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 55(2) and paragraph 110.6(7)(a) of the Income Tax Act (Canada) (the "Act")
We are writing in response to your letter of April 9, 1991 wherein you requested our comments on the computation of income earned or realized by a corporation for purposes of subsection 55(2) of the Act ("safe income") and the applicability of paragraph 110.6(7)(a) of the Act in a certain situation.
Comments
The situation described in your letter appears to involve actual proposed transactions. Confirmation as to the tax consequences of actual proposed transactions can only be provided in the context of an advance income tax ruling. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R2 dated September 28, 1990 issued by Revenue Canada, Taxation.
The calculation of safe income involves consideration of many factors, some of which were not dealt with in your submission. We have made the following assumptions:
XXX
We also wish to point out that we cannot envisage a situation in which safe income in respect of a share will exceed a dividend received on that share.
The intention of paragraph 110.6(7)(a) is to deny access to the capital gain deduction under section 110.6 of the Act in a situation where an individual has a capital gain for a taxation year from the disposition of property as part of a series of transactions or events which includes a reorganization pursuant to paragraph 55(3)(b) of the Act. XXX
Series of transactions or events has the extended meaning assigned by subsection 248(10) of the Act.
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© 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
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