Re: Request for a Technical Interpretation
This will reply to your letter of October 1, 1990 received in this office on December 18, 1990 and further to our telephone conversation of December 28, 1990 wherein you requested our confirmation of your interpretation of the income tax effects to the factual situation described in your letter. We regret that our reply has been delayed.
Our Comments
As the situation described in your letter appears to involve both specific taxpayers and a completed-transaction, the confirmation which you seek regarding your queries 2 and 3 falls within the responsibility of the District Taxation Office with which Mr A and Mr B file their income tax returns. The policy of directing such requests to the District taxation Offices is contained in the enclosed Information Circular IC 70-6R2 (see paragraph 21). We would also draw your attention to paragraph 14(e) of that circular, particularly in view of your stated position that the computer software sold to the newly formed company is capital property. This is a matter that will have to be resolved with the District Taxation Office either now or when your client file their tax returns. As the taxpayers' identities have not been revealed in your letter, we are unable to forward your request on their behalf. We would, therefore, suggest that you communicate with officials of the relevant District Taxation Office who should be able to assist your with your inquiries.
As explained to you in our telephone conversation, if you will provide further details and information with respect to the computer software equipment we may be able to assist you in determining whether it qualifies for inclusion in Class 10 or Class 12.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch