D. Bercusson 613-996-1834
June 11, 1981
Dear Sirs:
Re: Entitlement of an Amalgamated Corporation to CCA on Certain Assets of a Predecessor Corporation
This is in reply to your letter of April 6, 1981 wherein you request our opinion on whether, following an amalgamation where the amalgamated corporation acquired depreciable property of a discontinued business of a predecessor corporation, we would assert that the property was not acquired for the purpose of producing income and, accordingly, that the amalgamated corporation is not entitled, by virtue of paragraph 1102(1) (c) of the Regulations, to claim CCA on these assets.
We concur with your submission that in the above-noted transaction, paragraph 1102(14) (b) which deals very specifically with what is intended to happen on an amalgamation (i.e., that property of a predecessor corporation which is included in a prescribed class is deemed to be in that same prescribed class of the amalgamated corporation) would prevail over the general provision of paragraph 1102(1)(c).
However, it is also our opinion that in the case of a discontinued business, there may have been a deemed disposition of property following its change in use at the time the assets ceased to be used to earn income. Thus, it would be in this prescribed class that the assets would be deemed to continue in the amalgamated corporation.
We trust this will be of assistance to you.
for Director Corporate Rulings Division Corporate Rulings Directorate Legislation Branch
DB/jW