24(1) 5-903281
F.S. Gillman
(613) 957-8953
19(1)May 28, 1991
Dear Sirs:
Re: Subsection 18 (3.4) of the Income Tax Act (the "Act")
This is in reply to your letter dated November 15, 1990 wherein you requested clarification of the words "real property owned by it" in paragraph 18(3.4)(a) of the Act with respect to a principal business corporation ("PBC"). We apologize for the delay in our response.
In particular you queried whether a building which is owned by a PBC and situated on land leased by the PBC be considered real property owned by the PBC for purposes of subsection 18(3.4) of the Act.
It is our general view that real property in the context of paragraph 18(3.4)(a) and (b) of the Act includes a reference to buildings, which are depreciable property of the corporation and which are situated on land in which the corporation holds a leasehold interest. These comments are consistent with the Department's position as stated in paragraph 11 of IT-371 .
The above comments represent our opinion of the law as it applies generally. As indicated in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, an opinion is not an advance ruling and accordingly, is not binding on Revenue Canada, Taxation.
We trust that our comments will be of assistance.
Yours truly
for Director Small Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch
000050