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.
Dear Sirs:
RE: Transfer of Property to a Corporation by a Shareholder
This is in reply to your letter of March 27, 1981 with respect to the transfer of property to a corporation by a shareholder.
Where a taxpayer has disposed of property to a taxable Canadian corporation for consideration that includes shares of the capital stock of the corporation, we are of the view that a prior issuance of shares by the corporation for cash, in and by itself, would not constitute a business for the purposes of subsection 85(1.1) of the Income Tax Act (the Act). Accordingly, the provisions of subsection 85(1.1) of the Act would not apply in respect of such disposition to render the provisions of subsection 85(1) of the Act inoperative.
We trust that these comments are of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1981
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© Sa Majesté la Reine du Chef du Canada, 1981
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