| 19(1) | File No. 5-8703 |
| M.F. Symes | |
| (613) 957-2110 |
November 6, 1989
Dear Sirs:
Re: Transfer of U.S. Personal Use Property Subsection 15(1) of the Income Tax Act (Canada) (the "Act")
This is in reply to your letter of September 21, 1989, in which you requested our views concerning the application of subsection 15(1) of the Act to a hypothetical situation that can be summarized as follows:
1. An individual, X, owns personal use property in the United States.
2. X will transfer property at fair market value to a corporation and will not elect pursuant to subsection 85(1) of the Act in respect of the transfer, X may or may not claim a capital gains deduction in respect of any capital gain from the disposition.
3. X will be the sole shareholder of the corporation.
4. The corporation's only objective will be the holding of the property for the personal use or enjoyment of X, and the only transactions of the corporation will relate to such objective.
5. X will be responsible for all costs relating to the property and the corporation will have neither a profit nor a loss.
We confirm that the Department will not normally apply subsection 15(1) of the Act in such a situation.
We also confirm your understanding that the Department would apply subsection 15(1) of the Act if, in the above situation, X were to elect pursuant to subsection 85(1) of the Act in respect of the transfer of the property to the corporation.
In accordance with the practice described in paragraph 24 of Information Circular 70-6R, the foregoing comments are opinions and not rulings.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch