XXXX A.A. Cameron (613) 957-2121
XXXX
August 22, 1986
Dear Sirs:
Re: Technical interpretation requested concerning subsection 111(5) of the Income Tax Act (the "Act")
We apologize for the delay in responding to you letter of May 16, 1986 in which you requested our interpretation of the above-mentioned provision of the Act in a situation where control of a corporation has changed in a taxation year and that corporation had available at that time a non- capital loss from a prior taxation year which had arisen due to a legitimate allowable business investment loss sustained in that prior taxation year.
In our opinion since paragraph 111(5)(a) of the Act refers to "such portion of the corporation's non-capital loss ... as may reasonably be regarded as its loss from carrying on a business ...", that provision could not apply to restrict the deductibility of any portion of a non-capital loss of a prior year which did not arise from carrying on a business.
We hope this information is of assistance to you
Yours truly,
for Director Reorganizations and Non-Resident Division. Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch