Cases
Shaw v. The Queen, 89 DTC 5194, [1989] 1 CTC 386 (FCTD), aff'd 93 DTC 5213 (FCA)
The taxpayer and her husband had operated a service station in partnership and then transferred pursuant to s. 85(2) the assets of the business...
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| Tax Topics - General Concepts - Effective Date | 10 | |
| Tax Topics - General Concepts - Substance | 35 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 22 |
De Groote v. The Queen, 85 DTC 5008, [1984] CTC 687 (FCTD)
The taxpayer sold shares to, and executed a declaration of trust in favour of, a company controlled by him and then, while still retaining the...
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| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 49 | |
| Tax Topics - Income Tax Act - Section 82 - Subsection 82(1) - Paragraph 82(1)(a) | no longer beneficial shareholder | 76 |
Fraser Companies, Ltd. v. The Queen, 81 DTC 5051, [1981] CTC 61 (FCTD)
S.56(4) relates to the transfer or assignment of a right to an amount, not to the loaning of an amount.
The Queen v. Canadian-American Loan and Investment Corp. Ltd., 74 DTC 6104, [1974] CTC 101 (FCTD)
The taxpayer sublet 1/4 of the premises which were used by it in its marina business to an affiliated company ("Georgia") with accumulated losses,...
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| Tax Topics - General Concepts - Payment & Receipt | receipt of sums collected by affiliate | 153 |
The Queen v. Burns, 73 DTC 5219, [1973] CTC 264 (FCTD)
Cheques received by an employee which were endorsed by him to a company owned by him were included in his income pursuant to s. 56(4).
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| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | 62 |
See Also
Howard v. Commissioner of Taxation, [2014] HCA 21
The taxpayer and four others formed a joint venture to acquire, lease and sell a golf course. The taxpayer attempted to have a corporation of...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) | damages not received as constructive trustee as not received qua director | 191 |
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | damages not corporate income as not received qua director | 191 |
| Tax Topics - Income Tax Act - Section 9 - Nature of Income | agreement assigned rights to proceeds of law suit rather than entitlement under law suit | 344 |
Boutilier v. The Queen, 2007 DTC 479, 2007 TCC 96
The taxpayer was found to have transferred the right to receive trailer fee income to a family corporation, but to have continued to earn the...
MFC Bancorp Ltd. v. R., 99 DTC 905, [1999] 4 CTC 2468 (TCC)
Before going on to find that s. 56(4) did not apply to royalty income derived from the taxpayer's interest as lessor in mining concessions and...
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| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | largely overlapping boards of directors and substantial minority interest | 80 |
Ferrel v. R., 97 DTC 1565, [1998] 1 CTC 2269 (TCC)
The taxpayer who was the sole trustee of the family trust that, by utilizing his services, provided management services to corporations in which...
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| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 136 |
Placements T.S. Inc. v. The Queen, 94 DTC 1302, [1994] 1 CTC 2464 (TCC)
A property over which the taxpayer had a right of first refusal was purchased for $500,000 from the arm's length owner by companies with whom the...
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| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.01) | 110 | |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 117 |
Sazio v. MNR, 69 DTC 5001, [1968] CTC 579 (Ex Ct)
The taxpayer, who succeeded to the position of head coach at a football club, resigned from that position, became an employee of a company owned...
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| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | 148 |
Administrative Policy
28 October 2016 External T.I. 2016-0654331E5 F - Transfer of rights to income
Upon a sale by A of leased land to a non-arm’s length corporation (Corporation A) in which A did not hold any shares, A and Corporation A...
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| Tax Topics - Income Tax Act - Section 9 - Nature of Income | where rental lands purchased subject to obligation to pay the rents to vendor, rents did not have quality of income to purchaser under s. 9 | 165 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense | where rental lands purchased subject to obligation to pay the rents to vendor, no income inclusion and deduction of the rents by the purchaser under ss. 9 and 18(1)(a) | 89 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | s. 56(2) could apply to shareholder of purchaser of lands if vendor did not pay FMV consideration for retaining rights to rents | 168 |
11 March 2014 Internal T.I. 2013-0513221I7 F - Stock options
Publico determined to grant stock options to its directors and consultants, as a result of which a private corporation ("Corporation") was...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | double income inclusion under s. 56(2) or (4) to consulting corporation, and under s. 15(1) to its shareholder, where consultant's options issued directly by client to shareholder | 113 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | s. 56(2) benefit where corporation implicitly consented to consultant's options being issued by client directly to its shareholder | 170 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | s. 248(28) does not prevent a double income inclusion to corporation under s. 56 and shareholder under s. 15 | 226 |
| Tax Topics - Income Tax Act - Section 9 - Timing | no s. 9(1) income inclusion from consultant being granted stock options until exercise | 226 |
| Tax Topics - General Concepts - Fair Market Value - Options | stock options with no in-the-money value could have nil FMV | 134 |
| Tax Topics - Income Tax Act - Section 52 - Subsection 52(1) | s. 15 benefit due to shareholder receipt of stock options earned by corporation added to the ACB of the exercised shares | 165 |
10 July 2013 Internal T.I. 2013-0475501I7 F - Amounts returned to trustee/beneficiary
Father and Y were the trustees of a Quebec family trust, whose beneficiaries included father and his three children. Distributions made by the...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) | family trust income distributed to children but repaid as reimbursement to father for family expenses was income to him, not them | 221 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(24) | distributions to children immediately paid to father | 184 |
| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(6) | distributions to children immediately paid to father were deductible even though received by children as his agents | 179 |
| Tax Topics - Income Tax Act - 101-110 - Section 105 - Subsection 105(1) | payment of income distributions by children to father not a benefit under the trust | 230 |
14 April 2009 External T.I. 2007-0238221E5 F - Rights of musician-Transfer
As part of a general response respecting the transfer of rights by a musician to a corporation, CRA stated:
[I]n … F2002-0149781R3, the CRA took...
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| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | s. 56(2) not applicable where copyright or royalty interests transferred at FMV | 75 |
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) | right to royalties from SOCAN constituted eligible property | 109 |
| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business | royalty income generated from an active business is itself active business income | 122 |
16 December 2008 External T.I. 2008-0279741E5 F - Renonciation au capital d'une fiducie
CRA indicated that the renunciation of a capital interest in a discretionary family trust would not give rise to the application of s. 56(4),...
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| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | settlor’s valid renunciation of capital interest (but not income interest) prior to trustees’ exercise of discretion to distribute a capital gain would avoid application of s. 75(2)(a)(i) | 199 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(9) - Disclaimer | legally impossible for a beneficiary of a discretionary trust to partially renounce income from a specific trust property | 262 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (i) | non-disposition distribution of non-taxable portion of trust capital gains avoids a gain under s. 107(2.1) | 375 |
| Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition | settlor’s renunciation of capital interest (but not income interest) prior to trustees’ exercise of discretion to distribute a capital gain would generate nil proceeds and not engage s. 56(2) or (4) | 194 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | s. 69(1) does not apply to a renunciation of trust capital interest since no disposition "to" any person | 44 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | s. 56(2) inapplicable to renunciation of capital interest in a trust | 45 |
16 February 2004 External T.I. 2003-0054091E5 F - Rollover for Contractors
Mr. X who, in computing income from his construction business, used the percentage-of-completion method and excluded contract holdbacks each year,...
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| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) - Paragraph 85(1.1)(a) | construction lien holdbacks are eligible property that can be transferred at a nominal agreed amount | 124 |
29 April 2003 External T.I. 2003-00646
Allocations made to the spouse of a retired partner pursuant to s. 96(1.1) would, depending on the circumstances, also be included in the income...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 38 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1.1) | 38 |
8 September 1997 External T.I. 9707155 - INCORPORATION OF B.C. REAL ESTATE SALESPEOPLE?
Where self-employed BC real estate sales people purportedly incorporate their proprietorships, with the Superintendent of real estate allowing the...
3 February 1994 External T.I. 5-923647
Although s. 56(4) could apply in some circumstances to a contractor transferring unapproved billings and unapproved holdbacks to a controlled...
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| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) | 21 |
3 December 1993 External T.I. 9200995 F - Transfer of Farm Inventory to a Corporation
Where a farmer, who is guaranteed under the Gross Revenue Insurance Program ("GRIP") to receive a price of $4 per bushel of wheat, transfers his...