Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper

Summary Under
Tax Topics - Income Tax Act - Section 132 - Subsection 132(5.3) - Paragraph 132(5.3)(b)

Allocation-to-redeemer rulings (p. 12)

  • The allocation-to-redeemer methodology for allocating capital gains to a redeemed unitholder is supported...

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Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(7.1)

Purpose test applies at time the terms are established (p. 10)

  • The original Explanatory Notes referenced “one of the main purposes for the...

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Summary Under
Tax Topics - Income Tax Act - Section 132 - Subsection 132(5.3) - Paragraph 132(5.3)(a)

Abuse addressed by s. 132(5.3)(a), and response in practice (pp. 6-8)

  • S. 132(5.3)(a) addressed in part the potential for abuse arising from a...

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Summary Under
Tax Topics - Income Tax Act - Section 132 - Subsection 132(4) - Capital Gains Redemption

Potential to not receive a full refund (p. 13)

  • Where the amount of an MFT’s realized capital gains throughout a taxation year divided by the...

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Summary Under
Tax Topics - Income Tax Act - Section 132 - Subsection 132(5.31)

Background to s. 132(5.31) (p. 16)

  • S. 132(5.3)(b) produced an inappropriate result for exchange-traded funds (ETFs) where a market maker, in...

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Summary Under
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(2) - Paragraph 251.2(2)(b)

ETF difficulty in detecting whether a unitholder has become a majority-interest beneficiary (pp 25-26)

  • A fund can conclude that it did not...

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Summary Under
Tax Topics - Income Tax Act - Section 251.2 - Subsection 251.2(1) - Investment Fund

Permanent tainting if momentary breach of any condition (p. 26)

  • A trust breaching any of the conditions in paras. (a) or (b) of the definition of...

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Summary Under
Tax Topics - Income Tax Act - Section 18.2 - Subsection 18.2(1) - Excluded Entity - Paragraph (c)

Timing of applying tests under ss. (c)(ii) to (iv) (p. 30)

  • Although ss. (c)(ii) and (iii) do not expressly address when eligible entity status is...

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Summary Under
Tax Topics - Income Tax Act - Section 18.2 - Subsection 18.2(1) - Eligible Group Entity

Eligible group entity status in bank-controlled ETF group (pp. 31-32)

In the scenario where the asset manager for a mutual fund corporation (MFC)...

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Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(1) - Fixed Interest

Payment and allocation discretion consistent with fixed interest status (p. 32)

  • The discretion of pay distributions at different times (e.g., to...

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Summary Under
Tax Topics - Income Tax Act - Section 18.2 - Subsection 18.2(1) - Adjusted Taxable Income

Issues with computing trust ATI (p. 36)

  • The adjusted taxable income (ATI) definition in relation to a trust requires adding back (under Variable...

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