D. Holtz (613) 995-1178
Attention: XXXX
March 29, 1985
Dear Sirs:
Re: Subsection 251(5) and paragraph 125(7)(b)
This is in reply to your letter of February 8, 1985 wherein you requested that we confirm the statements made in paragraph 31 of Interpretation Bulletin IT-64R2 in light of the recent amendment to the preamble of subsection 251(5) of the Income Tax Act.
More specifically you are concerned that the Department's views with respect to a "right of first refusal" or a "shotgun arrangement" may change as a result of the above-mentioned amendment.
The change to subsection 251(5) extends its application to the determination of whether or not a corporation qualifies as a Canadian controlled private corporation. Consequently, this amendment will not by itself change the Department's views on "rights of first refusal" or "shotgun arrangements" encompassed by paragraph 251(5)(b).
However, whether or not a particular agreement is a "right of first refusal" or a "shotgun arrangement" as contemplated in IT-64R2 is a question of fact, dependent on the particular documents.
Yours truly,
Chief Corporate Reorganizations Section Specialty Corporations Rulings Division Corporate Rulings Directorate Legislation Branch