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 the corporation qualify as a non-profit organization under 149(1)(l) after certain transactions are undertaken?
Position: Must make a ruling request.
Reasons: We do not have sufficient facts, documentation or a submission to make a determination that after the proposed transactions are completed the activities will not be carried out on a for profit basis.
XXXXXXXXXX 990284
Attention: XXXXXXXXXX
May 17, 1999
Dear Sirs:
Re: XXXXXXXXXX
This is in reply to your letter dated January 26, 1999, wherein you are requested that we provide our views as to whether XXXXXXXXXX would be considered to be a non-profit organization as that term is defined in paragraph 149(1)(l) of the Income Tax Act (the "Act") after XXXXXXXXXX completes the transactions described in your letter. Your request mentions that certain facts described in our previous letter to you on this very same issue (5-970460 dated February 17, 1998) have been misconstrued and you ask whether the clarification of these facts would change our earlier views.
As discussed on the telephone (Cooke/XXXXXXXXXX) the income tax consequences of proposed transactions involving specific taxpayers can only be provided in response to a request for an advance income tax ruling. Notwithstanding this we advised you that the facts provided in your most recent letter do not alleviate the concern we expressed in our previous letter, commencing on the second paragraph of page 4, which relate to the nature of XXXXXXXXXX principal activities (i.e., leasing real property and property management) as being conducted on a for profit basis. While we are prepared to reconsider any additional submission you may have on this particular issue, along with the other issues that may arise as a result of the proposed transactions, we are only prepared to do so where they are made as part of an advance income tax ruling that is submitted in accordance with the guidelines set out in Information Circular 70-6R3 (IC-70-6R3) dated December 30,1996, issued by Revenue Canada. However we can offer no assurances that our views on this matter will change.
It also appears from paragraph 3 of your letter that all the shares of XXXXXXXXXX are held by nominee shareholders for the benefit of XXXXXXXXXX . As mentioned in our telephone conversation it appears that no consideration has been given as to whether XXXXXXXXXX is exempt from tax under any one of paragraphs 149(1)(d.2) to (d.6) of the Act. The determination of this matter depends on whether the ownership of XXXXXXXXXX shares by the nominee shareholders can be considered as a "bare trust" or "agency" relationship for income tax purposes and if so, whether XXXXXXXXXX is a corporation described in paragraph 149(1)(d) or (d.1) of the Act. Since the determination of this matter would be in respect of a completed transaction any submissions should be sent to the local Tax Service Office that deals with XXXXXXXXXX affairs.
While we trust that our comments will be of assistance to you as indicated in paragraph 22 of IC-70-6R3 this opinion is not a ruling and accordingly, it is not binding on Revenue Canada.
F. Lee Workman
Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy & Legislation Branch
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