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.
We reply to your referral of the above matter dated July 21, 1981.
In the situation set out in your memo, the taxpayer rolled depreciable property under section 85 and elected and received non-share consideration in an amount equal to the undepreciated capital cost of the depreciable property. However, the UCC was increased upon a subsequent audit and you state that "... Present policy is that the consequent increase to the agreed amount is to be reflected in the ACB of the shares rather than non-share consideration (e.g., shareholder's loan)."
It is our view that it is not "present policy" but rather the specific provisions of paragraph 85(1)(h) which requires that any increase to the agreed amount be reflected in the ACB of the shares. There is no provision in the Act whereby an election can be amended, once filed, and Information Circular 76-19R at paragraph 3 clearly sets out the only exceptions that the Department will recognize. In the circumstances of this case, we can see no reason or justification for deviating from that position.
We regret the delay in our reply.
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