The determination of whether for shares of a private corporation, interests in a partnership or interests in a trust are TCP can be complicated because it must be determined if at any time in the previous 60-month period more than 50% of the fair market value of the share or interest was derived directly or indirectly from real or immovable property, Canadian resource properties, timber resource properties and options or interests in these properties. Would the CRA consider an advance income tax ruling process for a seller or a purchaser to confirm whether a property is TCP?
CRA noted that it does not offer a program to confirm, before the transfer of property (or an audit), whether it is TCP.
Although the Income Tax Rulings program is there to provide advance comfort on the tax consequences of a transaction, as noted in IC70-6R12, CRA will not confirm the fair market value of a property, and the Rulings program is not in a position to verify the facts provided – and there are also timing considerations. However, if the taxpayer identifies a particular interpretive issue (such as under the TCP definition) that informs the determination of the status of the property as TCP, it can request a pre-ruling consultation, in response to which the Income Tax Rulings Directorate could provide a view on its ability to rule or not, and on what information would be expected from the taxpayer.