| 24(1) | 903275 |
| P. Diguer | |
| (613) 957-2123 |
19(1)
December 6, 1990
Dear Sirs:
Re: Subsection 245(2) of the Income Tax Act (Canada) (the "Act")
This is further to our letter of November 28, 1989 (our file number 5-9017) which was written in response to your letter dated November 2, 1989 in which you requested our opinion regarding the application of subsection 245(2) of the Act to a hypothetical situation described in your above mentioned letter.
We wish to inform you that we have recently reconsidered our position with regards to transactions similar to that described in your letter.
As a result of our review we are now of the opinion that the situation, outlined in your letter can be distinguished from that described in paragraph 14 of Information Circular 88-2. In our view, a transfer of shares by an individual to a wholly-owned holding company as part of an arrangement undertaken to avoid Part IV tax would not generally constitute a misuse of a provision of the Act or an abuse of the Act read as a whole with the result that subsection 245(2) of the Act would generally not apply to such an arrangement by virtue of subsection 245(4) of the Act.
The foregoing comments represent our general views with respect to the subject matter of your letter. The facts of a particular situation may lead to a different conclusion. The foregoing opinion is not a ruling and in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, are not binding on the Department.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch