14 January 2005 External T.I. 2004-0109411E5 - Revival of a Dissolved Corporation

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: whether revival of a dissolved CBCA corporation has retroactive effect

Position: Generally, yes

Reasons: subsection 209(4) of the CBCA and Policy Statement 10.6 issued by Corporations Canada

2004-010941
XXXXXXXXXX T. Harris
(613) 957-2114
January 14, 2005

Dear XXXXXXXXXX:

Re: Involuntary Dissolution of a Corporation

We are writing in response to your electronic message of December 29, 2004, wherein you requested our opinion concerning the tax consequences resulting from the revival of a corporation that has been involuntarily dissolved pursuant to the provisions of the Canada Business Corporations Act (the "CBCA"). In your message, you referred to a previous technical interpretation (#9628845) in which the Canada Revenue Agency (the "CRA") commented on the tax consequences of a revival of a corporation governed by the Ontario Business Corporations Act (the "OBCA") and have queried whether these comments would also be relevant to a corporation incorporated under the CBCA.

Our Comments

The particular situation outlined above appears to relate to a factual one, involving a specific taxpayer. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Where the particular transactions have been completed, any enquiry should be addressed to the relevant tax services office. Although we cannot comment on your specific situation, the following general comments may be of assistance.

The provisions relating to the revival of a dissolved corporation under the CBCA are found in section 209 thereof. Subsections 209(3.1) and (4) of the CBCA, which read as follows, are the provisions which are relevant to your enquiry:

(3.1) A body corporate is revived as a corporation under this Act on the date shown on the certificate of revival.

(4) Subject to any reasonable terms that may be imposed by the Director, to the rights acquired by any person after its dissolution and to any changes to the internal affairs of the corporation after its dissolution, the revived corporation is, in the same manner and to the same extent as if it had not been dissolved,

(a) restored to its previous position in law, including the restoration of any rights and privileges whether arising before its dissolution or after its dissolution and before its revival; and

(b) liable for the obligations that it would have had if it had not been dissolved whether they arise before its dissolution or after its dissolution and before its revival.

Unlike subsection 241(5) of the OBCA as it now reads, the above-noted provisions do not deem the revived corporation to have never been dissolved. However, a corporation that is revived under the CBCA will, subject to the conditions described in subparagraph 209(4) thereof, be restored to its previous position in law as if it had never been dissolved. In our view, a revival under the CBCA would appear to have retroactive effect and the revived corporation will generally have all of the rights (including tax attributes) and obligations that it would have had if it had not been dissolved. Our views are supported by the comments found in section 2 of Corporations Canada Policy Statement 10.6 Revival Policy dated February 6, 2002, which reads, in part, as follows:

2.01 As a result of recent amendments, subsection 209(4) now provides that a revival retroactively validates the business and affairs of the corporation during the time of its dissolution....

You have also indicated that your client's situation involves an involuntary dissolution. Since upon revival, the provisions of the CBCA do not deem the corporation not to have been dissolved, the comments in Interpretation Bulletin IT-444R, Corporations - Involuntary Dissolutions may also be of interest to you or your client.

We trust that these comments will be of assistance. However, as stated in paragraph 22 of Information Circular 70-6R5, this opinion is not a ruling and consequently is not binding on the Canada Revenue Agency in respect of any particular situation.

Yours truly,

for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Planning Branch

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