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.
J. Gibbons
XXXXXXXXXX 971375
Attention: XXXXXXXXXX
March 6, 1998
Dear Sir:
We are replying to your letter of May 16, 1997, requesting our interpretation of the phrase “compensation for property taken under statutory authority” in the definition of “proceeds of disposition” in section 54 and subsection 13(21) of the Income Tax Act. We apologize for the delay in replying. Specifically, you inquire whether the proceeds from a forced sale of shares or assets under section 92 of the Competition Act would be considered to be “compensation for property taken under statutory authority.”
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. The following comments are, therefore, of a general nature only.
It is our understanding that, under section 92 of the Competition Act, the Competition Tribunal can order a corporation to dispose of shares or assets so designated by them where they consider that a merger prevents or lessens competition substantially. It is our view that, in such circumstances, the proceeds of disposition of the shares or assets would be considered compensation for property taken under statutory authority or the sale price of property sold to a person by whom notice to take it under statutory authority was given.
We trust these comments will be of assistance.
Yours truly,
P. Spice
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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