28 March 1991 Income Tax Severed Letter

5-910294
                                                  T. Murphy
                                                  (613) 957-2744

               24(1)19(1)

March 28, 1991

Dear Sirs:

Re: Leasing Transactions

This is in reply to your letter of January 23, 1991 wherein you requested confirmation that the transaction described in your letter between a Canadian lessee and a non-resident lessor would, although structured as a lease, result in a disposition and acquisition of the property that is the subject of the lease for all purpose of the Income Tax Act (the "Act"). Among other things, you specifically requested confirmation that the lease payments would be viewed as blended payments of principal and interest for Parts I and XIII of the Act.

We are unwilling to comment on the income tax implications arising from the arrangement described in your letter, which appears to involve an actual or contemplated transaction or group of transactions. We can advise you that the Financial Industries Division of Revenue Canada, Taxation (RCT) has recommended that Interpretation Bulletin IT-233R be amended to state that the positions therein would apply for all purposes of the Act. We caution, however, that our recommendation has not yet cleared RCT's interpretation bulletin approval process.

Yours truly,

for Director Financial Industries Division Rulings Directorate

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