| 19(1) | 901470 |
| R.D. Mundell | |
| (613) 957-2139 | |
| EACC9328 |
August 13, 1990
19(1)
We are writing in reply to your letter of June 29, 1990, wherein you requested our views regarding the income tax implications of the following situation.
24(1)
24(1)
Our Comments
Since the situation described above appears to involve actual taxpayers and proposed transactions, that would more appropriately be dealt with be way of an advance income tax ruling, we are unable to comment specifically on the issues set out in your letter. However we offer the following general comments regarding the attribution of capital gains to 24(1) and the application of section 245 of the Act.
It would involve a finding of fact 24(1) would be considered to be an "artificial transaction for purposes of subsection 74.5(11) of the Act. Similarly, it would also involve a finding of fact as to whether the above transaction would be an avoidance transaction for purposes of section 245 of the Act. We note that we do not rule in cases where all the pertinent facts cannot be established at the time of the request for the ruling, nor will we rule where the matter involved is the determination of the fair market value of property.
In view of the above, you may wish to consider whether this matter should be resubmitted for a binding advance income tax ruling. Such a request should include sufficient facts and documentation to unable us to adequately consider the attribution and avoidance issues discussed above, along with the other matters set out in your letter. Alternatively, if the transactions are completed, you may wish to discuss the matter with the local District Taxation Office.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch