| 19(1) | File No. 5-9380 |
| A.W. Larochelle | |
| (613) 957-2140 |
March 7, 1990
Dear Sirs:
Re: Subparagraph 54(c)(v) of the Income Tax Act (the "Act")
This is in reply to your letter of December 11, 1989 and further to our telephone conversation of February 14 in which you ask for our views on the possible application of the above captioned provision to the situation described in your letter.
In your fact situation you briefly describe your client's case as follows:
1. 24(1)
2. 24(1)
It is your view that where the individual, as the highest bidder, acquires the property, there has been no change in the beneficial ownership, consequently, there would not be a disposition and reacquisition by your client.
Our Comments
It appears from the above facts and from further information provided by you during our telephone conversation of February 15, 1990 that you are requesting an opinion based on the fact situation of a specific taxpayer. Additionally although there are completed transactions, the main issue involves a proposed transaction. According to Information Circular 70-6R this proposed transaction is more appropriately the subject of an Advance Income Tax Ruling. Furthermore, paragraph 23 of the circular states that written opinions concerning such proposed transactions will not generally be provided. Thus we are unable to comment further with respect to the specific facts of your case.
We are prepared, however to set out our general views with respect to subparagraph 54(c)(v) of the Act.
Our Comments
Provided that property is held by a corporation as agent for a shareholder in a manner described in Interpretation Bulletin IT-216 and provided the laws governing the holding of property in a province permit an arrangement similar to that described in fact #2 above (without an actual transfer of title to and from the Province), we agree that a disposition and reacquisition has probably not occurred. Where this is the case, subparagraph 54(c)(v) provides that "disposition" does not include a transfer of property by virtue of which there is a change in the legal ownership of the property without any change in the beneficial ownership thereof.
If you plan on requesting an advance income tax ruling please ensure that all documents, etc. are provided as suggested in paragraph 15 and 16 of IC 70-6R.
We trust our comments will be of assistance.
Yours truly,
for Director Business and General Division Specialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch