XXXX J.D. Brooks (613) 957-2118
XXXX
April 28, 1986
Dear Sirs:
This is in reply to your letter of February 6, 1986 in which you requested our opinion concerning the change in control of a corporation.
You presented a hypothetical example wherein Company A is owned equally by three brothers. One of the three brothers sells his 1/3rd interest of Company A to his wholly-owned holding company ("Holdco") and elects under subsection 85(1) of the Income Tax Act (the "Act") to effect the transfer on a tax-free rollover basis.
In Interpretation Bulletin 302R the Department has stated that for purposes of section 111 of the Act it will consider whether there has been a change in the ultimate control of a corporation. In the example provided, ultimate control has not changed and, for purposes of subsections 111(4) and (5), it is our opinion that there has not been an acquisition of control by a person or persons. Therefore it is not necessary to determine if relief is available pursuant to subparagraph 256(7)(a)(i).
These comments represent an expression of opinion and are not binding on the Department, as explained in paragraph 24 of Information Circular 70-6R.
Yours truly,
for Director Reorganizations and Non-Resident Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch