Principal Issues:
1. Is an interest in the Partnership a tax shelter?
2. Is the Partnership's interest in XXXXXXXXXX a tax shelter?
3. (a) Are the XXXXXXXXXX contracts/XXXXXXXXXX agreements revenue guarantees for the purposes
of the prescribed benefit provisions in ITR 231(6)(b)(ii)?
(b) Are the letters of credit, provided by XXXXXXXXXX, revenue guarantees for the purposes of the prescribed benefit provisions in ITR 231(6)(b)(ii)?
4. Would the letters of credit be caught by 96(2.2)(d)?
5. Would draft Regulation 231(6.1) apply to treat the Full Recourse Debt of the Partnership as a prescribed benefit for the purposes of the definition of tax shelter in subsection 237.1?
6. Are the XXXXXXXXXX contracts/XXXXXXXXXX agreements revenue guarantees as contemplated in the at-risk provisions in 96(2.2)(d) or the at-risk adjustments in 143.2(2)?
7. Would the Full Recourse Debt be a prescribed benefit pursuant to ITR 231(6)(a)(iii), because the creditors rank equally (as opposed to having first priority) with the lenders under the Limited Recourse Debt in terms of priority against specified security (i.e. would this be a limitation by agreement for the purposes of the ITR)?
Position:
1 & 2. Not as of the date of the ruling, based on certain provisos.
3 to 7. No for all of them.
Reasons:
1 & 2. The statements and representations provided in Schedules "A" & "B" do not indicate that the interest in the Partnership would be a tax shelter and the statements and representations in Schedule "B" replace those in Schedule "A" and do not indicate that the Partnership's interest in XXXXXXXXXX would be a tax shelter. However, there may be other statements and representations made that we are not aware of, which could result in there being a tax shelter. This matter involves a question of fact.
3. XXXXXXXXXX
4. Purpose test not met. Letters of credit are to be given as part of package to get the commercial deal up and running. XXXXXXXXXX. Also, 96(2.2)(d)(v) would exclude this gross revenue guarantees since the "reasonably considered to ensure test" (similar to the test noted in issue 3. above) will not be met (i.e. revenue will not be generated unless XXXXXXXXXX is first completed. Also there is no guarantee that any funds will be available for distribution to the partners, as a result of the letter(s) of credit - see Rev. Canada comments page 53:12 of 88 Conference Report).
5. The most recent version of the draft regulation was contained in the June 20, 1997 Explanatory Notes. Therein it provides that a prescribed benefit (for the purposes of the definition of tax shelter in 237.1(1)(b)) includes an amount that is a limited- recourse amount because of 143.2(1), (7) or (13). It does not include amounts deemed to be limited-recourse amounts by virtue of 143.2(8). XXXXXXXXXX
6. The purpose test is not met (XXXXXXXXXX).
7. The creditors of the Full Recourse Debt still have full recourse against all the assets of the Partnership and of the General Partner. There was no limitation by agreement. XXXXXXXXXX
Can we rule that a child is financially dependent on an annuitant and whether the child is dependent on the annuitant by reason of physical or mental infirmity?
Whether increasing benefit under unfunded supplemental pension plan causes it to become SDA, RCA or makes members otherwise subject to immediate taxation?
Peut-on accepter qu'un bien au nom du rentier soit considéré détenu par le REER s'il y a une contre-lettre qui indique que le bien est détenu par le rentier pour le REER?
Est-ce qu'un employeur qui verse des intérêts sur un paiement rétroactif de salaire et des intérêts post-jugement à l'égard d'une allocation de retraite, doit obligatoirement produire des feuillets T5 en vertu du paragraphe 201(1) du Règlement ?
Submitted by narmstrong on Sat, 01/28/2023 - 02:28
premiums paid by corporation for disability policy on shareholder-employee are non-deductible
Revenue Canada indicated that the premiums paid by a corporation, as the policyholder and beneficiary of a disability insurance policy for an...
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Principales Questions:
Une société est preneur et bénéficiaire d'une police d'assurance-invalidité à l'égard de certains employés. Est-ce que les primes versées en vertu de cette police sont déductibles et est-ce que les prestations reçues seraient imposables?
Whether a reimbursement by an income beneficiary for rental payments made by a "testamentary trust" will be regarded as a contribution to the trust for the purpose of the definition of "testamentary trust" in subsection 108(1) of the Income Tax Act (the "Act").
Can a retiring allowance be transferred to an RRSP after it has matured or to a RRIF, where it is impossible for an employer to process a transfer prior to a plan's maturity.
1) Can an employee eligible for moving expenses with beneficial ownership of residence avail himself of the position in paragraph 37 IT 470R where there is an actual loss on the disposition of a home?
2) Is a payment by the employer to buy-out a car lease of an employee considered a taxable benefit?
1. Transfer to a related minor - Attribution of income after the transferor's death.
2. Transfer to a related minor - Attribution of income from property transferred.
3. Transfer to a related minor - Attribution of income from income from property transferred.
4. Tax consequences where a property is transferred to an informal trust.
5. Tax consequences where a property is transferred to a formal trust.
Position:
1. Income of the related minor after the transferor's death.
2. Income of the transferor.
3. Income of the related minor.
4. and 5. None.
Suite à la décision que nous avons rendue dans le dossier #9621065, concernant le traitement fiscal des ristournes versées par une coopérative de travailleurs à ses membres qui sont des employés de la coopérative et d'une opinion contraire émise par Revenu Québec, le représentant aimerait obtenir nos commentaires sur la vraisemblance d'avoir un traitement différent par les deux paliers de gouvernement à l'encontre d'un même revenu.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
5-970783
XXXXXXXXXX Michel Lambert
Attention: XXXXXXXXXX
October 22, 1997
Dear Sir\ Madam:
Re: Distribution of Capital from a Canadian Trust to a Swiss Beneficiary
Is an arrangement in which shares are issued to a trust at a discount an SDA where employees may acquire units in the trust as a consequence of their employment? Could 7(2) apply to such a trust?
Position:
No firm positions were given since the letter deals with a proposed transaction. However, we state that it would seem reasonable to consider that the arrangement might be an SDA or that section 7(2) might apply.
A "structured settlement" is involved with the related annuity contract being, among other things, non-commutable. In circumstances where the claimant does not survive the guarantee period, and, under the terms of the settlement, 50% of each of the remaining periodic amounts were to be paid to the claimant's estate and the other 50% of the periodic amounts were to be paid to the casualty insurer, the concern is whether the casualty insurer could commute its entitlement to its share of 50% of the remaining periodic amounts after the Claimant dies.
Position:
It is our general view that the 50% of the remaining periodic amounts due to the casualty insurer could be commuted without jeopardizing the structured settlement arrangement.
1. Does the position stated in paragraph 9 of Interpretation Bulletin IT-385R2 apply in computing the amount of taxable income of a non-resident beneficiary of a trust resident in Canada under subparagraph 115(1)(a)(iv) of the Act?
2. Do the principles set out in paragraph 9 of Interpretation Bulletin IT-385R2 apply with respect to the surrender of a capital interest in a trust?
Position:
1. Depending on the facts of a particular situation, the position stated in paragraph 9 of Interpretation Bulletin IT-385R2 could apply to determine, for the purpose of subparagraph 115(1)(a)(iv) of the Act, the amount required by subsection 106(2) to be included in computing a non-resident beneficiary's income as proceeds of the disposition of an income interest.
2. With respect to the surrender of a capital interest in a trust, our opinion is that the principles set out in paragraph 9 of Interpretation Bulletin IT-385R2 are equally applicable to surrenders of capital interests (the reference to subsection 106(2) being replaced with a reference to section 40).
Grandparents make a loan to a trust settled by them for the benefit of their minor grandchildren. Would the attribution rules apply in a situation where the income earned by the trust is not distributed to the grandchildren.
Position:
General comments. In the situation where the amount included in the income of a grandchild, by virtue of paragraph 12(1)(m) of the Act, is nil, the income of the minor grandchild for the purpose of section 74.1 of the Act would be nil.
Whether a child in the custody and control of a grandparent is considered to be a child of that grandparent for purposes of paragraphs 56(1)(b) and 60(b) of the Act.
1) Under what circumstances will a payment made by a discretionary trust to third parties for the benefit of a minor beneficiary be considered paid to the child for the purposes of subsections 104(6), (13) and (24)?
2) Will a taxable benefit under subsection 105(1) arise to a parent solely as a consequence of a trust paying the personal and living expenses of that child, including the "necessaries of life"?
Position:
1) Where the requirements of our proposed position have been met, amounts paid by a trust to a person other than a minor beneficiary for the benefit of the minor beneficiary will be considered paid to the beneficiary.
2) No.
1) Will there be a benefit under subsection 105(1) for the rent-free use of personal-use property by a minor beneficiary and the minor's parent where that property owned by the trust is acquired for the benefit of the minor beneficiary?
2) Will a taxable benefit under subsection 105(1) arise to a parent solely as a consequence of a trust paying the personal and living expenses of that child, including the "necessaries of life"?
Position:
1) The administrative position expressed in Q#31 and #69 of the Revenue Canada Round Table of the 1988 and 1989 Conference Report, respectively, represents our Department's position.
2) No.
