8 August 1997 External T.I. 9718755 - FORGIVENESS OF DEBT TO A BRANCH

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: Forgiveness of debt from a branch ?

Position: No

Reasons: Branch is same person as non-resident

                                         	971875
XXXXXXXXXX		                               C. Tremblay

Attention: XXXXXXXXXX

August 8, 1997

Dear Sirs:

Re: Forgiveness of Debt

This is in reply to your letter of July 11, 1997, wherein you seek our opinion as to whether the provisions of section 80 of the Act apply where a branch of a U.S. corporation operating a business in Canada converts its advances to the U.S. corporate head office into capital.

In our opinion, the non-resident corporation, i.e. the U.S. corporation is the person liable for tax under the various provisions of the Income Tax Act and not the branch. In our view, a person cannot transact with itself or forgive itself a debt. Accordingly, the provisions of section 80 would not apply.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch