912919
Dear Sirs:
We are writing in response to your letter dated October 17, 1991 which included a photocopy of a letter dated June 3, 1991 wherein you requested a technical interpretation on the application of subsection 88(1) of the Income Tax Act (Canada) (the "Act") to the situation described below.
Unfortunately, the original of your letter of June 3, 1991 was never received by this office.
Facts
24(1)
In your letter you have outlined what appears to be an actual fact situation related to a completed transaction. The review of such transactions falls within the responsibility of District Taxation Offices and it is the practice of this Department not to comment on such transactions when the identities of the taxpayers are not known. However, we can provide you with the following general comments which we hope will be of assistance to you.
The Department's general position regarding the meaning of "winding-up" for purposes of the Act can be found in Interpretation Bulletin IT-126R. As stated in paragraph 5 of IT-126R, notwithstanding that the formal dissolution of a corporation is not complete, the Department will consider a corporation to be wound up for purposes of section 88 of the Act where there is substantial evidence that the corporation will be dissolved within a short period of time. Evidence would generally include an application for dissolution having been made under the incorporating statute. In addition, it is our view that the deferral of a formal dissolution for a period of four to five years would not represent a short period of time for purposes of paragraph 5 of IT-126R.
The foregoing opinions are given in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990.
Yours truly,
for DirectorReorganizations and Foreign DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch