1999 Ruling 9914593 - PAYMENT OF PART IV TO AVOID 55(2)

Unedited CRA Tags

84(1) 53(1)(b)

View modes

Text of Severed Letter

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.

Definitions

FACTS

ADDITIONAL INFORMATION

PROPOSED TRANSACTIONS

PURPOSE OF PROPOSED TRANSACTIONS

RULINGS

COMMENTS

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: Whether proposed transactions to make two corporations not connected in order to pay part IV tax to avoid 55(2) is appropriate.

Position: Yes

Reasons: Payment of Part IV to avoid application of 55(2) specifically provided for in subsection 55(2).

XXXXXXXXXX
XXXXXXXXXX 3-991459
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1999

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX
Advance Income Tax Ruling

We are writing in response to your letter of XXXXXXXXXX in which you requested advance income tax rulings on behalf of the above-noted taxpayers. We acknowledge receipt of your letters of XXXXXXXXXX and our telephone conversations in connection herewith.

You have confirmed that to the best of your knowledge and that of XXXXXXXXXX none of the issues contained herein:

(a) is in an earlier return of XXXXXXXXXX or a related person;

(b) is being considered by a tax services office or taxation centre in connection with a previously filed tax return of XXXXXXXXXX or a related person;

(d) is before the courts or, if a judgement has been issued, the time limit for appeal to a higher court has not expired; or

(e) is the subject of a ruling previously issued by the Income Tax Rulings and Interpretations Directorate of Revenue Canada.

Definitions

In this letter unless otherwise expressly stated:

(a) "Act" means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1, as amended to the date hereof, and unless otherwise stated, every reference herein to a part, section, subsection, paragraph or subparagraph is a reference to the relevant provision of the Act;

(b) "ACB" means "adjusted cost base" and has the meaning assigned by section 54;

(d) "CBCA" means the Canada Business Corporations Act R.S.C. 1985 C-44 as amended to the date hereof;

(e) "CCPC" means "CCPC" as defined in subsection 125(7);

(f)
XXXXXXXXXX;

(g)
XXXXXXXXXX;

(h) "paid-up capital" has the meaning assigned by subsection 89(1);

(i) "proceeds of disposition" has the meaning assigned by section 54;

(j) "public corporation" has the meaning assigned by subsection 89(1);

(k) "specified financial institution" has the meaning assigned by subsection 248(1);

(l) "taxable Canadian corporation" has the meaning assigned by subsection 89(1); and

(m) "taxable dividend" has the meaning assigned by subsection 89(1).

FACTS

1. XXXXXXXXXX is a corporation incorporated pursuant to the laws of XXXXXXXXXX is a taxable Canadian corporation and a CCPC. XXXXXXXXXX business number is XXXXXXXXXX, its tax affairs are handled by the XXXXXXXXXX Tax Services Office and it files its tax returns at the XXXXXXXXXX Taxation Centre.

2. XXXXXXXXXX is owned and controlled by members of the XXXXXXXXXX family. All of the issued and outstanding shares of XXXXXXXXXX are owned by individuals or trusts (none of the beneficiaries of the trusts is a corporation) as described below:

Name of Shareholder

No. Of Shares

Class of Shares
% of Class
XXXXXXXXXX
XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX
XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX
XXXXXXXXXX