V.A. Sider (613) 995-1178
August 17, 1983
Dear Sirs:
We are writing in response to your letter of June 16, wherein you requested an interpretation relating to the determination of paid- up capital for income tax purposes.
Paid-up capital in respect of a class of shares is for income tax purposes an amount equal to the paid-up capital of that class computed without reference to the Income Tax Act (except for certain technical adjustments). Therefore the paid-up capital for tax purposes will depend upon the applicable corporate law and possibly on accounting practices also.
You have inquired whether "subscribed capital" would be part of paid-up capital for income tax purposes. By "subscribed capital" you mean funds which have been paid into the company in respect of shares which have not yet been issued.
Because paid-up capital is determined outside of income tax law, we are not able to give you a definitive answer. However, in our opinion, subscribed capital would generally not be considered to be part of paid-up capital.
Yours truly,
ORIGINAL SIGNED BY ORIGINAL SIGNÉ PAR R.D. WEIL
for Director General Corporate Rulings Directorate Legislation Branch