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: Subsection 15(1), Vine Estate Case [[1990] 1 C.T.C. 18]
This is in reply to your letter dated March 27, 1991 requesting the Department's current position with respect to the possible application of subsection 15(1) to intercompany loans.
Generally, it is the Department's position that subsection 15(1) of the Act will not be applied in respect of intercorporate loans arising in the course of carrying on the businesses of the two corporations.
However, depending on the facts and circumstances of a particular situation, it may be evident that the recipient corporation may not be in a position to repay the loans or advances or to provide reasonable security for the repayment of the loans and advances. In this situation, the payer corporation has provided valuable consideration with no reasonable expectation of repayment. The shareholder directing such a payment would be viewed as having deliberately and permanently removed value from the payer corporation in a transaction not made in the ordinary course of business. It would be our opinion that a benefit, taxable under 15(1) of the Act, has been conferred on the shareholder in these circumstances.
We trust our comments will be of assistance to you.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1991
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1991
Email this Content