5-910768
Dear Sirs:
We are replying to your letter of March 14, 1991 wherein you requested our views regarding the application of subsections 110.6(8) and 245(2) of the Income Tax Act (the "Act") to the following hypothetical situation:
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Issues
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Our Comments
The situation outlined in your letter appears to relate to specific proposed transactions. Confirmation of the tax consequences of specific proposed transactions will only be provided in response to a request of an advance income tax ruling. The procedures for requesting an advance ruling are set out in Information Circular IC 70-6R2. However, we can provide the following general comments.
The provisions of subsection 110.6(8) of the Act will apply if "it may reasonably be concluded, ... that a significant part of the capital gain is attributable to the fact that dividends were not paid on a share." It is a question of fact whether it would be reasonable to reach such a conclusion in a particular situation, however, we would not expect the provisions of subsection 110.6(8) of the Act to apply
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In our view, however, it may, depending on the facts, be reasonable to conclude that
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These comments represent our general views with respect to the subject matter of your letter. The facts of a particular situation may result in a different result. The foregoing comments are not rulings and, in accordance with the guidelines set out in Information Circular IC 70-6R2 dated September 28, 1990, are not binding on the Department.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch