Income Tax Severed Letters - 2012-08-10

Ruling

2012 Ruling 2012-0435291R3 - Public Corporation PUC Reduction

Unedited CRA Tags
40(3); 53(2)(a)(ii); 54.2; 84(2); 84(4.1); 85(1)
Summary Under
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2)
sale of Spinco in reverse takeover of capital pool company followed by PUC distribution of share consideration

Principal Issues: 1. Will subsection 84(2) of the Act apply to the proposed transactions such that subsection 84(4.1) will not apply? 2. Will subsection 40(3) and subparagraph 53(2)(a)(ii) apply to the shareholders of the Corporation?

Position: 1. Yes 2. Yes

Reasons: 1. Based on past rulings given. 2. Based on past rulings given.

Technical Interpretation - External

13 July 2012 External T.I. 2012-0443281E5 F - DPA- véhicule dans le cadre d'un bien locatif

Unedited CRA Tags
18(1)b); 20(1)a); Annexe II du Règlement de l'impôt sur le revenu.
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(c)
CCA could be claimable on motor vehicle used to earn rental income

Principales Questions: Peut-on demander la DPA d’un véhicule à moteur lorsqu'on se sert de ce dernier pour tirer un revenu d’un ou plusieurs biens immeubles locatifs, et que les conditions pour déduire un montant raisonnable pour des frais de véhicule à moteur sont remplies?

Position Adoptée: Oui, sous réserve de la limite édictée au paragraphe 1100(11) du Règlement.

Raisons: Le Règlement de l’impôt sur le revenu.

10 July 2012 External T.I. 2012-0440471E5 - Administrative Sanctions - Climate Change Laws

Unedited CRA Tags
67.6

Principal Issues: Is the payment of an administrative penalty assessed under Alberta's Climate Change and Emissions Management Act deductible under the ITA?

Position: No.

Reasons: An administrative penalty is a fine or penalty. Section 67.6 of the ITA denies a deduction for the payment of a fine or penalty.

6 July 2012 External T.I. 2012-0444401E5 - Definition of “wood waste” in Class 43.2

Unedited CRA Tags
ITR 1104(13) definition of “wood waste” and “eligible waste fuel”; Class 43.1 and 43.2 of Schedule II
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 43.1
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1104 - Subsection 1104(13) - Wood waste

Principal Issues: 1. Does “forest biofibre”, as defined by the Ontario Ministry of Natural Resources, meet the definition of “wood waste” in subsection 1104(13) of the Regulations? 2. Are wood pellets manufactured from “wood waste” considered an “eligible waste fuel” for the purposes of Class 43.1?

Position: 1. Question of fact. Whether or not a particular item meets the definition of “wood waste” can only be determined on a case-by-case basis. 2. Yes.

Reasons: 1. Not all items that could be included in Ontario's definition of “biofibre” would be automatically included in the definition of “wood waste”. 2. Wood pellets manufactured from inputs meeting the definition of “wood waste” in subsection 1104(13) of the Regulations would be considered an “eligible waste fuel” for the purposes of subparagraph (d)(ix) of Class 43.1.

3 July 2012 External T.I. 2012-0443421E5 F - 84.1 and partnership

Unedited CRA Tags
84.1, 245(2)
Summary Under
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4)
s. 245(2) has been applied to the use of a partnership to avoid s. 84.1
Summary Under
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1)
use of partnership to avoid s. 84.1 could be attacked through challenge to partnership validity or applying s. 245(1) re circumvention of s. 84.1

Principales Questions: Whether section 84.1 applies to a particular situation involving the transfer of shares of the capital stock of an operating corporation by an individual to a partnership, followed by the sale of the partnership interest by the individual to a holding corporation and the winding-up of the partnership.

Position Adoptée: In some limited cases, section 84.1 may apply. Alternatively, GAAR may apply. General comments provided.

Raisons: Wording of the Act and previous positions.