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Notwithstanding the above comments, we will forward a copy of your memorandum and our response to the Department of Finance for their consideration from a policy viewpoint. ...

We would be available, in response to a request from you, to provide assistance in your consideration of the application of subsection 55(2) or 245(2). ...

We prefer to answer questions about the tax consequences of a proposed transaction in the form of an advance income tax ruling taking into consideration all the facts. ...

It would appear from our reading of the translation of the German decision that the German court considered that the vendor/licensor, not the purchaser/licensee, is the person upon whom the German VAT is imposed and who is liable therefore and that accordingly the VAT is included in the vendor's/licensor's income for income tax purposes as described in the first paragraph on page 2 of our Memorandum to you dated May 7, 1991, namely: "If, on the other hand, the VAT is a tax imposed on the vendor/licensor as the person primarily liable therefore (as opposed to merely being liable in its capacity as a collecting agent with an absolute obligation to collect), as appears to be indicated in the letter to you from the German competent authority dated August 17, 1990, we would be inclined to conclude that the entire amount payable to or for the account of the vendor/licensor or for which the vendor/licensor obtained credit against its VAT liability by virtue of action taken by the purchaser/licensee would be "consideration for the use of, or the right to use, any copyright, (etc.)... ...

The consideration of such changes is the responsibility of the Department of Finance. ...

The determination of whether a money-lending business is being carried on is a question of fact which requires a full knowledge of the relevant circumstances of the particular case under consideration. ...

The question as to which provisions of the Act would have application in the above-mentioned situation also rests upon consideration of all the facts of the particular situation and therefore cannot be determined based upon the information given. ...

This matter has been brought to the attention of the Department of Finance for consideration of an appropriate technical amendment. ...

Our Comments The Department's position continues to be as stated in paragraph 3 of IT-239R2 that a capital loss arising from honouring a guarantee given for inadequate or for no consideration is nil by virtue of subparagraph 40(2)(g)(ii) of the Act. ...

That is, any consideration received for the granting of the option is a capital gain to the individual. 2) It is our view that the tax consequences of the subsequent repurchase by the individual who initially granted the option should be governed by paragraph 3 ofInterpretation bulletin IT-403R which states that "where the grantor of any option purchases it back from the grantee and they are dealing at arm's length, the Department takes the position that the adjusted cost base of the property to the grantor is generally increased by the amount of the purchase price of the option from the grantee... ...