective date of the amalgamation provided that the series of transactions occurred in a logical sequence. The Department would not, of course, consider an amalgamation to be effective at a particular time if, for example, that time was before either of the predecessor corporations came into existence.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch