| 19(1) | File No. 5-8653 |
| Firoz Ahmed | |
| (613) 957-2092 |
October 5, 1989
Dear Sirs:
Re: Application of Section 245 of the Income Tax Act (Canada) (the "Act") to Service Vehicles
Further to our letter to you of August 29, 2989 our reference 5-7772, (the "First Letter") and to our telephone conversation 19(1) of September 11, 1989, this letter provides our views as to the application of the general anti- avoidance rule contained in section 245 of the Act as a result of the use by an individual or a partnership carrying on a professional business of a service partnership, the partners of which are the professional individuals involved or by persons with whom they do not deal at arm's length.
The relevant facts are outlined in the First Letter except that the vehicle used to provide the services to the professional business is a service partnership as described above not a service corporation. Also, we have assumed that the fiscal period of the service partnership is the same as that of the professional business.
Opinion
We confirm that our views expressed in the First Letter are equally applicable to the use of service partnerships as to the use of service corporations in the circumstances described herein and in the First Letter.
The above comments are an expression of opinion and are not binding on Revenue Canada, Taxation, as explained in paragraph 24 of Information Circular 70-6R.
Yours truly,
for DirectorReorganizations and Non-ResidentsSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch