| 24(1) | 903183 |
| M.P. Sarazin | |
| (613) 957-2125 |
19(1)
December 19, 1990
Dear Sirs:
We are writing in response to your letter dated November 6, 1990 wherein you requested a technical interpretation regarding the application of subsection 84(3) of the Income Tax Act (Canada) (the "Act") to the following situation.
Facts
24(1)
24(1)
It appears that the interpretation you seek relates to specific taxpayers and therefore, we bring to your attention Information Circular 70-6R2 dated September 28, 1990 issued by Revenue Canada, Taxation. Confirmation with respect to proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. If you wish to obtain an advance income tax ruling for a particular taxpayer with respect to specific transactions which are contemplated, a written request for an advance income tax ruling should be submitted in accordance with the Information Circular. Nevertheless, we can offer the following general comments.
Where a corporation has acquired any of the shares of any class of its capital stock and the amount paid by the corporation exceeds the paid-up capital of the particular shares, then the provisions of subsection 84(3) would apply to deem a dividend to have been paid by the corporation. The provisions of subsection 84(3) apply to the actual proceeds paid by virtue of the words "...the amount paid by the corporation on the redemption ..." and not to the proceeds deemed to have been paid under the various provisions of the Act.
It is however, a question of fact whether an amount has been paid for the acquisition of a share. In this regard we offer no comments on whether the assumption of liabilities assumed by a parent company on the winding up of the subsidiary would constitute an amount paid for purposes of the Act.
The foregoing comments represent our general views with respect to the subject matter of your letter. As indicated in paragraph 21 of Information Circular 70-6R2, this is not an advance income tax ruling and is therefore not binding on the Department.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch