7 May 1991 Income Tax Severed Letter - Tax shelter reporting for immigrant investment syndicates

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.

1991 RCT - B.C. TAX STUDY GROUPS ROUND TABLE

Question 33 Tax Shelter Reporting

Immigrant investment syndicates, as authorized by Canada's immigrant investor program, typically provide that an investor's subscription (i.e. now usually $350,000) will be refunded to him is he is unsuccessful in obtaining his visa for permanent residence. Will this refund be considered a prescribed benefit for purposes of the tax shelter reporting rules?

Department's Position

In our view, such a refund would generally be considered to be a prescribed benefit for the purposes of the tax shelter reporting rules. The definition of prescribed benefit under subsection 231(6) of the Income Tax Regulations is very broad and includes by virtue of paragraph (c), any amount that is the proceeds of disposition of the interest in the tax shelter to which the purchaser may be entitled. It is our understanding that the prescribed benefit provisions were intended to catch virtually all amounts that may serve to reduce the risk of loss of a purchaser. These provisions will be interpreted accordingly.

There may be situations where the refund described above would not be regarded as a prescribed benefit; however, we are not aware of any such situations at this time. Any exceptions to the above position could only be considered on a case by case basis and after consideration of all of the relevant facts.