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For instance, if the transfer of the asset were undertaken to avoid a specific rule, such as a rule designed to preclude the deduction of losses after the acquisition of control of a corporation by an arm's length person, such a transfer would be considered a misuse of the provisions of the Act and be subject to subsection 245(2). ... In our opinion, while arranging the timing of the asset sale to realize the gain in 1989 might constitute an "avoidance transaction", it would ordinarily not, in and by itself, be considered to result in a misuse of any provision of the Act or an abuse having regard to the provisions of the Act read as a whole. However, as indicated above, each transaction must be considered in light of all the facts and circumstances relating to the particular transaction in order to determine whether subsection 245(2) is applicable. ...

You request our comments on the following: i) Would the mortgage be considered used in an active business carried on primarily in Canada? ... iv) If prior to the sale of land and buildings, the corporation purchased a replacement property (within the meaning of subsection 44(5)) would the replacement property be considered to be a qualified asset prior to the sale of the original property i.e. prior to its being put into use? ... An advance income tax ruling might be considered for a specific proposed transaction. ...

In this respect you refer to a letter from this Department dated August 2, 1979 wherein guaranteed investment certificates are considered to be funds on deposit. ... As GIC's are not negotiable, the foreign currency funds held in this form have not been disposed of but are still considered funds on deposit, thus no foreign exchange gain or loss occurs. ... However, as discussed with you over the telephone, it may not be considered disposed of for purposes of foreign currency gains or losses if the funds have not been converted to some other currency or used to acquire a negotiable instrument. ...

Is the prepayment of management fees sufficient to purify OPCO so that it would be considered a small business corporation? ... The part of the prepaid management fees that could be accrued under GAAP ($24(1)) may be able to meet the criteria in the above test, in that it could be considered a liability or obligation especially if the services have already been rendered for that period. As for the balance of the prepaid management fees, it can not be considered to be linked to any definite obligation or liability of OPCO. ...

Another important factor to be considered is the proportion of the amount of space rented in relation to the total area of the building. ... In our view the use of the word principally requires that the property as a whole must be considered rather than a percentage or a portion of the property. Provided that the principal or primary use test is met, the entire property would be excluded from being considered to be non-qualifying real property. ...

A proper request entails the provision of all related documents for our review as well as an identification of all of the specific provisions of the Income Tax Act (the "Act") in respect of which the request is to be considered. ... A fund of this nature is also generally considered to be conducting a business with the result that all gains and losses are treated as being on income account. ... In response to your third concern, while a number of provisions of the Act may have application and no general rule can be applied, in most cases, a fund will be considered to be a foreign property if it holds more than 10% of its investments in foreign securities. ...

XXX It also follows that, in our opinion, any new separate assets which were not part of the Original Plan could not be considered to be an “approved project property” to be used in an “approved project” for the purposes of subsection 127(9) of the Act and section 4604 of the Regulations for the following reasons: (1) The new separate assets would not be considered part of the plan submitted “before July 1988”. (2) Such assets may be considered as substantial changes to the Project. (3) The Shorter Oxford English Dictionary defines “project” as something projected; a plan, a scheme; a proposal. Based on this definition, only assets described in the Original Plan (and additions thereto) may be considered as meeting the definition of “approved project”. (4) The French version of the Act uses the term “ouvrage approuve” as the equivalent of “approved project”. ...

7 October 1990 Income Tax Severed Letter- Arm's Lenth- Related Persons Unedited CRA Tags 251 Dear Sirs: This is in reply to your letter of September 6, 1990 requesting our opinion as to whether or not, for purposes of section 251 of the Income Tax Act (the "Act") XXX and its individual members are considered to be "related persons", and consequently, whether or not they are considered to deal with each other at arm's length. ... In the absence of a better definition, a transaction at arm's length could be considered to be a transaction between persons between whom there are no bonds of dependence, control or influence, in the sense that neither of the two co-contracting parties has available any moral or psychological leverage sufficient to diminish or possibly influence the free decision-making of the other. ... Different interests are considered to exist when each party has completely independent interests from the other parties to a transaction, notwithstanding the fact that each party may have the `same' purpose of economic gain. ...

Our Comments As discussed during our second telephone conversation on April 3, 1991, it is our view that land inventory of a real estate developer would normally be considered used in an active business for purposes of the definition of small business corporation in subsection 248(1) of the Act. ... The fact that mortgage reserves and mortgage interest may be considered incident to or pertaining to the active business does not necessarily determine that the mortgages receivable are used in the active business. ... In summary, mortgages are generally not considered to be assets used in an active business and where more than incidental to the business, the income earned therefrom is considered income from property and subject to the "specified investment business" rules in paragraph 125(7)(e) of the Act We trust that our comments will be of assistance to you. ...

Where the lease is subsequently cancelled or altered to favour the shareholder, could the subsequent cancellation or alteration not be considered to be a benefit conferred on the shareholder at that time. 3. We agree that the provisions for the extension of the lease is only one of the factors to be considered in calculating the amount of any shareholder benefit. It must, however, be considered. In order to satisfy the Department's position, as expressed in paragraph 17 of IT-432R, all of the relevant facts related to each particular situation, including all of the lease option periods, must be reviewed and considered in the valuation of the amount of any shareholder benefit pursuant to subsection 15(1) of the Act. ...