Income Tax Severed Letters - 2016-04-13

Ruling

2015 Ruling 2014-0552071R3 - Post Mortem Pipeline Planning

CRA Tags
84.1, 84(2)

Principal Issues: Whether section 84.1 and subsection 84(2) apply to the proposed transactions?

Position: Favourable rulings provided subject to the possible application of section 84.1.

Reasons: In accordance with the provisions of the Act and our previous positions.

Technical Interpretation - External

23 December 2015 External T.I. 2015-0601671E5 - T4A reporting for services provided

CRA Tags
56(1)(r), ITR 200(2)(c)

Principal Issues: Whether the value of a service provided to an individual must be included in the individual’s income, and reported on a T4A slip.

Position: It is a question of fact.

Reasons: See response.

Conference

17 November 2015 Roundtable, 2015-0614251C6 - 2015 TEI Meeting Q7 Donations to qualifying US charity

CRA Tags
1101(1)(a), Treaties Article VII
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 21
Canadian domestic sourcing rules apply in determining whether a Canadian corporate donor to a U.S. charity has U.S.-source income for Treaty purposes

Principal Issues: (i) Determination of U.S.-sourced income for purposes of paragraph 7 of Article XXI of the Canada/U.S. tax treaty; (ii) Reporting of the donations to a qualifying U.S. charity.

Position: (i) Sourcing rules in the Act apply; (ii) Gifts to a qualifying U.S. charity should be reported in the same manner as gifts to a Canadian registered charity.

Reasons: (i) There are no specific sourcing rules in Article XXI; (ii) There are no special T2 filing instructions.

17 November 2015 Roundtable, 2015-0613821C6 - TEI question on section 55

CRA Tags
55(2)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b)
regular dividends not in excess of return on comparable listed shares not included

Principal Issues: Determination of purpose in s. 55(2)

Position: Based on facts, including, but not limited to, the actions taken by the parties to the dividend and their motivation. See Ludco (2001 SCC 62).

Reasons: See Response

17 November 2015 Roundtable, 2015-0614241C6 - 2015 TEI Liaison Meeting Q.6 - Specified Right

CRA Tags
18(5), 18(6), 212(3.1)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(3.1) - Paragraph 212(3.1)(c)
cross-border notional cash-pooling arrangement engages the B2B loan rules
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(6) - Paragraph 18(6)(c)
cross-border notional cash-pooling arrangement produced intermediary debt

Principal Issues: In the context of a notional cash pooling arrangement, whether the right provided to an arm's length non-resident bank by pool participants to offset overdraft balances with deposit balances or the use of deposit balances to offset overdraft balances upon the exercise of that right constitutes a specified right as defined in subsection 18(5)?

Position: Not answered.

Reasons: Notional cash pooling arrangements of the type described raise issues both in respect of the thin capitalization rules and the non-resident withholding tax rules. The concept of a “specified right”, which is the main focus of your question, is relevant in the application of the new “back-to-back loan” rules contained in section 18, in respect of thin capitalization, and in section 212, in respect of non-resident withholding tax.