Income Tax Severed Letters - 2017-06-21

Ruling

2017 Ruling 2017-0686051R3 - Supplemental Ruling - Time Extension

Principal Issues: Whether CRA will grant an extension of time for ATR 2015-057805.

Position: Yes.

Reasons: The extension of time will allow the taxpayer time to complete the proposed transactions, which were not undertaken due to unfavourable market conditions.

Technical Interpretation - External

29 May 2017 External T.I. 2014-0537111E5 F - Consequential assessment

Unedited CRA Tags
152(4.3); 152(4.4); 10(2)
reassessing to increase closing inventory permits a s. 152(4.3) reassessment to change the taxes payable "balance" for the following year
reassessing to increase closing inventory permits reassessment to increase next year's COS

Principales Questions: Whether, in a hypothetical scenario, a reassessment of tax resulting from the modification of an ending inventory balance of the taxpayer for taxation year 1 would result in a change to the taxpayer's "balance" for that year such that a consequential assessment can be made, pursuant to subsection 152(4.3), to adjust the tax resulting from the modification of the opening inventory balance for the subsequent taxation year.

Position Adoptée: Yes

Raisons: The reassessment of tax resulting from the modification of the ending inventory results in a change to the taxpayer's income, taxable income and tax payable, all of which meet the definition of "balance" in subsection 152(4.4).

12 May 2017 External T.I. 2016-0649841E5 F - Dividend Refund to Private Corporation

Unedited CRA Tags
129(1)
CRA automatically pays available dividend refunds even when not claimed (or wanted)

Principales Questions: Whether a private corporation could choose not to claim a dividend refund under subsection 129(1) on its T2 return of income?

Position Adoptée: In theory yes. However, the CRA policy is to issue automatically a dividend refund.

Raisons: 129(1)

11 May 2017 External T.I. 2016-0679751E5 F - TFSA - Exempt Contribution

Unedited CRA Tags
207.01(1), 146.2(1), 248(8)(a)
a “survivor payment” can be made out of the deceased’s TFSA even where this occurs in the executor’s discretion
legacy made by executor exercising discretion conferred under will occurred because of death

Principal Issues: Whether an amount paid out of an arrangement that ceased to be a TFSA upon the death of its last holder to the deceased holder's estate and distributed by the estate executor to the deceased's surviving spouse in satisfaction of a bequest of a sum of money would qualify as a survivor payment for the purposes of the definition of "exempt contribution"?

Position: Generally yes, provided that the distribution is in accordance with the terms of the deceased's will and it is made during the rollover period.

Reasons: When such an amount is distributed in accordance with the terms of the deceased holder's will, the CRA will generally consider that such amount is distributed as a consequence of the death of the deceased holder, consistent with paragraph 248(8)(a).

10 May 2017 External T.I. 2017-0687051E5 F - Addition to ACB of a partnership interest

Unedited CRA Tags
34.2, 53(1)(e), 96(1), 12(1)(l)
no s. 53(1)(e) addition for s. 34.2(2) stub period income inclusion
no partnership-interest ACB addition for inclusion

Principales Questions: Whether an amount included by virtue of section 34.2 in the income of a corporation can be added to the ACB of the partnership interest held by the corporation.

Position Adoptée: No.

Raisons: Application of the Act.

9 March 2017 External T.I. 2016-0680071E5 F - Règles transitoires - immobilisations admissibles

Unedited CRA Tags
13(38), 13(38(d)(iii), 13(41)
s. 13(38)(d)(iii) election can be available notwithstanding that only a minor pre-2017 ECE was incurred

Principales Questions: Est-ce qu’une société peut effectuer le choix énoncé au sous-alinéa 13(38)d)(iii) de la Loi suite à la vente, en décembre 2016, d’un achalandage créé au fil des ans ? / Can a corporation make the election set out in subparagraph 13(38)(d)(iii) of the Act with respect to the sale of internally-generated goodwill in December 2016?

Position Adoptée: Question de fait. / Question of fact.

Raisons: Pour pouvoir bénéficier du choix énoncé au sous-alinéa 13(38)d)(iii) de la Loi, un contribuable doit, entre autres, remplir la condition énoncée au préambule du paragraphe 13(38) de la Loi selon laquelle il a engagé une dépense en capital admissible relativement à une entreprise avant le 1er janvier 2017. / In order to qualify for the election set out in subparagraph 13(38)(d)(iii) of the Act, a taxpayer must, among other things, satisfy the condition outlined in the preamble of subsection 13(38) of the Act, which requires the taxpayer to have incurred an eligible capital expenditure in respect of a business before January 1, 2017.