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You have considered the possibility that what really has taken place is a rollover of partnership property to the corporation under 85(2) regardless of the manner in which the elections were filed. ... A partnership formed in the process of dissolving and only for the purposes of resulting in the termination of a previous partnership, would not be considered a bona fide partnership. ...

Before we present our views, we wish to note the following aspects: (A) While the specific rules of paragraph 55(5)(d) of the Act must be considered, the broader provisions of subsection 55(2) must also be considered in formulating the final decision on whether or not the taxpayer should have a concern under section 55. ...

Our Comments In our view, interest which has been credited to an investor's account on the maturity of an investment contract or interest credited to a savings or other account issued by XXX is considered to be received for income tax purposes. ... However, in our view, interest income, which has been accrued on the investment certificates and T5's but not paid and not covered by CDIC insurance is not considered to be received and a reserve pursuant to paragraph 20(1)(1) of the Act is available to those individuals holding such investment certificates. ...

It is our opinion that each of these transactions could reasonably be considered to be undertaken primarily to obtain the tax benefits described and therefore these transfers would be avoidance transactions within the meaning assigned by subsection 245(3) of the Act. ... We would only agree with your statement where a purification transaction cannot be considered to be part of a series of transactions or events that would result in a disposition of property to an arm's length party. ...

This is illustrated by the jurisprudence involving subsection 245(1) (there are no cases dealing with subsection 55(1)) in which the courts have distinguished the meaning of “unduly” and “artificially” from that of “fictitions” or “sham” and also considered the policy intention underlying the tax provisions allegedly being abused by taxpayers and under review by the courts. ... In addition to the meanings of the words “artificially” and “unduly”, the courts have also considered the government's policy intent underlying the tax provisions allegedly being abused. ...

You urged us to give the term "vessel" a broad interpretation and noted that such interpretation is reflected in our Interpretation Bulletin 267R [IT-267R] (in paragraph 16), wherein we listed various objects which are considered to be vessels. ... In paragraph 16 of the bulletin, it is stated that "the following are considered vessels for registration purposes. ...

The comments contained herein should be considered with this in mind. ... Assuming that there is an avoidance transaction in the relevant series of transactions, GAAR would apply to such series unless it may reasonably be considered that the transaction would not result directly or indirectly in a misuse of any of the provisions of the Act or an abuse having regard to the provisions of the Act read as a whole (subsection 245(4) of the Act). ...

. • Comments in paragraph 5 of IT 145R [IT-145R] state that the dyeing of cloth can be considered the processing of goods. As acid and stone washing would be in the same category as dyeing cloth it is unlikely that the activities could be considered a service rather than processing. • Paragraph 9 of IT 147R2 [IT-147R2] states that the manufacturer or processor of the goods need not necessarily be the vendor of the goods. • The facts in the Dixie X-Ray Associates Limited case can be distinguished from that of the taxpayer in that the case involved taxpayers who were providing a service and no physical goods were sold or leased. ...

You stated that officials of Specialty Rulings Division had Previously informed you that any expenditures incurred on the conversion would fall under the exclusion in subsection 37(7)(f)(i) of the Act and not be deductible as scientific research and experimental development ("SR & ED") expenditures, The reason given for this conclusion was that additions and alterations related to a building are considered to be included under the exclusion for acquisition expenditures in subsection 37(7)(f)(i) of the Act. ... As the company owns the $150,000 building, it must have acquired the $150,000 building and the $100,000 in additions and alterations must be considered to have been capital expenditures made in respect of the acquisition of that $150,000 building. ...

As this provision is applicable to 1982 and subsequent years, it must be considered with respect to the years in question (i.e., 1985 and subsequent years). ... However, XXX (the auditor who reviewed the partnership records) has indicated to us in a telephone conversation that the XXX District Office has not considered this requirement. ...