Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Does Gillette Canada stand for the general proposition that subsection 15(2) of the Income Tax Act does not apply to debts that have been assigned?
Position: No
Reasons: Case was decided on its particulars.
XXXXXXXXXX T. Cook
2004-006276
March 22, 2004
Dear XXXXXXXXXX:
Re: Assignments and Shareholder Benefits
As you will recall, we had a number of discussions in the summer of 2003 regarding a potential ruling request for certain contemplated cross-border transactions. Among other things, we discussed the Federal Court of Appeal's decision in The Queen v. Gillette Canada Inc., 2003 DTC 5078 (F.C.A.), aff'g 2001 DTC 895 (T.C.C.). You suggested that Gillette Canada could stand for the proposition that subsection 15(2) of the Income Tax Act does not apply in circumstances where a shareholder of a corporation initially owes a debt to someone other than the corporation, and that debt is later assigned to the corporation. At the time we said that we did not necessarily share the same view.
We thought it would be useful to let you know that we have completed an internal review of the decision and it appears to us that the Federal Court Appeal simply was not satisfied that all the prerequisites for the application of subsection 15(2) were present in the particular case at hand. As a consequence, it is our view that Gillette Canada does not stand for any general proposition precluding the application of subsection 15(2) in situations where there has been an assignment of debt.
Sincerely,
Jim Wilson
Section Manager
For Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Planning Branch
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