Income Tax Severed Letters - 2023-12-06

Ruling

2023 Ruling 2022-0950461R3 - Continuation of a Bermudian LP to a Delaware LP

Unedited CRA Tags
248(1) "disposition"; 96
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition
the domestication of an exempted Bermuda limited partnership under the DRULPA does not entail dispositions
Summary Under
Tax Topics - Income Tax Act - Section 96
Bermuda partnership that was domesticated under the DRULPA continued as a partnership

Principal Issues: Whether a limited partnership (“the Partnership”) will continue to be treated as a partnership for purposes of the Act after the continuation. Whether the continuation will result in the partners to have a disposition of their Units. Whether the continuation will result in a disposition of properties by the Partnership.

Position: Yes. No. No.

Reasons: After the continuation, the characteristics of the Partnership more closely resemble partnerships formed in Canada than any other form of business entity or arrangement. The continuation will not result in a disposition given that the Partnership will continue being the same partnership following the continuation from both a Bermuda and Delaware law perspective, and there will be no significant change in the rights and obligations of the partners.

Technical Interpretation - Internal

21 June 2023 Internal T.I. 2017-0720181I7 - Application of 15(2) and 215(6)

Unedited CRA Tags
15(1), 15(2), 215(6).
Summary Under
Tax Topics - Income Tax Act - Section 214 - Subsection 214(3) - Paragraph 214(3)(a)
no application of s. 214(3)(a) to Canco's conferral of a benefit on a non-resident sister by bearing the Part XIII tax on a royalty paid to it
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2)
no s. 56(2) or 15(1) benefit from the conferral by Canco of a benefit on a non-resident sister by bearing the Part XIII tax on a royalty paid to it

Principal Issues: Whether a debt is created for the purposes of subsection 15(2) in circumstances where Part XIII tax is assessed in respect of a payment made by a Canadian-resident corporation to a non-resident person, and paid by the Canadian-resident corporation on behalf of the non-resident person under subsection 215(6).

Position: No.

Reasons: Consistent with prior published position.

17 December 2018 Internal T.I. 2016-0659031I7 F - Attendance of board of directors meeting by phone

Unedited CRA Tags
2(3), (6)(1)(c), 115(1)(a); 248(1) “office”; 153(1)(a), ITR 10
Summary Under
Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(i)
participation in Canadian board meetings by telephone from outside Canada is not the exercise of the office in Canada
Summary Under
Tax Topics - Income Tax Regulations - Regulation 104 - Subsection 104(2)
no withholding on directors’ fees from duties not exercised in Canada

Principal Issues: Is a non-resident director who, while physically outside of Canada, participates, by phone, in a board meeting held in Canada, considered to be performing duties of offices and employments in Canada?

Position: To the extent that the duties of offices and employments are performed outside of Canada, they should not be taxable income earned in Canada.

Reasons: Duties of offices and employments which are performed outside of Canada by a non-resident are not subject to tax under subparagraph 115(1)(a)(i).