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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Where two corporations have amalgamated, whether the amalgamation date, or another date, is the date on which the shares of the new corporation were "last acquired" for purposes of calculating the "eligible real property gain".
Position TAKEN:
Shares were last acquired on the date of the amalgamation.
Reasons FOR POSITION TAKEN:
According to paragraph 87(2)(a) of the Act, the corporate entity formed as a result of an amalgamation is deemed to be a new corporation for the purposes of the Act.
5-943175
XXXXXXXXXX C. Chouinard
Attention: XXXXXXXXXX
January 31, 1995
Dear Madam:
Re: Eligible Real Property Gain
We are writing in response to your letter of November 25, 1994, wherein you requested our opinion on the meaning of the expression "last acquired" for purposes of the definition of "eligible real property gain" in subsection 110.6(1) of the Income Tax Act (the "Act").
In the situation you describe, two corporations amalgamated on January 31, 1992. The amalgamation met the requirements of subsection 87(1) of the Act. The shares of each predecessor corporation were "non-qualifying real property" within the meaning of subsection 110.6(1) of the Act. One of the corporations was incorporated on XXXXXXXXXX and the other was incorporated on XXXXXXXXXX You inquire whether the amalgamation date, or another date, is the date on which the shares of the new corporation were "last acquired" for purposes of calculating the "eligible real property gain".
According to paragraph 87(2)(a) of the Act, the corporate entity formed as a result of an amalgamation is deemed to be a new corporation for the purposes of the Act. In addition, subparagraph (b)(ii) of the definition of disposition in section 54 of the Act provides that any share owned by a taxpayer which is converted by an amalgamation or merger constitutes a disposition. Accordingly, where the capital gains election is filed in respect of shares of a corporation formed as a result of an amalgamation, the date on which the shares were last acquired would be the date of the amalgamation.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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