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.
Audit Applications Division Specialty Rulings
Mr. K. Warren, Director Director
D. Yuen
957-2111Attention: Mr. R. Jolie
Application Opinions Section 900354
Subsections 15(1) and 56(2)
Attached is our reply to a letter from an accounting firm which requested our comments on the application of subsections 15(1) and 56(2) in a hypothetical situation. The firm is concerned that the Department would adopt the findings of the Court in the case of Helen Vine, in her capacity as Executrix of the Last Will and Testament of William J. Vine v, Her Majesty The Queen ( 89 DTC 5528) ("the Vine case") in assessing benefits to the controlling shareholder of two corporations.
It is our view that subsection 15(1) would not be applicable in the hypothetical situation since subsection 15(2) and section 80.4 contemplate that intercompany loans are excluded from their purview. We also feel that subsection 56(2) is inapplicable in the circumstances because the Courts have held that intercompany loans were not considered payments or transfers of property.
Would you please provide us with your comments on whether you consider the findings of the Vine case to reflect the Departmental policy in respect of the application of subsections 15(1), 56(2) and section 80.4 to intercompany loans. Please note that we have also received a telephone enquiry on the same topic.
Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch
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