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.
Dear Sirs:
RE: Insurers - Application of Subsection 85(1) of the Income Tax Act
This is in reply to your letter dated December 11, 1984 wherein you requested our comments concerning the necessity of determining the fair market value of goodwill transferred under the provisions of the above-noted subsection.
In our view the necessity of a fair market value determination depends on the facts of the situation (i.e. will it be necessary to have that information) and should be decided by the District Office. However, it is our general view that the absence of a fair market value determination does not generally invalidate an election under subsection 85(1) of the Act.
We acknowledge receipt of copies of two letters issued by the Department of Insurance indicating that the issuance of shares for cash and goodwill does not contravene the provisions of the Canadian and British Insurance Companies Act. Consequently, it would appear that the goodwill was transferred for consideration including shares and therefore meets the requirements of subsection 85(1) of the Income Tax Act.
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© Her Majesty the Queen in Right of Canada, 1985
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© Sa Majesté la Reine du Chef du Canada, 1985
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