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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether the election in subsection 48.1(1) is available in respect of shares held in a partnership.
Position TAKEN:
No.
Reasons FOR POSITION TAKEN:
The election in subsection 48.1(1) is available to an individual, in respect of shares owned by the individual. In addition, this election is not included in the partnership elections referred to in subsection 96(3).
XXXXXXXXXX 5-982936
M. Azzi
Attention: XXXXXXXXXX
January 22, 1999
Dear Sirs:
Re: Section 48.1 of the Income Tax Act
This is in reply to your letter of November 9, 1998, wherein you requested our views on whether the election in section 48.1 of the Income Tax Act (the “Act”) can be made in respect of shares of a small business corporation which are held in a partnership. You indicate that the partners of the partnership are a corporation and a personal trust.
Written confirmation of the tax implications inherent in particular transactions is given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3, dated December 30, 1996. Where the particular transactions are completed, the enquiry should be addressed to the relevant tax services office. However, we are prepared to offer the following general comments.
The election in subsection 48.1(1) of the Act specifically applies to an individual, and where, inter alia, at any time in a taxation year the individual owns capital property that is a share of a class of the capital stock of a small business corporation (“SBC”) which, immediately after that time, ceases to be a SBC because a class of its shares is listed on a prescribed stock exchange. In our view, the election in subsection 48.1(1) of the Act is not available in respect of shares held in a partnership.
We trust that these comments will be of assistance.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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