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: Whether the income from the sale of mutual funds may be reported by a corporation set up by a registered salesperson as a result of the recent decisions of the Tax Court in Wallsten and Lakeside Properties Limited
Position: Our position continues to be that only the individual salesperson may report this income based on IT-189R2.
Reasons: As we understand it, the Ontario Securities Act only permits the sale of securities by "salespersons" if they are registered, and it further provides that only individuals may be "salespersons."
May 4, 2001
Kitchener-Waterloo TSO HEADQUARTERS
J. Gibbons, CGA
(613) 957-2135
Attention: Christine Barnard
2001-008096
Incorporated Mutual Fund Salespersons
We are replying to your email of April 19, 2001, concerning our views with respect to mutual fund salespersons in Ontario using corporations to carry on business. In your email, you referred to a number of previous interpretations issued by us on this issue, but you are concerned about the impact of recent decisions of the Tax Court, i.e. Wallsten and Lakeside Properties Limited, that may affect our position.
At the present time, our position continues to be as stated in earlier letters. As we understand it, the Ontario Securities Act only permits the sale of securities by "salespersons" if they are registered, and it further provides that only individuals may be "salespersons." On this basis, we have not accepted the reporting of income from the sale of mutual funds by a corporation set up by a registered salesperson, i.e., an individual, even if there is a bona fide employment contract between the corporation and the salesperson under which this income is assigned to the corporation. However, as a result of the recent jurisprudence, we are currently reviewing our position. We intend to publish the results of our review in a future issue of the Income Tax Technical News.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. Should you wish to send a severed copy to the client, you may obtain one by contacting
Jackie Page at (613) 957-0682.
John Oulton, CA
Manager
Business and Individual Section
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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