| 19(1) | File No. 5-8681 |
| M. Eisner | |
| (613) 957-2138 |
November 20, 1989
Dear Sirs:
This is in reply to your letter of September 15, 1989 concerning whether certain benefits are "prescribed benefits" described in subparagraph 231(6)(b)(ii) of the Income Tax Regulations for the purposes of the definition of "tax shelter" in subsection 237.1(1) of the Income Tax Act.
In your letter, you have referred to venture capital legislation enacted by a number of provinces under which an investor, who acquires shares of a registered venture capital corporation, is entitled to a provincial tax credit equal to a certain percentage of the amount invested. An example of such a province is B.C. where the percentage of the amount invested. An example of such a province is B.C. where the percentage is 30%. You also mention that shares of adventure capital corporation may be an eligible investment for a registered retirement savings plan (RRSP). By contributing such shares to an RRSP, an investor would be eligible for a premium deduction under subsection 146(5).
With respect to the above situation, it is our view that the provincial tax credit is a "Deduction from tax" for the purposes of Regulation 231(6)(b)(i) and that, accordingly, it is a prescribed benefit. On the other hand, it is our view that he deduction under subsection 146(5) is not a form of government assistance for the purposes of that provision.
These comments represent our opinion of the law as it applies generally. As indicated in paragraph 24 of Information Circular 70-6R dated December 18, 1978, this opinion is not a ruling and , accordingly, it is not binding on Revenue Canada, Taxation. Furthermore, part of this opinion relates to the applicability of draft regulations in respect of the definition of prescribed benefit, and is only valid provided the draft regulations are enacted into law in substantially the some form.
We trust that these comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch