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:
Will GAAR ruling be extended to cover dispositions by a personal trust after the expiry of the escrow agreement thereby avoiding the application of subsection 47(1)?
Position:
No.
Reasons:
There was support for providing the favourable ruling for the period when the shares held are subject to an escrow agreement and the results from the application of 47(1) and 7(1) are considered inappropriate. However, after the escrow period the intention is to avoid the application of 7(1.3) thereby deferring the recognition of any gain which has been deferred under subsection 7(1.1). This result was considered abusive and the GAAR ruling could not be extended to cover this period.
XXXXXXXXXX 972346
Attention: XXXXXXXXXX
XXXXXXXXXX, 1997
Dear Sirs:
Re: XXXXXXXXXX
Advance Income Tax Ruling 971700, dated XXXXXXXXXX, 1997
This is in reply to your letter dated XXXXXXXXXX, wherein you advised us that you wish to withdraw your request for an amendment, as requested in your letter dated XXXXXXXXXX (the "First Letter"), to a ruling described in the above-referenced Advance Income Tax Ruling (the "Ruling Letter"). In your letter, you also requested our general views with respect to the application of the Income Tax Act (the "Act") to the completed transactions that were proposed in the Ruling Letter. The review of completed transactions falls within the responsibility of tax services offices and, as such, we can only provide you with the following general comments which we hope will be of assistance.
In your First Letter, you also advised us that the proposed transactions described in the Ruling Letter were amended to change each reference to "registered charity" to "family member".
Generally, we are of the opinion that where there are two separate and distinct persons for purposes of subsection 47(1) of the Act, there would also be two separate and distinct persons for the purposes of subsection 7(1.3) of the Act.
As explained in paragraph 22 of Information Circular 70-6R3, the above opinion is not binding on the Department
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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