Income Tax Severed Letters - 2013-05-29

Technical Interpretation - External

29 April 2013 External T.I. 2010-0356401E5 - Stock Option Recharge on Grant Date

CRA Tags
246(1)(b), 15(1), 214(3)(a), 7(3)(b)
stock option reimbursement in year of grant

Principal Issues: The parent company (Parentco) grants employee stock options or share awards to the subsidiary's (Canco's) employees. Canco reimburses Parentco an amount equal to the fair value at the grant date of the options or share awards. Would the reimbursement constitute a benefit paid by Canco to Parentco, such that Part XIII applied to payment?

Position: No, however the method used to compute fair value may be reviewed.

Reasons: It would not be unreasonable for Parentco to recoup the portion of the stock option or share award benefit that it has effectively provided to the employees on Canco's behalf.

17 April 2013 External T.I. 2012-0457011E5 F - Coop Shares in RRSP and Prohibited Invest. Rules

CRA Tags
ITR 4901(2), 207.06, 207.05, 207.04, 207.01, ITR 4900(14), 248(1)
shares can become prohibited investments as a result of other shareholders dispose of their shares
dispositions that generate the refund are not limited to redemptions of the shares
advantage tax on net capital gains and income of RRSP from cooperative shares

Principales Questions: Several questions regarding the tax consequences of shares of a cooperative being held in an RRSP in light of the anti-avoidance provisions relating to prohibited investment.

Position Adoptée: General comments.

Raisons: Interpretation of the Act and prior positions.

9 April 2013 External T.I. 2013-0479901E5 - Lump Sum RRSP payment to UK residents

CRA Tags
Treaties Article XVIII, 212(1)(l)

Principal Issues: What is the withholding rate on a lump-sum payment from an RRSP to a UK resident?

Position: 25%

Reasons: Relief under Article 17(1) of the Canada-UK treaty applies only to periodic pension payments

17 January 2013 External T.I. 2012-0468321E5 - Capital gain on sale of land

CRA Tags
110.6(1), 110.6(19), 54, 38(a), 40(2), 39(1)(a), 40(1.1), 110.6(2), 110.6(1.3), 248(1), 40(1)(a)

Principal Issues: What are the tax implications of sale of two parcels of land?

Position: Question of fact. General comments only.

Reasons: Specific fact situation.

Technical Interpretation - Internal

15 March 2013 Internal T.I. 2012-0468081I7 - Paragraph 164(1)(b)

CRA Tags
152(4.01), 152(4)(a), 164(1)(b)
refund request not related to issues in waiver issues

Principal Issues: Whether a refund may be issued where the application for the refund was not made prior to the statute barred date, however a valid waiver identifying specific issues was filed with the Minister within the normal reassessment period.

Position: No, unless the request for refund is based on issues which are identified in the waiver.

Reasons: Paragraph 164(1)(b) does not provide for a refund beyond the period within which the Minister would be allowed under subsection 152(4) to assess tax payable, regardless of whether a waiver was filed for the taxation year.