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:
XXX
This will reply to your letter of August 31, 1990 requesting a copy of our correspondence to Toronto District Office dated July 18, 1990 regarding the above trust.
We apologize for the delay in responding to your request.
In this regard we are unable to send you a copy of our memorandum which concerned the deductibility of legal and accounting expenses incurred in connection with the deemed dispositions provided for by Section 104 of the Income Tax Act. If you need a copy of the memorandum we suggest you contact Mr. G. Gaignery, Co-ordinator, Access to Information and Privacy, Revenue Canada, Taxation at 88 Metcalfe Street, Room 502, Ottawa, Ontario K1A 0L8.
Although we are not able to send you a copy of the memorandum, we do, however, provide the following general comments for your information.
Our Comments
As noted in paragraph 6 of Interpretation Bulletin IT-99R3, legal and accounting fees and other consultation fees relating to the structuring of a transaction are deductible depending on the nature of the underlying transaction (as income or capital). Generally, where accounting or legal consultations regarding a deemed disposal of fixed assets are entered into, the expenditures incurred would be considered to be capital in nature. Moreover, where the expenditures in question relate to tax planning discussions concerning the minimizing of income taxes, our view would be that they do not relate to any business activity.
In general, it is our view that legal and accounting fees incurred to minimize the effect of the 21 year deemed realization rule for trusts do not contribute towards any earning of trust income nor do they preserve or maintain any of the assets of the trust. Accordingly, the underlying transactions would be capital in nature.
We hope this will be helpful.
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, 1990
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, 1990
Email this Content