5-910152
Dear Sirs:
We are replying to your letter of January 14, 1991 wherein you requested our views regarding the application of paragraph 70(5)(a), subsection 74.4(2) and section 245 of the Income Tax Act (the "Act") to the series of transactions described below. We also acknowledge our various telephone conversations 19(1) (Woolley)
Facts 24(1)
24(1)
Purpose of Proposed Transactions
The purpose of these transactions
24(1)
Our Comments
It appears that the interpretation you seek relates to proposed transactions to be undertaken by a specific taxpayer 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 arc contemplated, a written request for an advance income tax ruling can be submitted in accordance with the Information Circular. Nevertheless, we can offer the following general comments.
The determination of the fair market value of a property is a question of fact on which the Department is not prepared to comment. As stated in subparagraph 14(f) of IC-70-6R2 advance rulings will not be issued where the matter involves the determination of fair market value of property. Similarly, the Department will not provide opinions with respect to such matters.
It is our view, as outlined in Question 52 of the 1990 Canadian Tax Foundation Conference's Revenue Canada Round Table, that the fact that a discretionary trust of which the freezer is a beneficiary has been used to accomplish an estate freeze would not generally, in and by itself, result in the application of section 245 of the Act. However, depending on the facts of the situation other provisions of the Act, such as subsection 56(2), 74.1(2), 74.3(1), 74.4(2), 75(2) and 86(2) may have application.
These comments represent our opinion of the law as it applies generally. As indicated in paragraph 21 of Information Circular IC 70-6R2 dated September 28, 1990 this opinion is not a ruling and accordingly is not binding on Revenue Canada, Taxation.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch