C. Savage (613) 995-1178
May 1, 1984
Dear Sirs:
Re: Determination of paid-up capital
This is in response to your letter of March 13, 1984 wherein you requested our views with respect to the classification for purposes of the Income Tax Act (the "Act") of a capital redemption reserve fund under the Alberta Companies Act (the "ACA") and on continuance under the Alberta Business Corporations Act (the "ABCA").
In our opinion subsection 83(4) of the ACA does not operate to include the capital redemption reserve fund in the paid-up share capital of the company as the words of that subsection merely state that certain provisions of the ACA apply "as if the capital redemption reserve fund were paid-up share capital of the company". The fact that the fund is treated for certain provisions of the ACA "as if" it were paid-up capital, in our opinion suggests that it is not in fact paid-up capital.
Since the capital redemption reserve fund does not form part of paid- up capital under the ACB, on continuance of a company under the ABCA subsection 26(10) of the ABCA would not, in our opinion, operate to include an amount in respect of the fund in the stated capital of the company. Possibly an amount could be added to a stated capital account of the continued company in respect of the fund pursuant to subsection 26(7) of the ABCA if the company so chose. If this were the case subsection 84(1) of the Act would appear to apply.
We trust that this will be of assistance.
Yours truly,
for Director Corporate Rulings Division Legislation Branch