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: Loss Consolidation Transactions
Position: Affiliated corporate taxpayers
Reasons: Technical news
973253
XXXXXXXXXX C. TremblayAttention: XXXXXXXXXX
January 27, 1998
Dear Sirs:
Re: Loss Consolidation Transactions
This is in reply to your letter of December 10, 1997, with respect to intercorporate loss consolidation transactions. You seek our position on the application of GAAR and on the interest deductibility requirements.
It is our position that transfers of income or deductions between corporations that are affiliated using transactions that are legally effective and complying with all applicable provisions of the Income Tax Act (the "Act") would not usually result in a misuse of the provisions of the Act or an abuse of the Act read as a whole, for purposes of applying the general anti-avoidance rule ("GAAR") in section 245 of the Act. The Department will also maintain its position with respect to a type of scheme which involves the borrowing of money by one corporation in the group (see for example, Income Tax Ruling ATR-44 or example 5 of Information Circular 88-2 Supplement 1). Nevertheless, although Canwest Broadcasting Ltd. and Mark Resources Inc. have discontinued their appeals to the Federal Court of Appeal, there are similar cases presently before the courts and we will review the position outlined above once the decisions have been rendered. Should the review result in any change to our position, it will be announced in the Income Tax Technical News.
We trust our comments will be of assistance to you
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Division
Policy and Legislation Branch
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