JAN 30 1987
SPECIALTY RULINGS DIRECTORATE J.C. Clark 957-2114
RE: Advance Ruling 3-4263
This is in response to your request for our comments on the application of subsection 110.6(8) of the Act to the transactions described in the draft ATR which you have prepared, based on our XXXX.
We only give favourable subsection 110.6(8) rulings in respect of a share that fits the definition of a prescribed share in section 6205 of the Regulations. We are unable to ascertain in advance the information which would be necessary to calculate the average rate of return pursuant to subsection 110.6(9) of the Act, so we are unable to give favourable advance rulings on subsection 110.6(8) in cases where a share is not a prescribed share.
The draft ATR which you referred to us involves an estate freeze. In this case, we do not have sufficient information to determine if the common shares are prescribed shares pursuant to subsection 6205(1) of the Regulations. In order for the preferred shares to qualify as prescribed shares under subsection 6205(2) of the Regulations, the common shares must be prescribed shares under subsection 6205(1). The ruling or content that could be given in this case is that provided the common shares issued to the son are prescribed shares pursuant to subsection 6205(1), then the preferred shares issued to the parents would be prescribed shares pursuant to subsection 6205(2) of the Regulations.
Director General Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch