18 March 1999 External T.I. 9826695 - LOSS UTILIZATION

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.

XXXXXXXXXX 		982669
D. Boychuk
March 17, 1999

Dear Sir:

Re: Loss Utilization

We are writing in response to your letter of September 30, 1998 wherein you requested our opinion as to whether a Canadian corporation (“Canco”) could utilize the losses of a U.S. corporation following the purchase of the shares of the U.S. corporation by Canco from a person who is a 50% shareholder in Canco.

Our Comments

Under the Income Tax Act (Canada), the losses of one corporation cannot be offset against the income of another corporation except in limited circumstances where each of the corporations involved are taxable Canadian corporations. The situation described by you does not fall within such circumstances and, therefore, the losses of the U.S corporation would not be available to reduce the income of the Canadian corporation.

We trust that our comments will be of assistance.

The above comments represent our general views with respect to the subject matter of your letter and are provided in accordance with paragraph 22 of Information Circular 70-6R3.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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