| 24(1) | 903319 |
| Glen Thornley | |
| (613) 957-2101 |
Attention: 19(1)
December 18, 1990
Dear Sirs:
Re: Single Purpose Corporation
This is in reply to your letter of November 19, 1990 concerning the Department's position with respect to "single purpose corporations" (SPC). In particular you refer to our response to Question 14 of the 1985 Conference Report, Revenue Canada Round Table which confirmed the four previously given conditions that had to be met with respect to SPC's and added a fifth condition. That condition is as follows:
"The corporation acquired the property with funds provided solely by the shareholder and not by virtue of his holdings or that of a related person in any other corporation".
You ask for our comments with respect to the applicability of subsection 15(1) to a situation where a shareholder and another person (corporate or individual), who does not deal at arm's length with the shareholder, provide the funds to a corporation to enable the latter to acquire a property that is for the exclusive personal use of the shareholder. We offer the following comments regarding your enquiry.
Our Comments
The Department's position in this matter is an administrative concession historically directed at facilitating the implementation of estate plans by Canadian residents who hold foreign residential real property. In order to qualify for this administrative concession it is necessary to meet all five conditions. As the fifth condition, set out above, uses the term "provided solely by the shareholder", it would appear that your scenario is outside the Department's administrative position. The same rationale would apply to having a corporation qualify as a SPC on a prospective basis.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch