Can the CRA explain to us its policy regarding the facts submitted by the taxpayer in support of the taxpayer’s request and the questioning of the facts? CRA responded:
(a) if the ITRD is satisfied for example that a corporation is not a CCPC on the basis of the submitted documents, it will inform the taxpayer (or its representative) and refuse to rule favorably in regards to provisions of the Act requiring CCPC status to apply (for example, the capital gains deduction in subsection 110.6(2.1) resulting from the disposition of “qualified small business corporation shares”.
(b) in cases where the scope of a document is debatable or uncertain, in general, ITRD will give a favorable advance ruling with a proviso or restriction. For example, a favorable ruling regarding the application of the capital gains deduction by virtue of subsection 110.6(2.1) could be given provided the exception under paragraph 110.6(14)(b) applies to a right under paragraph 251(5)(b) that is provided under a purchase and sale agreement.
(c) the ITRD can also add to the rulings given warnings or comments to inform the reader of the document of ITRD’s position with respect to, inter alia, the tax consequences resulting from the facts, the proposed transactions, the rulings given or a provision of the Act whether or not it is the subject of a ruling.