Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: will purchaser be considered an investor for purposes of the XXXXXXXXXX tax credit rules
Position: no.
Reasons: non-resident with no PE in Canada. Will not make a deduction in calculating Canadian tax.
XXXXXXXXXX
XXXXXXXXXX 982605
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1999
Dear Sirs:
Re: Advance Income Tax Ruling Request for
XXXXXXXXXX
We are writing in response to your letter dated XXXXXXXXXX wherein you requested an advance income tax ruling with respect to the XXXXXXXXXX. We also acknowledge your telecopier transmissions dated XXXXXXXXXX. We also acknowledge our several telephone conversations.
Except as otherwise noted, all statutory references in this ruling application are references to the provisions of the Income Tax Act (Canada) (the “Act”).
To the best of your knowledge and that of the XXXXXXXXXX none of the issues referred to herein are currently under objection or consideration by a Tax Services Office or Taxation Centre in connection with a return already filed.
Our understanding of the statements of facts and proposed transactions is as follows:
Facts
1. The XXXXXXXXXX is a taxable Canadian corporation (“TCC”) incorporated under the laws of XXXXXXXXXX. It is a “qualified corporation” for the purposes of section 125.4. The XXXXXXXXXX account number is XXXXXXXXXX and it files its corporate tax returns at the XXXXXXXXXX Taxation Centre and deals with the XXXXXXXXXX Tax Services Office.
All the shares of the XXXXXXXXXX are owned by XXXXXXXXXX is a public Canadian corporation.
The term TCC has the meaning assigned by subsection 89(1).
2.
XXXXXXXXXX
3.
XXXXXXXXXX
4.
XXXXXXXXXX
Proposed Transactions
5. The XXXXXXXXXX will sell at fair market value their collective interests in the XXXXXXXXXX. The Purchaser does not, nor will it in the future, carry on business in Canada, has no establishment in Canada, and is not otherwise taxable in Canada under the Act. The Purchaser is not related to any of the XXXXXXXXXX.
6. The XXXXXXXXXX will maintain ownership of the copyright in the XXXXXXXXXX. The Purchase price will be approximately
XXXXXXXXXX
7.
XXXXXXXXXX
Purpose of the Proposed Transactions
The purpose of the proposed transactions is to raise additional revenues with respect to the exploitation of the XXXXXXXXXX.
Ruling Given
Provided that the preceding statements constitute a complete and accurate disclosure of all relevant facts and proposed transactions, the proposed transactions are carried out as described herein and in accordance with the documents and agreements submitted in respect of this request and that there are no material difference in the terms and conditions of the final signed documents and agreements from the drafts submitted with this request, our ruling is as follows:
Subsection 125.4(4) will not apply to deny a credit under 125.4 to the XXXXXXXXXX, solely because of the proposed transactions described in paragraphs 5 to 7 above, provided the Purchaser may not now nor in the future be subject to Canadian tax under the Act.
This ruling is given subject to the general limitations and qualifications set out in Information Circular 70-6R3 dated December 30, 1996 and is binding on Revenue Canada, provided that the proposed transactions described herein are completed by XXXXXXXXXX.
Our ruling is based on the Act in its present form and does not take into consideration any proposed amendments to the Act.
Yours truly,
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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