| 19(1) | File No. 5-8883 |
| A.B. Adler | |
| (613) 957-8962 |
November 9, 1989
Dear Sirs:
This is in reply to your letter of October 11, 1989 regarding paragraph 149(1)(o.2) of the Income Tax Act ("Act").
You indicated that a particular corporation has limited its activities to those listed in subparagraph 149(1)(o.2)(ii) of the Act with respect to a capital interest in real property (and has qualified since its incorporation for exemption from Part I tax under paragraph 149(1)(o.2) therein). You are concerned that the corporation would lose its exempt status under subparagraph 149(1)(o.2)(ii) of the Act should it dispose of a capital interest in real property is not one of the activities listed in that subparagraph.
It is our view that a corporation that otherwise qualifies under subparagraph 149(1)(o.2)(ii) of the Act may dispose of capital property that is a capital interest in real property without losing its exemption from Part I tax. For example, the corporation may occasionally sell property that is capital property in order to realize a return on its investment, and acquire a more desirable investment with the proceeds.
We trust that our comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate