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 XXX:
This is in reply to your letter of August 31, 1981 concerning subsection 85(1) rollovers.
The Department recognizes that the situation often arises that, for business reasons, it is expedient to execute a transfer pursuant to subsection 85(1) of the Act at a time when the company has insufficient authorized preference share capital to fully carry out the exchange. For that reason, the Department will concur with the transferor receiving in the interim (in addition to a qualifying share) a right to receive preference shares and will view such a right as being an acceptable form of consideration for the purposes of paragraph 85(1)(e.2) of the Act provided that the preference shares (with the appropriate fair market value) that the right represents are authorized, issued, and in place within the time specified in subsection 85(6) of the Act.
The other matters set out in your letter, being the application of other provisions of the Act to the above rollover, have not been dealt with in this letter as they cannot be answered on a hypothetical basis. It is only after an examination of all of the relevant facts can the proper conclusions be arrived at. For that reason, if you have a factual situation in mind we would suggest that you consider requesting an advance income tax ruling.
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© Her Majesty the Queen in Right of Canada, 1981
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1981
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