Vance A. Sider (613) 995-1178
February 7, 1983
Dear XXXX
Re: Interaction of Section 26 of the Alberta Business Corporations Act ("ABCA") and Sections 89(1)(c) and 84(1) of the Income Tax Act (Canada) ("ITA")
We are writing in response to your letter of December 7, 1982 to Mr. Philip Pinkus, Director, Provincial and International Relations Divi- sion wherein you raised several questions relating to the above issue.
You have indicated that the ABCA was proclaimed in force on February 1, 1982. A requirement of the ABCA is that almost all companies incor- porated under the old Alberta Companies Act ("ACA") must continue under the ABCA. You have raised several questions relating to how paid-up capital ("PUC") will be determined for income tax purposes under the ABCA.
We regret that we are not able to answer your specific questions because to do so would involve the interpretation of the ABCA which is not within the purview of this Department. Nevertheless we can state that in general it is our view that the PUC for tax purposes of a class of issued shares of a corporation subject to the ABCA is the stated capital of those shares as determined under the ABCA. In addition, regarding your concerns relating to the calculation of PUC on continuance under the ABCA, we will not take the position that PUC has changed on continuance, unless it is clear from the financial statements or other documents, such as directors' resolutions, that it was the intention of the corporation to change its PUC.
We do agree however that it is not perfectly clear, from the ABCA, how stated capital is determined when a corporation is continued under the ABCA.
We trust these comments will be of assistance to you.
Yours truly,
for Director General Corporate Rulings Directorate Legislation Branch