Words and Phrases - "immediately before"
28 November 2013 External T.I. 2013-0504221E5 F - Fin d'années réputées
Opco, a Canadian-controlled private corporation with a September 30 year end, amalgamates on October 1 with another CCPC so that the deemed year end arising from the amalgamation coincides with Opco's normal year end. At noon on October 1, Amalco ceases to be a CCPC by issuing an option to a non-resident. Can Amalco make the s. 249(3.1) election with a view to having only one year end arising out of the transactions (September 30 of that year)?
After noting that in the absence of the election, s. 249(3.1) deemed a year end of Amalco to occur at 11:59 a.m. on October 1, CRA responded negatively (TaxInterpretations translation):
[T]he first condition provided in s. 249(3.1)(c)(i) is not satisfied. As Amalco is a new corporation by virtue of paragraph 87(2)(a) and no provision provides for a continuation of the predecessor corporations for these purposes, Amalco does not have a taxation year which would have ended in the period of seven days that ended immediately before the time when Amalco lost its CCPC status.
Macklin v. The Queen, 92 DTC 6595, [1993] 1 CTC 21 (FCTD)
In August 1979 the taxpayer decided that she wished to have a portion of a farm then owned by her husband developed as a housing subdivision. In October 1979 top soil was stripped from approximately 60 acres, in January 1980 a joint venture agreement between a real estate developer and the family corporation was signed, on April 2, 1980 (the date of her husband's death) the taxpayer acquired the beneficial ownership of the lands and sometime between April 11, 1980 and May 23, 1980 the land was disposed of to the joint venture. In finding that the lands in question including the 60 acres constituted a former business property "immediately before" their disposition, notwithstanding that after being stripped of the top soil the 60 acres could be no longer utilized as farm land, Rothstein J. stated (p. 6602):
"... The word 'immediately' must be capable of an interpretation broader than 'instantly', that is an interpretation connoting 'closely' or 'proximately'. Otherwise, an interim renting of property or property sitting idle pending disposition would disqualify the taxpayer from availing herself of the replacement property rules."
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| Tax Topics - Statutory Interpretation - Resolving Ambiguity | 53 |