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.
| |
April 10, 1990 |
| Review Committee |
Specialty Rulings |
| |
Directorate |
| |
S. Shinerock |
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957-2108 |
| |
File No. 7-4798 |
Subject: Rights, Options and Warrants and paragraph 15(1)(c) of the Income Tax Act (the "Act")
We recently issued an opinion to 24(1) (copy attached) on the application of paragraph 15(1)(c) of the Act to a situation where a public corporation confers on all owners of its common shares a "right" to buy units consisting of shares of the corporation and "warrants", which may be exercised to buy additional shares of the corporation.
It was previously our position that the exception in paragraph 15(1)(c) would only apply to the initial right portion of the unit, and would not apply to the warrant portion of the unit, on the basis that only those shareholders who exercise their right to acquire the unit will have the right to acquire shares pursuant to the warrants. Therefore, with respect to the warrants, it could not be said that "... all owners of common shares ... a right to buy additional shares thereof", within the meaning of paragraph 15(1)(c).
This position, which was to have been reflected in the revision of IT-116R 23 21(1)(b)
We have therefore adopted this broader interpretation of paragraph 15(1)(c) of the Act in our reply to 24(1)
ChiefCorporate Reorganizations III Section Reorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch
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