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: interpretation of 90% of capital test
Position: where corporation has share capital ownership determined by reference to capital.
Reasons: previous position
XXXXXXXXXX 982289
B. Kerr
September 30, 1998
Dear Sirs:
Re: Paragraph 149(1)(d) of the Income Tax Act
This is in response to your letter of August 11, 1998, concerning the interpretation of the 90% of the shares or capital test in respect of a municipal corporation.
It should be noted that the provisions of paragraph 149(1)(d) were amended by S.C. 1998, c19, s.178(1) applicable to taxation years and fiscal periods that begin after 1998.
It is now paragraph 149(1)(d.5) that provides an exemption on the taxable income for a particular period of a corporation not less than 90% of the capital of which was owned by one or more municipalities in Canada, if the income for the period of the corporation from activities carried on outside the geographical boundaries of the municipalities does not exceed 10% of its income for the period.
It is still the Department’s view that where a corporation has share capital, ownership is determined solely with reference to the corporation’s shares and where it is a corporation without share capital, ownership is determined solely by reference to the capital of the corporation.
We trust that these comments will be of assistance.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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