2010 Ruling 2010-0376231R3 F - Supplementary ruling

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.

Principal Issues: Amendment to the ruling to allow proportionate transfer of CEC

Position: Accepted

Reasons: Historical administrative position

XXXXXXXXXX 						2010-037623

XXXXXXXXXX , 2010

Dear XXXXXXXXXX :

Re: XXXXXXXXXX , XXXXXXXXXX Tax Centre, XXXXXXXXXX TSO)

Further to your request for an amendment to our Advance Income Tax Ruling dated XXXXXXXXXX , our file number 2009-032883 (the "Ruling"), issued to the above named taxpayer, the Ruling is amended by:

1) adding the following definition where it belongs in the definitions section to preserve the alphabetical order of that section:

"cumulative eligible capital" has the meaning assigned by subsection 14(5);

2) Adding the following paragraph after paragraph 14 c):

For purposes of the joint elections in this paragraph, the reference to "4/3 of the taxpayer's cumulative eligible capital in respect of the business" in subparagraph 85(1)(d)(i) shall read as "2/3 of the taxpayer's cumulative capital in respect of the business".

3) Replacing ruling A by the following ruling:

A. Provided that the requisite joint elections are filed in prescribed form and within the prescribed time and subject to the application of subsection 69(11) and paragraph 85(1)(b), the provisions of subsection 85(1) will apply to the transfer by ACo to Newco of the transferred property described in paragraph 13 above with result that the agreed amount in respect of such property will be deemed pursuant to paragraph 85(1)(a) to be proceeds of disposition thereof to ACo and the cost thereof to Newco.

For purposes of the joint elections in this paragraph, the reference to "4/3 of the taxpayer's cumulative eligible capital in respect of the business" in subparagraph 85(1)(d)(i) shall read as "2/3 of the taxpayer's cumulative capital in respect of the business".

For purposes of this ruling, the reference to the "undepreciated capital cost to the taxpayer of all of the property of that class immediately before the disposition" in subparagraph 85(1)(e)(i) shall mean that proportion of the undepreciated capital cost to ACo of all of the property of that class immediately before the transfer that the capital cost of the property of that class transferred is of the capital cost of all of the property of the class at that time.

For greater certainty, the provisions of paragraph 85(1)(e.2) will not apply to the transfer described in Paragraph 13.

We confirm that the rulings in the Ruling remain binding on the Canada Revenue Agency subject to the same limitations and qualifications set out in the Ruling.

Yours truly,

XXXXXXXXXX
Section Manager
for Division Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch