Income Tax Severed Letters - 2010-10-01

Ruling

2010 Ruling 2009-0345011R3 - Irish Common Contractual Fund

Unedited CRA Tags
94(1); Part XIII
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1)
Irish contractual fund

Principal Issues: Characterization of an Irish CCF for purposes of the Act

Position: A contractual arrangement between the investors and the manager of the CCF

Reasons: The investors maintain an undivided co-ownership interest in the property held by the CCF

Technical Interpretation - External

14 September 2010 External T.I. 2010-0379381E5 - Provincial foreign tax credit

Unedited CRA Tags
Article XXIX-B (US Treaty); BC Income Tax Act; Ontario Income Tax Act

Principal Issues: Whether provincial foreign tax credits would be granted by the Province of BC or the Province of Ontario for U.S. federal and state estate taxes?

Position: No.

Reasons: Nothing in the Income Tax Act of BC or Ontario would provide for such a credit.

31 August 2010 External T.I. 2010-0368641E5 - Loan - Bonus payment

Unedited CRA Tags
9(1), 12(1)(c)

Principal Issues: What is the tax treatment of the amount received as a 'bonus' in a loan agreement?

Position: The receipt could be regular income, interest or a capital gain, depending on the facts of the situation.

Reasons: It is a question of fact.

27 August 2010 External T.I. 2010-0366781E5 - Return of Securities Transaction

Unedited CRA Tags
Regulation 201 and 230

Principal Issues: Whether an information return is required to be filed for certain transactions.

Position: Yes, if they fall within the requirements of subsections 230 (2) & (3) of the Regulations and are not one of the exceptions listed in subsection 230(7) of the Regulations.

Reasons: Reporting requirements in Regulation 230 and as explained in RC 4268, Handbook on Securities Transactions.

13 July 2010 External T.I. 2010-0359251E5 - Frankfurt Stock Exchange

Unedited CRA Tags
ss. 248(1) "designated stock exchange", s. 262
Summary Under
Tax Topics - Income Tax Act - Section 262

Principal Issues: Whether the Open Market segment of the Frankfurt Stock Exchange is considered to be a designated stock exchange for purposes of the Act?

Position: No. The unofficial exchange-regulated markets operated by several European stock exchanges, such as the Open Market of the Frankfurt Stock Exchange, do not qualify as a designated stock exchange. Only EU-regulated markets qualify as a designated stock exchange, provided that the exchange is included in the list of designated stock exchanges published on the Department of Finance website.

Reasons: Exchange-regulated markets are not recognized as an official market segment under European Union (EU) and Member State law. These unofficial markets are only regulated by the exchange, which places no or minimal transparency requirements on issuers. In contrast, EU-regulated markets are governed by EU Directives and Member State law, which provide stringent transparency requirements and investor protection regulations.

18 June 2010 External T.I. 2009-0348901E5 - RESP swap

Unedited CRA Tags
ITA 40(2)(g)(i), 146.1

Principal Issues: Can an individual swap securities between their RESP and non-registered investment account?

Position: Yes. Unlike TFSAs, there are no specific restrictions on swap transactions in RESPs.

Reasons: The individual is considered to have disposed of the securities for proceeds of disposition equal to their FMV at the time of the transaction and the RESP trust is considered to have acquired the securities at a cost equal to their FMV at that time. Any taxable capital gain arising on the disposition must be included in the individual's income. However, any capital loss would likely be denied as a superficial loss.

Conference

19 May 2010 Roundtable, 2010-0366541C6 - Thin Capitalization

Unedited CRA Tags
Subsection 18(6) of the Income Tax Act

Principal Issues: Under what conditions will CRA not apply subsection 18(6)

Position: See document

Reasons: See document

19 May 2010 Roundtable, 2010-0366531C6 - Canada-United States Tax Convention

Unedited CRA Tags
Paragraph 78(1)(b) of the Act; Article IV(6) of the Convention

Principal Issues: Whether Article IV(6) of the Convention could apply to an amount deemed to be paid pursuant to paragraph 78(1)(b) of the Act

Position: Yes

Reasons: See response

19 May 2010 IFA Roundtable, 2010-0366521C6 - Canada-United States Tax Convention

Unedited CRA Tags
Paragraph 78(1)(b) of the Act; Article IV(7)(b) of the Convention
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 4
IV.6(b) not avoided using s. 78(1)(b) election

Principal Issues: Interaction between paragraph 78(1)(b) of the Act and Article IV(7)(b) of the Convention where an amount of interest is deemed to be received by a resident of the United States from a Canadian Unlimited Liability Company (ULC) that is fiscally transparent under the taxation laws of the United States

Position: Article IV(7)(b) applies

Reasons: The tax treatment of the amount under the taxation laws of the United States is not the same as it would be if the ULC were not fiscally transparent