31 March 1992 Income Tax Severed Letter 9203015 - Prescribed shares

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.

Subject: PRESCRIBED SHARES Section(s): REG EG6205(4)(f)(iii)(I), REG 6205(4)(f)(iii)(A)(II)]

XXX 920301 W.P. Guglich (613) 957-2102

Attention: XXX

March 31, 1992

Dear Sirs:

Re: Prescribed Shares

This is in reply to your letter of January 27, 1992, concerning the requirements of clause 6205(4)(f)(iii)(A) of the Income Tax Regulations.

It is our view that the requirements of clause 6205(4)(f)(iii)(A) of the Regulations would be met in a situation where pursuant to an employee share purchase agreement the requirements of subclause 6205(4)(f)(iii)(A)(I) are satisfied during some fixed period of time after the share purchase by the employee and thereafter the requirements of subclause 6205(4)(f)(iii)(A)(II) are satisfied. Whether either subclause is satisfied will be a question of fact, the determination of which will require a consideration of all the circumstances and not only the terms of the employee share purchase agreement.

This opinion is our best interpretation of the law as it applies generally. It may, however, not always be appropriate in the circumstances of a particular case, and as stated in paragraph 24 of Information Circular 70-6R2, it is not binding on the Department.

We trust our comments will be of assistance to you.

Yours truly,

E. Wheeler
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch