| 920900 | |
| 24(1) | A. Seidel |
| (613) 957-2120 |
Attention:19(1)
May 11, 1992
Dear Sirs:
This is in reply to your letter dated March 17, 1992 requesting confirmation that a Canadian controlled private corporation ("CCPC"), within the meaning of paragraph 125(7)(b) of the Income Tax Act (the "Act"), which sells its shares "over-the-counter"24(1) will not be a "public corporation" within the meaning assigned by subparagraph 89(1)(g)(i) of the Act.
Whether a corporation is a public corporation for the purposes of the Act is a question of fact which can only be determined by reviewing the share transactions of a particular corporation. The Department's position with respect to the status of a corporation which sells its shares over-the-counter is stated in paragraph 4 of Interpretation Bulletin IT-391 as follows: "Where a corporation does not otherwise qualify as a public corporation, the trading of a class of its shares "over-the-counter" does not qualify it as a public corporation under subparagraph 89(1)(g)(i) of the Act which requires the shares to be listed on such a stock exchange." Accordingly, over-the-counter trading of shares of a CCPC, in and by itself, will not change the status of a CCPC to a public corporation for purposes of the Act.
While we hope our comments are of assistance to you they do not constitute an advance income tax ruling and therefore are not binding on the Department in respect of a specific situation.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate