Subsection 129(1) - Dividend refund to private corporation
Cases
Bonnybrook Industrial Park Development Co. Ltd. v. Canada (National Revenue), 2018 FCA 136
CRA's longstanding view (most recently in 2013-0499421I7) was that s. 220(3.1) does not accord it the discretion to extend the limitation in s....
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| Tax Topics - Income Tax Act - Section 220 - Subsection 220(2.1) | failure of the Minister, on application for s. 220(3) relief, to consider the request for s. 220(2.1) relief | 261 |
| Tax Topics - Income Tax Act - Section 220 - Subsection 220(3) | Minister had the discretion under s. 220(3) to extend the time for applying for a dividend refund | 545 |
Binder Capital Corp v. Canada (National Revenue), 2017 FC 642, effectively rev'd 2018 FCA 136
The first taxpayer (“BCC”) filed its 2010 income tax return in 2015. In assessing the return, CRA denied the claimed dividend refunds,...
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| Tax Topics - Income Tax Act - Section 220 - Subsection 220(3) | CRA denial of extension of 3-year deadline in s. 129(1) not subject to Federal Court review | 227 |
1057513 Ontario Inc. v. Canada, 2015 FCA 207
During its 1997 to 2004 taxation years, the taxpayer received dividends subject to Part IV tax, and paid dividends which, if its returns had been...
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| Tax Topics - Income Tax Act - Section 129 - Subsection 129(3) | RDTOH is not reduced by unclaimed dividend refunds | 126 |
See Also
1057513 Ontario Inc. v. The Queen, 2014 DTC 1196 [at 3743], 2014 TCC 272
Bocock J found that the requirement in s. 129(1) to file a return claiming a dividend refund within three years of the year within which the...
Nanica Holdings Limited v. The Queen, 2015 DTC 1111 [at 657], 2015 TCC 85 (Informal Procedure)
The taxpayer was a Canadian controlled private company which paid taxable dividends to its shareholders in 2007 and 2008. However, it failed to...
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| Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) | loan made to the principal of a business corporation could not be construed as a corporate loan |
Presidential MSH Corporation v. The Queen, 2015 DTC 1101 [pp. 596-610], 2015 TCC 61
The taxpayer paid taxable dividends in its 2005 to 2006 taxation years but missed the three-year deadline to apply for dividend refunds. Graham J...
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| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | definitional term not inserted immediately after referent term | 87 |
Ottawa Ritz Hotel Company Limited v. The Queen, 2012 DTC 1172 [at 3427], 2012 TCC 166 (Informal Procedure)
The taxpayer was ineligible for a dividend refund because it did not send the required application within three years of the taxation year in...
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| Tax Topics - Income Tax Act - Section 129 - Subsection 129(3) | RDTOH not extinguished by three-year limitations period on dividend refund | 57 |
| Tax Topics - Income Tax Act - Section 162 - Subsection 162(2) | 84 |
Administrative Policy
3 December 2019 CTF Roundtable Q. 4, 2019-0824521C6 - 84.1(1)(a) v/s 129(1)(a)
Mr. A transfers all the shares of Opco 1 to Opco 2 (which is owned 50-50 by him and his spouse) in consideration for a note. 2002-0128955...
11 October 2019 APFF Roundtable Q. 1, 2019-0819401C6 F - Interaction between par. 84.1(1)(b) and 129(1(a)
Mr. A transferred his shareholding of Opco 1 (wholly-owned by him) to a corporation (Opco 2) equally owned by him and his spouse in consideration...
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| Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) - Paragraph 84.1(1)(b) | s. 84.1 dividend can generate dividend refund | 95 |
2017 Ruling 2016-0674681R3 - Sequential Split-Up Butterfly
Starting structure
An investment holding company (DC1) is held directly by A and his brother B (apparently, a non-resident) and by an upper-tier...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution | sequential split-up butterfly with 1% tolerance, triggering of capital gains to generate CDA and RDTOH, and year end change to accommodate RDTOH division | 747 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(a) | sale of securities for cash proceeds that are reinvested, and tendering shares for shares of offeror | 58 |
| Tax Topics - Income Tax Act - Section 249.1 - Subsection 249.1(7) | CRA accommodates year end change so that dividend refund of full RDTOH balance is generated in Year 1 | 210 |
24 November 2015 CTF Roundtable Q. 1, 2015-0610691C6 - T2 Late-Filing: Impact on Div. Refund and RDTOH
Will CRA follow recent decisions (e.g., MSH) that have not required the reduction of a corporation’s RDTOH balance where it was denied a...
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| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) | unclaimed divided refunds do not generate s. 186(1)(b) tax to the dividend recipient | 100 |
9 October 2015 APFF Roundtable Q. 8, 2015-0595591C6 F - Dividend Refund and Part IV Tax Payable
CRA accepts MSH and has reversed 2012-0436181E5, in now considering that a dividend refund which is not claimed on a timely basis does not reduce...
2 February 2015 External T.I. 2013-0510751E5 F - Cooperatives and Dividend Refund
In finding that an agricultural cooperative corporation, as defined in s. 135.1(1), that is a private corporation and has an RDTOH balance may be...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share | fractions of cooperative capital not shares | 127 |
11 March 2014 Internal T.I. 2013-0499421I7 - Application of subsection 220(2.1) to 129(1)
An extension of time to make a return using s. 220(3) does not alter or affect whether a corporation has factually filed its return of income...
18 October 2012 External T.I. 2012-0436181E5 - Part IV Tax / Denied Dividend Refund
There is a cross-redemption of preferred shares held by two connected corporations (Aco and Bco) in each other, thereby giving rise to Part IV tax...
28 June 2002 Internal T.I. 2002-0132427 F - RDTOH
Portfolioco, which had a RDTOH account on December 31, 1997 of $200,000, paid a taxable dividend of $300,000 in its taxation year ended December...
92 CPTJ - Q.10
RC may accept the assignment of any dividend refund to which a corporation may be entitled in payment of withholding tax which the corporation...
4 March 1991 T.I. (Tax Window, No. 2, p. 15, ¶1183)
S.129(1)(a) does not permit the payor corporation to apply for less than the full amount of its dividend refund.
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| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) | 40 |
86 C.R. - Q.31
RC does not have any statutory authority to provide interest on dividend refunds.
Articles
Tim Barrett, Kevin Duxbury, "Corporate Integration: Outbound Structuring in the United States After Tax Reform", 2018 Conference Report (Canadian Tax Foundation), 18:1-76
Deferral where use of CFA of CCPC to earn aggregate investment income (AII) (pp. 18:29–30)
[T]he reduction of the US federal corporate rate to...
Aasim Hirji, Kenneth Keung, "Planning Possibilities Resulting from CRA Policy Reversal on Section 84.1", Tax for the Owner-Manager, Vol. 20, No. 1, January 2020, p. 9
CRA policy re ss. 83(2)/129(1) application to s. 84.1 dividend (p.9)
At the Canadian Tax Foundation’s 2019 annual conference, the CRA confirmed...
A.G. (Sandy) Stedman, "Intercorporate Dividend Planning: More Complexity", Tax for the Owner-Manager, Vol. 20, No. 1, January 2020, p. 7
Planning issues for intercorporate dividends by private corporations (p. 8)
[A] private corporation contemplating the payment of a dividend...
Anthony Strawson, Timothy P. Kirby, "Vendor Planning for Private Corporations: Select Issues", 2017 Conference Report, (Canadian Tax Foundation), 11:1-28
Potential generation of dividend refund with s. 84.1(1) dividend (p. 11:23)
[T] he 2002 technical interpretation discussed above … stated that...
Paragraph 129(1)(a)
Administrative Policy
15 June 2021 STEP Roundtable Q. 10, 2021-0883191C6 - Acquisition of control
The shares of ACo were held equally by BCo and CCo, so that ACo’s purchase for cancellation of the shares held by BCo on November 1, 2020...
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| Tax Topics - Income Tax Act - Section 249 - Subsection 249(4) - Paragraph 249(4)(a) | “immediately before” timing in s. 249(4) means that a share redemption effecting an AOC generates a resulting dividend refund in the taxation year commencing with the AOC | 106 |
12 May 2017 External T.I. 2016-0649841E5 F - Dividend Refund to Private Corporation
Can a private corporation, at the time of filing its T2 return, choose to not apply for a dividend refund ("DR")? CRA responded that although it...
Subsection 129(1.2) - Dividends deemed not to be taxable dividends
See Also
Speer v. The Queen, 99 DTC 157 (TCC)
The reasons for judgment include a description of an arrangement entered into prior to the introduction of s. 129(1.2) for the generation of a...
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| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 47 |
Canwest Capital Inc. v. The Queen, 97 DTC 1, [1996] 1 CTC 2974 (TCC)
The taxpayer, which was a prescribed qualifying corporation within the meaning of s. 186.2 was found to be not subject to s. 129(1.2) when it paid...
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| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business | 46 |
Administrative Policy
7 October 2020 APFF Financial Strategies and Instruments Roundtable Q. 3, 2020-0851991C6 F - Shares Donation to a tax exempt entity & dividend
In order to make a donation to a registered charity and public foundation (the "Donee"), a CCPC wholly-owned by Mr. X and with a NERDTOH balance...
2017 Ruling 2016-0628181R3 - Donation of shares to private foundation
The estate of B gifts her shares of a portfolio holding company (“Holdco”) with an RDTOH Balance to a private foundation, with Holdco...
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| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(13) - Paragraph 118.1(13)(c) | gift of NQS in portfolio company cured when company wound-up into charity | 210 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | residue paid under terms of spousal trust to charitable beneficiary was not a gift | 139 |
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(15) | gift of shares (NQS) of portfolio company retroactively deemed to be made in terminal year once company wound up into charity | 100 |
10 June 2013 STEP CRA Roundtable, 2013-0480361C6 - 2013 STEP, QUESTION 12. RDTOH and Dividend Refunds
" In response to a request for an update on its position on s. 129(1.2), CRA noted that it had issued favourable s. 129(1.2) rulings on...
29 June 2009 External T.I. 2008-0296371E5 F - Capital dividends
An estate owns all the shares of Corporation A, which has a capital dividend account (CDA) and refundable dividend tax on hand account (RDTOH) but...
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| Tax Topics - Income Tax Act - Section 83 - Subsection 83(2.1) | s. 83(2.1) would apply to acquisition and amalgamation with shell corp. with CDA unless s. 83(2.4) exceptions applied | 255 |
| Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(z.1) | s. 87(2)(z.1) would apply to eliminate CDA of predecessor if the s. 83(2.4) exceptions did not prevent the application of s. 83(2.1) to the notional dividend paid by that predecessor | 266 |
17 January 1997 External T.I. 9629325 - DIVIDEND REFUND
"The provisions of subsection 129(1.2) of the Act will apply to a dividend in any situation where 'one of the main purposes' of acquiring a share...
23 June 1992 Memorandum 921769 (January - February 1993 Access Letter, p. 28, ¶C117-180)
It would be difficult to conclude that there has been an avoidance of Part IV tax by a recipient corporation where a related group carries out...
Articles
Anthony Strawson, Timothy P. Kirby, "Vendor Planning for Private Corporations: Select Issues", 2017 Conference Report, (Canadian Tax Foundation), 11:1-28
Narrow scope of abuse stated in Explanatory Notes (pp. 11:23-24)
The Department of Finance explanatory notes that accompanied the enactment of...
Subsection 129(2)
Administrative Policy
12 December 2002 External T.I. 2001-0100755 F - Impact of LCB on Dr and Part IV
Regarding the situation where a CCPC (Bco) was subject to Part I tax for a year but also to a dividend refund (DR), CCRA stated:
Where a...
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| Tax Topics - Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) | connected dividend recipient is not required to pay s. 186(1)(b) tax if it can demonstrate by the return-filing deadline that such tax was eliminated through a loss carryback | 274 |
| Tax Topics - Income Tax Act - Section 164 - Subsection 164(1) | where subsequent loss carryback eliminates the Part I tax and dividend refund (DR), the refund interest is calculated on the initial Part I tax amount even if the DR reversal is paid by set-off | 350 |
| Tax Topics - Income Tax Act - Section 160.1 - Subsection 160.1(1) | interest payable under s. 160.1(1) on the reversed dividend refund where subsequent year’s loss is carried back to eliminate the Part I tax and RDTOH | 283 |
Subsection 129(3)
Cases
1057513 Ontario Inc. v. Canada, 2015 FCA 207
Webb JA found that the taxpayer was ineligible for dividend refunds for various years because it did not file the returns claiming the dividend...
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| Tax Topics - Income Tax Act - Section 129 - Subsection 129(1) | dividend refund requires timely filing | 141 |
See Also
Ottawa Ritz Hotel Company Limited v. The Queen, 2012 DTC 1172 [at 3427], 2012 TCC 166 (Informal Procedure)
The taxpayer was ineligible for a dividend refund because it did not send the required application within three years of the taxation year in...
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| Tax Topics - Income Tax Act - Section 129 - Subsection 129(1) | 57 | |
| Tax Topics - Income Tax Act - Section 162 - Subsection 162(2) | 84 |
Tawa Developments Inc. v. The Queen, 2011 DTC 1324 [at 1837], 2011 TCC 440
The taxpayer failed to apply for its dividend refund for a taxation year within the three year time-limit, and its dividend refund that year was...
Subsection 129(4) - Definitions
Aggregate Investment Income
Administrative Policy
2 June 2022 External T.I. 2019-0828381E5 - Tax Rate on Rental Income in Excess of SBD
Opco, which is a CCPC that has exceeded the $15 million “taxable capital employed in Canada” threshold such that the small business deduction...
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| Tax Topics - Income Tax Act - Section 123.4 - Subsection 123.4(1) - Full Rate Taxable Income - Paragraph (b) | a CCPC not entitled to the SBD and with more than 5 employees receives the regular corporate rate on its rental income | 134 |
9 October 2015 APFF Roundtable Q. 24, 2015-0598261C6 F - Calcul du revenu de placement total - annexe 7
Dividends which are deductible in the computation of taxable income are expressly excluded from "aggregate investment income," as defined in s....
9 May 2012 External T.I. 2012-0440781E5 - Recapture of CCA
A depreciable property of the taxpayer was rented to an associated company carrying on an active business, so that the CCA claims of the taxpayer...
Paragraph (b)
Subparagraph (b)(iv)
Administrative Policy
13 February 2006 External T.I. 2005-0153561E5 F - Aggregate Investment Income
A Canadian-controlled private corporation receives distributions from a resident unit trust derived exclusively from the rental of capital...
Eligible Refundable Dividend Tax on Hand
Paragraph (a)
Subparagraph (a)(ii)
Administrative Policy
9 December 2020 Internal T.I. 2020-0856521I7 - ERDTOH and NERDTOH Transition Rules
A corporation that has transitioned to the eligible refundable tax on hand (“ERDTOH”) and non-eligible refundable tax on hand (“NERDTOH”)...
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| Tax Topics - Income Tax Act - Section 129 - Subsection 129(4) - Non-Eligible Refundable Dividend Tax on Hand - Paragraph (b) | on the transition to the ERDTOH/NERDTOH regime there can be an anomalous addition of Part IV tax on a connected corporation dividend to the recipient’s NERDTOH | 176 |
Canadian Investment Income
Cases
Burri v. The Queen, 85 DTC 5287, [1985] 2 CTC 42 (FCTD)
Net rental income which a company derived from an apartment building in its 1978 and 1979 taxation years (managed by an affiliated property...
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| Tax Topics - General Concepts - Evidence | 54 |
The Queen v. Brown Boveri Howden Inc., 83 DTC 5319, [1983] CTC 301 (FCA)
Interest earned on the investment in 30-day notes of progress payments received by a manufacturer on its long-term contracts related to money that...
Morbane Developments Ltd. v. MNR, [1983] CTC 338, 83 DTC 5304 (FCA), briefly aff'g 81 DTC 5362, [1981] CTC 490 (FCTD)
Proceeds received for the expropriation of land inventory were active business income notwithstanding that there was a 4-year delay between a...
The Queen v. Marsh & McLennan, Ltd., 83 DTC 5180, [1983] CTC 231 (FCA)
Interest earned, on the investment of funds received by an insurance broker, during the period before those funds had to be paid to the insurers,...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 51 |
Riviera Hotel Co. Ltd. v. The Queen, 82 DTC 6045, [1982] CTC 30 (FCTD)
The taxpayer bought and resold approximately 15 separate parcels of land over a 12-year period in addition to owning and operating a hotel. It was...
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| Tax Topics - General Concepts - Evidence | 24 |
Supreme Theatres Ltd. v. The Queen, 81 DTC 5136, [1981] CTC 190 (FCTD)
After noting (at p. 5138 (DTC)) that "there is a presumption that, since the purpose of a corporation is to make profits from carrying out its...
See Also
Ben Barbary Co. Ltd. v. MNR, 89 DTC 242, [1989] 1 CTC 2364 (TCC)
The taxpayer sold to a related company its sporting goods business, a gas bar and the underlying land in consideration of an interest-bearing...
King George Hotels Ltd. v. The Queen, 81 DTC 5082, [1981] CTC 87 (FCA)
It was "stressed that whether a business is an active or inactive one is ... [a question] of fact dependent on the circumstances of each case ......
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| Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Accrual Property Income | 58 |
Administrative Policy
19 September 1991 T.I. (Tax Window, No. 11, p. 15, ¶1509)
In any case where s. 129(4.1) does not apply, the taxable gain from disposition of a life insurance policy will constitute "income from property".
Articles
Durnford, "The Distinction Between Income from Business and Income from Property, and the Concept of Carrying on Business", 1991 Canadian Tax Journal, p. 1131.
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| Tax Topics - Income Tax Act - Section 125 - Subsection 125(1) | 0 |
Foreign Investment Income
Administrative Policy
81 C.R. - Q. 25
In determining whether or not income or loss is from property, the normal rules apply.
Income or Loss
Administrative Policy
7 October 2022 APFF Roundtable Q. 12, 2022-0950691C6 F - Revenu de location - DPE
ABC Inc. is a Canadian-controlled private company that operates a manufacturing business. It owns a building, 65% of which is used for its...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | building treated as a single property for purposes of principal use test | 140 |
7 June 2019 STEP Roundtable Q. 7, 2019-0798321C6 - Income Author / Musician
Gagliese Productions found that a company which earned royalties from the daily activities of its sole shareholder and employee in writing and...
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| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business | royalty income from a music composing business is active business income | 334 |
15 December 2011 Internal T.I. 2011-0413891I7 F - Récupération d'amortissement-Recapture CCA
A holding corporation carrying on a specified investment business leased a building for two years to an associated corporation that carried on an...
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| Tax Topics - Income Tax Act - Section 13 - Subsection 13(1) | successive business and property income use of rental property reflected in apportionment of source of ensuing recapture | 135 |
30 September 2004 Internal T.I. 2004-0085051I7 F - Intérêts et indemnité additionnelle
A construction company sued a supplier for damages to its business suffered as a result of having been supplied the wrong product (including a...
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| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | indemnity under CCQ Art. 1619 was pre-judgment interest | 213 |
14 November 2002 External T.I. 2002-0136485 F - REVENU D'ENTREPRISE ET REVENU DE BIEN
A company (Aco) with a computer-consulting business acquires a building, and uses one floor in its operations and rents out the other two floors...
Paragraph (b)
See Also
Rocco Gagliese Productions Inc. v. The Queen, 2018 TCC 136
A company which earned royalties from the daily activities of its sole shareholder and employee in writing and producing music for TV episodes was...
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| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business | SOCAN royalties generated by a CCPC from writing TV-episode music were not from SIB | 255 |
Subparagraph (b)(ii)
Administrative Policy
27 January 2005 Internal T.I. 2004-0103531I7 F - Dommages Intérêts art.1618- 1619 CCQ
Irving Oil applied to find that interest on damages received to compensate for additional costs incurred in the taxpayer’s construction business...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | Irving Oil applied to find that interest on damages received to compensate for additional costs incurred in a construction business, was business income | 119 |
Non-Eligible Refundable Dividend Tax on Hand
Articles
Tim Barrett, Kevin Duxbury, "Corporate Integration: Outbound Structuring in the United States After Tax Reform", 2018 Conference Report (Canadian Tax Foundation), 18:1-76
Addition of FAPI to Non-Eligible Refundable Dividend Tax on Hand in limited circumstances, and generating refund of such NERDTOH (p. 18:32)
FAPI...
Paragraph (a)
Subparagraph (a)(i)
Variable B
Administrative Policy
8 November 2004 External T.I. 2004-0092021E5 F - RDTOH: Foreign tax credit under sub. 126(1)
A CCPC (the “Corporation”) derives its income for a taxation year from property situated in Canada and from a business carried on in Canada...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | foreign tax on royalty income generated from a Canadian business generating IP gave rise to credit under s. 126(1) rather than s. 126(2)] | 138 |
Subparagraph (a)(ii)
Articles
Marie-Pier Maheux, "Dividend Payment Trap: ERDTOH Converted to NERDTOH", Canadian Tax Focus, Vol. 11, No. 1, February 2021, p. 3
Paying an eligible dividend and non-eligible dividend in the same year to 2 connected corps can convert ERDTOH to NERDTOH
- Where, in the same...
Paragraph (b)
Administrative Policy
9 December 2020 Internal T.I. 2020-0856521I7 - ERDTOH and NERDTOH Transition Rules
CRA has confirmed that the eligible refundable tax on hand (“ERDTOH”) definition applies in an anomalous manner where a corporation that has...
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| Tax Topics - Income Tax Act - Section 129 - Subsection 129(4) - Eligible Refundable Dividend Tax on Hand - Paragraph (a) - Subparagraph (a)(ii) | since (a)(ii) requires a dividend refund out of the connected payor’s ERDTOH, a dividend if such payor had not yet transitioned to the new regime goes into recipient’s NERDTOH | 278 |
Subsection 129(4.1)
Cases
The Queen v. Irving Garber Sales Canada Ltd., 92 DTC 6498, [1992] 2 CTC 261 (FCTD)
The taxpayer, which was engaged in the sale of raw fur skins and of manufactured fur coats, had its holdings of certificates of deposit grow from...
McCutcheon Farms Limited v. Her Majesty The Queen, 91 DTC 5047, [1991] 1 CTC 50 (FCTD)
An incorporated farm which held more than $200,000 in demand deposits and which derived between 16% and 20% of its gross income from the interest...
Ensite Ltd. v. R., 86 DTC 6521, [1986] 2 CTC 459, [1986] 2 S.C.R. 509
The taxpayer made U.S. dollar deposits with commercial banks in order to reduce its net borrowing cost under a swap arrangement respecting an...
See Also
Balmoral Investments Ltd. v. The Queen, 97 DTC 802, [1997] 1 CTC 2372 (TCC)
Substantial interest income that the taxpayer derived from the investment of instalments from the sale of one of its hotel were property income.
Cornwall Gravel Co. Ltd. v. The Queen, 94 DTC 1709, [1994] 2 CTC 2175 (TCC)
The taxpayer, which was in the aggregates business, was in many cases required to secure a performance bond from a bonding company before...
Lake Superior Investments Ltd. v. MNR, 93 DTC 898 (TCC)
Rental income from a plaza held by the taxpayer as an investment, and interest income from short-term investments in mortgages and other...
Regina News Ltd. and Mid-Western News Agency Ltd. v. MNR, 93 DTC 358, [1993] 2 CTC 2136 (TCC)
In upholding the contention of the taxpayer ("Mid-Western") that income from surplus cash invested in short-term deposits gave rise to Canadian...
Alamar Farms Ltd. v. The Queen, 93 DTC 121, [1993] 1 CTC 2682 (TCC)
Royalty income that a family farm corporation derived from producing oil wells situate on the farm land was found to be income from property used...
Great Eastern Life Assurance Co. Ltd. v. Director General of Inland Revenue (Malaysia), [1986] BTC 372 (PC)
The phrase "incidental gross income" meant "merely income arising as an ordinary incident of the business" rather than "income of a particular...
Administrative Policy
19 August 1994 External T.I. 9415995 - RECAPTURE OF CCA
Recapture of depreciation on the disposition of a building the rental income from which was active business income, will also be active business...
4 February 1994 External T.I. 9325365 - PROPERTY INCOME V. BUSINESS INCOME
Where a corporation whose principal business is farming owns certain rights to take petroleum from a well located on the farm land and leases such...
Subsection 129(6) - Investment income from associated corporation deemed to be active business income
Cases
Norco Development Ltd. v. The Queen, 85 DTC 5213, [1985] 1 CTC 130 (FCTD)
The taxpayer was an equal partner with two associated corporations in a partnership (Noort Developments) which was engaged in an active business. ...
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| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(a) | interest paid by partnership treated as paid by the corporate partners for s. 129(6) purposes | 192 |
Administrative Policy
6 June 2019 External T.I. 2019-0795751E5 - 129(6) - multiple tax years
As a result of an acquisition of its control, Corporation B ceased to be associated with Corporation A and had a fresh taxation year commence on...
29 November 2016 CTF Roundtable Q. 15, 2016-0669731C6 - The New SBD provisions
In contrast to a problem in the July 29, 2016 draft legislation, under recently enacted s. 129(10), where an Opco earns all its income as active...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 125 - Subsection 125(10) | sharing of business limit with Rentalco | 188 |
10 May 2013 External T.I. 2012-0449651E5 F - SENC - revenu d'entreprise exploitée activement
CRA followed Norco in finding that rents paid by an operating corporation to a limited partnershp having related corporations as its partners was...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Qualified Small Business Corporation Share | assets used by an LP in its active business are used by its partner in an active business | 215 |
10 May 2013 External T.I. 2012-0442791E5 F - SENC - Revenu d'entreprise exploitée activement
Mr. A holds all the shares of a Canadian holding company ("Holdco") which holds all the shares of Opco. Holdco also holds 50% of the units of a...
26 June 2012 Internal T.I. 2012-0436381I7 F - Nature d’un revenu - Indemnité d’assurance
Corporation A, a CCPC without employees or an active business, leases property for use in the active business of an associated corporation such...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | life insurance proceeds for rental property did not have the character of rents from an associated corp | 105 |
5 February 2009 External T.I. 2008-0302821E5 F - Revenu de biens ou revenu d'entreprise
A private corporation whose sole asset is a commercial rental property which is rented as to 75% to an associated corporation that carried on an...
29 June 2004 External T.I. 2004-0065941E5 F - Revenu de bien ou d'entreprise exploitée active
Aco lent money to Bco, its wholly owned subsidiary, which on-lent the funds to Cco, its wholly-owned subsidiary, which used the funds in its...
1 March 2002 External T.I. 2001-0095115 F - ACTIF UTILISE PRINCIPALLEMENT-SEPE
CCRA indicated that where s. 129(6) would not apply to the rents received by Holdco for the use of premises in the grocery store operation of its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation | relative floor area a significant factor in determining principal use of building/ interposition of franchisor as tenant/ sublessor did not change potential business-use finding | 194 |
21 October 1994 External T.I. 9421505 - ACTIVE BUSINESS INCOME - RECAPTURED CCA
Where s. 129(6) applies to deem rental income received by a corporation to be active business income, any recapture on the sale of the building...
Paragraph 129(6)(a)
Subparagraph 129(6)(a)(i)
Administrative Policy
11 October 2022 External T.I. 2020-0856421E5 - Adjusted AII and Deemed ABI
CRA confirmed that rents paid by an operating CCPC to an associated CCPC owning the property, such that those rents were deemed by s. 129(6)(a)(i)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Adjusted Aggregate Investment Income - Paragraph (c) | rental income deemed not to be property income by s. 129(6) is not included in the recipient’s AAII | 234 |