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.
DATE October 17, 1985
To- Audit Directorate Policy & Systems Branch
FROM- Corporate Rulings Director Legislative and Intergovernmental Affairs Branch K.H. Major 995-1787
ATTENTION J.R. Robertson Director General
RE: Transfer of files of recently incorporated New Brunswick Corporations
Based on the information provided in Mr. A.L. Fox's memorandum of July 4, 1985 to Mr. G.W. Venner, there are no apparent tax implications related to the unusual number of requests for permission to transfer files of recently incorporated companies from Saint John N.B. District Office to other offices, particularly Toronto.
It would appear that these corporations would continue to be subject to Canadian tax on their world wide income as residents of Canada by virtue of the fact that they were incorporated in Canada, even if the majority of the board of directors were or became residents of the United States and mind, management and control could be considered to be in the United States. Subsection 250(4) of the Acts deems a corporation that was incorporated in Canada after 1965 to be resident in Canada for the purposes of the Act and Article IV(3) of Canada-U.S. Income Tax Convention 1980, where there is dual residency, deems a corporation to be resident in the country in which it was incorporated for purposes of the treaty.
Where it is possible for a corporation incorporated in Canada to become resident in another country because its mind, management and control shifts to that country and dual residency is possible for the purposes of the applicable treaty, subsection 88.1 of the Act will apply and in most cases taxpayers would do their best to avoid its application.
While there are apparently no tax implications in the situations described by Mr. Fox, it is likely that there are more reasons for incorporating such companies in New Brunswick than just future flexibility should the directors want to move to the U.S.A. and the situation may merit further investigation.
Director General Corporate Rulings Directorate Legislative and Intergovernmental Affairs Branch
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, 1985
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, 1985
Email this Content