| To: | From: |
| Legislative Affairs Directorate | Speciality Rulings |
| Directorate | |
| F. Ahmed | |
| 957-2092 | |
| Your File: F-3123 | |
| B. Bryson, A/Director | |
| Current Amendments and RegulationsDivision | 7-3857 |
Subject: Paragraph 149.1(3)(a) and Section 245 of the Income Tax Act
We refer to your memorandum of August 8, 1989 in response to ours of July 14, 1989 concerning the policy underlining paragraph 149.1(3)(a) of the Act. The request arose in the context of the potential application of GAAR to arrangements involving the use of trusts to avoid the related business restriction contained in paragraph 149.1(3)(a).
Our reason for requesting that you ascertain such policy was to enable us to provide the Charities Division of the Registration Directorate with some guidelines as to the types of trust arrangements which are acceptable from a policy perspective in order to assist them in advising taxpayers on such matters. While the Department of Finance's response deals with their views on the application of GAAR to the particular arrangement mentioned in our memorandum, it does not provide a description of the policy underlying paragraph 149.1(3)(a) of the Act.
Given this 21(1)(b)
Please call Firoz Ahmed with any questions or comments which you may have regarding this issue.
M.A. Hiltz for Director GeneralSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch