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: Determination of UCC of amalgamated corporations following amalgamation
Position: UCC of amalgamated corporation is equal to the aggregate of the UCC of the predecessor corporations immediately before the amalgamation taking into account any deduction under Section 20(1) (a) by a predecessor corporation for the taxation year ending on the amalgamation.
Reasons: Previous Position and Statutory Provisions
XXXXXXXXXX 2009-031480
Henry Chong
(613) 957-2053
January 4, 2010
Dear XXXXXXXXXX :
Re: Undepreciated Capital Cost of Depreciable Property of Amalgamated Corporation
This is in response to your letter dated March 23, 2009, in which you requested a technical interpretation on whether the undepreciated capital cost (UCC) of a prescribed class of depreciable property to an amalgamated corporation determined pursuant to subparagraph 87(2)(d)(ii) of the Income Tax Act (Canada)(the "Act") is net of any capital cost allowance claimed by the predecessor corporations in their final taxation years preceding the amalgamation.
Our Comments
Clause 87(2)(d)(ii)(A) of the Act provides that where depreciable property of a prescribed class has been acquired by an amalgamated corporation from a predecessor corporation as a result of an amalgamation, in determining the UCC to the amalgamated corporation of depreciable property of a prescribed class at any time, there shall be added to the capital cost to the amalgamated corporation of depreciable property of the class acquired before that time the cost amount, immediately before the amalgamation, to a predecessor corporation of each property included in that class by the amalgamated corporation.
In Interpretation Bulletin IT-474R dated March 14, 1986, paragraph 13, we stated that the amount of undepreciated capital cost of a prescribed class of a predecessor corporation to be added, pursuant to clause 87(2)(d)(ii)(A) of the Act, to the capital cost of that class of the new corporation is net of any deduction claimed by a predecessor corporation under paragraph 20(1)(a) of the Act in computing its income for the taxation year ending immediately before the amalgamation. While Interpretation Bulletin IT-474R has been replaced by Interpretation Bulletin IT-474R2 dated January 8, 2008, this continues to be our position.
To the extent that your question relates to a particular transaction, you should note that written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. The foregoing comments are, therefore, of a general nature only.
We trust the foregoing is satisfactory. Our comments are provided in accordance with the practice outlined in paragraph 22 of Information Circular IC 70-6R5, dated May 17, 2002.
David Palamar
Manager
Corporate Reorganizations Section II
Reorganizations and Resources Division
Income Tax Rulings Directorate
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