News of Note
We have translated 6 more CRA interpretations
Email this ContentWe have translated a further 6 CRA interpretations released in January of 2000. Their descriptors and links appear below.
These are additions to our set of 3,367 full-text translations of French-language Technical Interpretation and Roundtable items (plus some ruling letters) of the Income Tax Rulings Directorate, which covers all of the last 25 ½ years of releases of such items by the Directorate. These translations are subject to our paywall (applicable after the 5th of each month).
| Bundle Date | Translated severed letter | Summaries under | Summary descriptor |
|---|---|---|---|
| 2000-01-07 | 16 December 1999 External T.I. 9925755 F - COMMUNAUTÉ DE BIENS - RÈGLE D'ATTRIBUTION | Income Tax Act - Section 248 - Subsection 248(23.1) - Paragraph 248(23.1)(b) | application of s. 248(23.1)(b) to shares acquired by the deceased spouse pursuant to the partition of the community of property on her death engaged s. 74.2(1) |
| Income Tax Act - Section 74.2 - Subsection 74.2(1) | application of s. 248(23.1)(b) to partition on death of community of property caused s. 74.2(1) to apply to the resulting shares received by the estate of the deceased spouse | ||
| 16 December 1999 External T.I. 9907425 F - REVENU D'ENTREPRISE - INDIEN | Other Legislation/Constitution - Federal - Indian Act - Section 87 | business of transporting Indians between the reserve and off-reserve health-care facilities was exempted | |
| 15 December 1999 External T.I. 9907635 F - REVENU GAGNÉ - AUGMENTATION ARTIFICIELLE | Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) | CCRA monitors whether there has been an artificial creation of safe income through not claiming CCA | |
| 16 December 1999 External T.I. 9908945 F - REMBOURSEMENT DE FRAIS RELATIFS AUX ETUDES | Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | reimbursement by new employer of tuition fees previously incurred by employee was taxable under s. 6(1)(a) or 6(3) | |
| 9 December 1999 External T.I. 9910665 F - DETTE D'UN ACTIONNAIRE-HABITATION | Income Tax Act - Section 15 - Subsection 15(2.4) - Paragraph 15(2.4)(e) | loan to sole shareholder/employee received qua shareholder unless such a loan could be demonstrated to be received by employees | |
| Income Tax Act - Section 15 - Subsection 15(2.4) - Paragraph 15(2.4)(f) | reasonable repayment term determined by reference to ordinary business practice | ||
| 4 August 1999 External T.I. 9921050 F - ÉVALUATION DES ACTIONS AU DÉCÈS | Income Tax Act - Section 70 - Subsection 70(5.3) | s. 70(5.3) applicable even where policy beneficiary of policy taken out by corporation is one of its creditors |
Homburg – Tax Court of Canada finds that the taxpayer failed to establish that family trusts rather than he had de facto control of a public corporation
The taxpayer failed to establish that a public corporation was controlled by the independent trustee of two family trusts rather than by him.
The assumptions pleaded by the Crown did not establish de jure control by the taxpayer, nor did the evidence adduced establish such control. However, the evidence was sufficient to establish that the taxpayer had de facto control of the corporation and its successor. In particular, the circulars issued by the corporation and its successor repeatedly and specifically stated that the taxpayer had indirect control of it through his shareholdings of group companies. Thus, the taxpayer had sufficiently significant influence and control over it to constitute de facto control.
Accordingly, the denial of his s. 110(1)(d) deduction regarding his exercise of stock options that had been granted to him by the corporation was confirmed by Hill J.
Neal Armstrong. Summary of Homburg v. The King, 2025 TCC 162 under s. 251(1)(c).
CRA considers that a housing unit includes a co-ownership interest therein for purposes of the flipped property rules
An individual who had held a 1/2 ownership interest in a cottage for a number of years, acquired the other 1/2 ownership interest in 2025 shortly before selling a 1/2 ownership interest in the cottage to a third party.
CRA considers that the reference in the flipped property rules to a housing unit includes a co-ownership interest therein. Accordingly, he would be considered to have held a housing unit for more than 365 days in respect of his sale of the co-ownership interest, so that the flipped property rules would not apply.
Neal Armstrong. Summary of 9 October 2025 APFF Financial Planning Roundtable, Q.7 under s. 12(13)(a)(i).
CRA finds that s. 12(14) does not deny losses on the disposition of housing units
S. 12(14) provides that a taxpayer’s loss from a business in respect of a flipped property is deemed to be nil.
CRA found that s. 12(14) does not deem a loss on the disposition of a housing unit to be nil, irrespective of whether the housing unit was held as inventory or capital property. If held as inventory, a flipped property by definition excludes inventory. If held as capital property, deeming a loss from a business to be nil does not have the effect of deeming a capital loss to be nil.
Although not stated by CRA, the implication appears to be that s. 12(14) only denies the deduction of net operating losses from the fictional flipped-property business.
Neal Armstrong. Summary of 9 October 2025 APFF Financial Planning Roundtable, Q.6 under s. 12(14).
CRA indicates that the payer of TOSI does not have to identify it as such on its tax-reporting slips
CRA indicated that the ITA did not impose any specific reporting requirements (e.g., making a notation on the applicable T5 or T3 tax slip) on the payer of income subject to the tax on split income (TOSI) – but noted that where a trust is allocating TOSI to a beneficiary, an additional statement indicating the beneficiary's share of the income and the type of income must be attached to the T3 slip. The beneficiary should also be advised in writing that the beneficiary can be required to file Form T1206., “Tax on Split Income”.
Neal Armstrong. Summary of 9 October 2025 APFF Financial Planning Roundtable, Q.5 under Reg. 201(1).
Coréalis – Quebec Court of Appeal confirms that putting pharmaceutical companies’ drugs into capsules for clinical tests qualified as manufacturing for sale
Coréalis entered into “service agreements” with pharmaceutical companies pursuant to which it would develop and manufacture clinical lots of solid oral dosage forms (tablets, capsules and granules) containing an active pharmaceutical ingredient (API) provided by the companies. These along with placebos, which were also manufactured and provided by Coréalis, were used in clinical trials of the drugs by the companies.
Hamilton JCA affirmed the trial judge’s finding below that the equipment which Coréalis had purchased and used in manufacturing the clinical lots qualified for Quebec investment tax credits based on its having satisfied the requirement under the description of a Class 29 property that the equipment had been acquired “to be used directly or indirectly by him in Canada primarily in the manufacturing or processing of goods for sale.”
First, the production of clinical batches for the drug companies were distinct transactions from the services of Coréalis in formulating the product so that (subject to the second point below) the capsules were to be considered as sold to those companies rather than being assimilated to a provision of services to them.
Second, although the API was a specialized high-value product, the trial judge had made a non-reversible finding that it represented only a small part of the total property provided by Coréalis to the drug companies, so that the property in the capsules was transferred to them by sale rather than by accession to the API.
Neal Armstrong. Summary of Agence du revenu du Québec v. Pharma Coréalis Inc., 2025 QCCA 1346 under Class 29.
CRA indicates that a s. 60(l)(v) RRIF-to-RRSP direct transfer in the first 60 days of the year must be reported on the Sched. 7 for the previous taxation year
CRA indicated that where there was a direct transfer from a RRIF of an annuitant to the annuitant’s RRSP in accordance with s. 60(l)(v) in the first 60 days of a year (e.g., 2025), the taxpayer was required to include the RRIF benefit in income for the 2025 taxation year, and may also deduct, for that same taxation year, the amount that was contributed by direct transfer to the RRSP, provided that the amount was reported on Schedule 7 for the preceding taxation year (2024).
Neal Armstrong. Summary of 9 October 2025 APFF Financial Planning Roundtable, Q.4 under s. 60(l)(v).
CRA confirms that structuring to satisfy the s. 20(1)(c) direct-use test is not contrary to the revised GAAR
Folio S3-F6-C1 stated that a “taxpayer may restructure borrowings and the ownership of assets to meet the direct use test” under s. 20(1)(c). The Folio provided the example of an individual selling shares on the TSX in order to use the proceeds to pay off borrowings that had been used to acquire a personal-use property (her condominium); and borrowing money to acquire replacement shares, such that the borrowed money was directly used for an income-producing purpose.
CRA confirmed that this “series of transactions … would not engage the application of the GAAR” notwithstanding the introduction of s. 245(4.1) (but cautioned that its answer might differ if the series included other transactions).
Neal Armstrong. Summary of 9 October 2025 APFF Financial Planning Roundtable, Q.3 under s. 245(4).
CRA confirms the requirement for T5 reporting by the issuer of a fully registered bond both any s. 12(4) interest on stripped coupons and of the interest-coupon payments
Where s. 12(4) applied to the holder of a coupon on a fully registered bond that had been detached, the debtor was required, under Reg. 201(4), to report on a T5 slip the interest which would be deemed to accrue on the coupon under s. 12(4) for the year if it were the taxation year of the taxpayer; and on payment of the coupon by the debtor, it would be required, pursuant to Reg. 201(1)(b)(i), to issue a T5 slip for the interest paid that was in excess of the interest that had been reported under Reg. 201(4).
Neal Armstrong. Summary of 9 October 2025 APFF Financial Planning Roundtable, Q.2 under Reg. 201(1)(b)(i).
Castro – Quebec Superior Court grants judicial review of an ARQ refusal to backdate a QST registration by more than 30 days
After a long and difficult history (see, e.g., Castro) the Castros requested in 2023 that the ARQ retroactively register, for QST purposes, a corporation to which they had transferred real estate in 2010. They hoped that, by virtue of such retroactive registration as of the 2010 transfer date, the corporation would now be the one liable for the QST on the transfer, be able to claim a corresponding input tax refund, and that the ARQ assessments of them in 2016 for failure to charge QST on the 2010 transfer could be annulled.
The ARQ refused the request on the basis that they had not complied with the relevant ARQ Bulletin requiring that either the retroactive backdating not exceed 30 days or that the applicants demonstrate that, on the transfer date, the corporation had been obligated to register for QST purposes (the "Decision").
The Castros now sought judicial review of the Decision (and sought review in the Federal Court of the corresponding CRA refusal).
Vaillancourt JCS noted that the Quebec equivalent of ETA s. 241(1) did not place limits as to the discretion of the ARQ as to what extent to retroactively register a taxpayer, referred to Stemijon as authority for the proposition that “[i]t is a well-established legal principle that a decision based solely on policy, and not on the law, cannot be considered reasonable” and then stated:
For this reason alone, the Decision must be considered unreasonable. The Minister refused to exercise his discretion, while the decision-maker believed that the request could not be accepted due to a requirement that is not found in the statute. He improperly concluded that the Bulletin limited his discretionary power and, in doing so, he refused to exercise his discretion.
After noting various arguments of the ARQ suggesting that the Castros’ position “rested on fragile grounds”, he indicated that this did not matter because none of such considerations were addressed in the Decision. The Decision was remitted to the ARQ for reconsideration.
Neal Armstrong. Summary of Castro c. Agence du revenu du Québec, 2025 QCCS 3494 under ETA - s. 241(1).