| 922907 | |
| A. Seidel | |
| (613) 957-2120 |
24(1)
Attention: 19(1)
December 16, 1992
Dear Sirs:
This is in reply to your letter dated September 24, 1992 with respect to the application of subsections 164(6) and 85(4) of the Income Tax Act (the "Act") in the situation where a shareholder of a corporation dies and the corporation redeems its shares held by the estate.
The situation outlined in your letter is similar to that described in part 2 of Question 42 of the 1991 Revenue Canada Round Table which appears on page 50:25 of the 1991 Conference Report published by the Canadian Tax Foundation. As stated in our response to that question, subsection 85(4) of the Act will not generally apply to such a situation unless the corporation which redeems its shares is, immediately after the disposition of the shares by the estate, controlled, directly or indirectly in any manner whatever, by the estate. The expression "controlled, directly or indirectly in any manner whatever" is defined in subsection 256(5.1) of the Act."
These comments are provided in accordance with the guidelines set out in paragraph 21 of Information Circular 70-6R2.
Yours truly,
for DirectorReorganizations and Foreign DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch