W.E. Douglas (613) 593-6937
Attention:
April 11, 1983
Dear Sirs:
In reply to your letter of March 10, 1983 and as discussed with you we have no established policy regarding the matter you outlined.
It would seem that in theory there is some benefit arising as a result of the guarantee although there does not appear to be any provisions short of subsection 245(2) to deem a payment to have been made. There would clearly be a taxable event should the guarantor have to make good the guarantee.
The effect of giving a guarantee for no consideration is discussed in IT-239R2 .
Due to the fact that the central question of any ruling on this question would relate to the valuation and existence of a benefit we doubt that we would be able to give a binding ruling on the question.
Yours truly,
for Director Specialty Corporations Rulings Division Corporate Rulings Directorate Legislation Branch