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The Draft Amendments to the Income Tax Act and Related Statutes (July, 1990) propose the following amendments to the definition of "investment expense" dealing with the issue you have raised as follows: "(2) Paragraphs (a) and (b) of the definition "investment expense" in subsection 110.6(1) of the said Act are repealed and the following substituted therefor: "(a) the aggregate of all amounts each of which is an amount deducted in computing the individual's income for the year from property (except to the extent that the amount was otherwise taken into account in computing the individual's investment expenses or investment income for the year) other than any such amount deducted under (i) paragraph 20(1)(c), (d), (e), (e.1), or (k) in respect of borrowed money that was used by the individual to or that was used to acquire property that was used by the individual (A) to make a payment as consideration for an income-averaging annuity contract. ...

Thus in your hypothetical situation it is the shares (and not the underlying assets) of the subsidiary which would be taken into consideration in determining whether the all or substantially all test in the definition of small business corporation in subsection 248(1) of the Act is met. ...

We have, however, brought the matter to the attention of the Department of Finance for their consideration. ...

In particular you ask if the Farm Start grant was used to reduce a promissory note given as consideration in acquiring shares of a family farm or family farm partnership interest, would it be treated as income or as an adjustment to the adjusted cost base of property? ...

We would particularly draw your attention to the third precondition, the transfer must occur without consideration or benefit accruing to the donor or to anyone designated by the donor. ...

X sells his common shares of XCO to a holding company ("Holdco") of which he is the sole shareholder, and receives $1,000 cash as consideration. ...

If you are unable to make a determination concerning the nature of the income received by XXX Copies of any documents concerning the application and approval processes for the bursary and the student assistantship, including those relating to XXX personally and those available for general distribution, should be submitted to the District Office for their consideration. ...

The above comments are of a general nature and do not take into account considerations that might arise in the context of a specific transaction. ...

7 December 1990 Income Tax Severed Letter- Transfer of Debt Property to Corporation by Shareholder Unedited CRA Tags 80, 85(1), (1.1), 245 Dear Sirs: Re: Subsection 85(1) and Section 80 of the Income Tax Act (the “Act”) This is in response to your request for a technical interpretation contained in your letter of November 19, 1990, wherein you requested our opinion as to whether the provisions of subsection 85(1) of the Act would apply where a corporate taxpayer disposes of a debt obligation, to the debtor who is a taxable Canadian corporation, and receives newly issued shares of the debtor corporation as consideration for the transfer. ...

The corporation sells capital property to the partnership and receives from the partnership consideration equal to the fair market value of the property at the time of the transfer. ...