We have published a translation of a CRA interpretation released last week and a further 6 translations of CRA interpretations released in September of 2003. Their descriptors and links appear below.

These are additions to our set of 2,417 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 19 ½ years of releases of such items by the Directorate. These translations are subject to our paywall (applicable after the 5^th of each month).

CRA indicated that government assistance related to interest paid on a debt obligation secured by a mortgage on a qualifying property would not reduce the amount of interest paid on the debt obligation for purposes of s. 125.7(1)(b)(i) of the definition “qualifying rent expense” for purposes of the Canada emergency rent subsidy ("CERS") rules.

Neal Armstrong. Summary of 23 December 2022 Internal T.I. 2021-0880421I7 F under s. 125.7(1) – qualifying rent expense - (b)(i).

An individual (Samson) and corporation (Bourgade) implemented a tax-planning memo that contemplated that they would transfer their shares of a corporation in December 2013 after having satisfied the conditions for realizing a business investment loss under s. 50(1)(b)(iii). This result was premised on their having had a November 30, 2013 taxation year – which had occurred for Bourgade, but not for Samson (who had a calendar taxation year).

The Quebec Superior Court agreed to rectify the share sale agreement to change its date from December 11, 2013 to the date on which it had actually been signed (April 4, 2014).

Before dismissing the ARQ’s appeal, the Court repeated that realizing the loss under s. 50(1)(b)(iii) was a specified result in the tax memo, and stated:

Since the ITA s. 50(1)(b)(iii) election could not be made before December 31, 2013, the December 11, 2013 date of the Agreement does not reflect the parties' intention.

Given this clearly expressed intention, it must be concluded that the respondent's request for rectification simply seeks to correct the date of the Agreement to give effect to that intention. This is consistent with … Jean Coutu. This is not a case where the taxpayer is seeking a tax benefit that he did not anticipate at the time of his tax planning.

Neal Armstrong. Summary of Agence du revenu du Québec v. Samson, 2023 QCCA 332 under General Concepts – Rectification.

In 2013, the taxpayer’s spouse made a $13,142 contribution that was (the taxpayer claimed) intended to pay off her home buyers’ plan (HBP) balance. However, the RBC branch treated that amount as a contribution by her to the RRSP of the taxpayer which, if correct, meant that he had over-contributed for 2013. In June 2021, CRA assessed the taxpayer for excess contribution tax under s. 204.1(1), and in July 2021 (rather than objecting), the taxpayer requested a waiver of the tax under s. 204.1(4).

Southcott J noted that the CRA position in reaching an adverse decision - that the taxpayer had not made a reasonable error given that he was notified of his contribution on a sufficiently timely basis that he could have gone back to RBC to correct its reporting of the contribution while it still had sufficient records of the transaction – was not supported by the record, which did not establish that CRA had notified the taxpayer of his alleged over-contribution in 2013 before December 2020.

Regarding the second element of s. 204.1(4), namely, the requirement for the taxpayer to have taken reasonable steps to eliminate his excess contribution, Southcott J stated (at para. 43):

[T]he Applicant submits that he should not be expected to make an RRSP withdrawal to correct an over-contribution situation that would not exist if the Minister accepted his position that the $13,142 contribution made in 2013 should not be attributed to him. This argument raises what I consider to be a valid point that what constitutes reasonable steps, under the second element of the s 204.1(4) test, may in some circumstances be influenced by the particular facts surrounding the excess contribution for which a tax waiver is sought. In the case at hand, the Delegate’s unreasonable analysis under the first element of the test precluded the possibility of the Delegate accepting the Applicant’s characterization of the 2013 contribution and considering what, if anything, would be required as reasonable remedial steps in the context of that characterization.

As can be seen from the above passage, Southcott J was unwilling to get caught up in the scoping question as to whether s. 204.1(4) can apply to the cancellation of tax that was never owing (and whose assessment was not objected to) because in fact there was no over-contribution. The adverse decision of the CRA review officer was remitted for decision by another officer.

Neal Armstrong. Summary of Zhang v. Canada (Attorney General), 2023 FC 356 under s. 204.1(4).