Principal Issues: [TaxInterpretations translation] Does the application of section 14(3) take precedence over the application of section 24(2)?
Position: Yes
Reasons: Generally, yes, given the introductory wording of section 14(3). However, we would need to consider a specific situation with all the relevant facts and documents before reaching a final decision.
2005-015226 XXXXXXXXXX A. Dagenais, Advocate, M. Fisc. April 22, 2008
Dear XXXXXXXXXX,
Subject: Transfer of goodwill
This is in response to your letter of September 20, 2005, in which you requested our opinion regarding the interaction between subsections 14(3) and 24(2) of the Income Tax Act (the "Act") on a transfer of goodwill and an entire business by an individual to a corporation controlled by the individual.
Unless otherwise indicated, all statutory references herein are to provisions of the Act.
Our Comments
We are of the view that, in general, where the conditions for the application of subsection 14(3) are satisfied, subsection 14(3) takes precedence over the application of subsection 24(2), because of the opening words of that subsection: "Notwithstanding any other provision of this Act.... ". However, we would need to consider a specific situation with all the relevant facts and documents before making a final determination.
These comments are not advance income tax rulings and do not bind the CRA with respect to any particular factual situation.
We hope that our comments are of assistance.
Best regards,
Randy Hewlett
Manager
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.