Dear Sirs:
Re: Limitation on Advertising Expense
This is reply to your letter of April 12, 1991 concerning the Technical Amendments of July 13, 1990 proposing to amend clause 19(5)(b)(v)(C) of the Income Tax Act.
24(1)
24(1)
You have requested our opinion on whether such rights will be consider to be acquired before July 14, 1990 both in the case of the original term of the agreement and for any renewal thereof.
This determination would require a review of the specific arrangements and an examination or all the documents and circumstances. Since this is an existing situation and not a proposed transaction this determination is the responsibility of the local] District Office. You may wish to consult with District Office officials in this regard.
Regardless of the determination made with respect to the original term, we note that the renewal feature, referred to in your letter, is at the discretion of all the parties to the arrangement. Consequently, we believe that the rights granted under the renewal provisions can only arise when it is established that none of the parties have given written notice of the intention to terminate. Such rights would be acquired after July 13, 1990.
We trust these comments will be of assistance.
Yours truly,
for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch