23 March 1990 Ministerial Correspondence 74734 F - Revision of Interpretation Bulletin IT-463

SUBJECT: Revision of Interpretation Bulletin IT-463 Project Number P-1469

We are writing in response to your memorandum of February 15, 1990 concerning the above project.

You have asked whether a comment should be included concerning the possible effect of accounting practices on the calculation of paid-up capital and also whether the comments in paragraph 3 and 4 of Interpretation Bulletin IT-463 are still useful.  You have also requested our comments in general concerning the project.

The first point that you have raised related to the comment in the copy of the interpretation letter you submitted which indicated that the determination of paid-up capital would depend on the relevant corporate law "...and possibly on accounting practices also".  In our view this comment may have been inserted to reflect the possibility of alternative treatments being acceptable under generally accepted accounting principles (which are not otherwise precluded under the relevant corporate statute).  In our opinion such situations would arise infrequently and therefore including a reference to same in the revised interpretation bulletin would only serve to confuse the issue.

In our view the comments contained in paragraphs 3 and 4 of Interpretation Bulletin IT-463 are still useful due to the difference between the various corporate statutes e.g. British Columbia still allows the issuance of par value shares.  However, we have suggested certain revisions to former paragraph 3 (see copy of draft IT attached) and would also suggest that these comments be placed after former paragraph 4 to fit the continuity of the revised IT.

We have also made a number of revisions on the copy of the draft IT attached which in our opinion may help to clarify the matters discussed therein.

M.A. Hiltz for Director GeneralSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch