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:
Follow-up to 972799 (December 17, 1997) re tax consequences to a Canadian shareholder as a result of a U.S. "spin-off" where stock of a subsidiary is distributed to shareholders.
Position:
See previous letter.
Reasons:
980187
XXXXXXXXXX J. Stalker
February 16, 1998
Dear XXXXXXXXXX:
Re: XXXXXXXXXX "Spin-off"
We are writing in response to your phone message of January 24, 1998.
Our review of the XXXXXXXXXX spin-off indicated that it was the same as other spin-offs we have reviewed. We have enclosed some shareholder information which we assume you also received which states that this was a distribution by XXXXXXXXXX of a controlled corporation XXXXXXXXXX which clearly indicates ownership of XXXXXXXXXX by XXXXXXXXXX prior to the distribution..
As noted in our letter to you of December 17, 1997, the Department of Finance has been aware of the consequences of spin-offs since at least 1985. Rulings has also kept the Department of Finance fully apprised of the high number of such transactions that have taken place in 1996 and 1997 and the comments made by Canadian shareholders.
We have enclosed a copy of Income Tax Technical News which contains an item on spin-offs for your information.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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