Principal Issues: Minor change to facts and a change in the date set out for the completion of the transactions ("XXXXXXXXXX " has been changed to "XXXXXXXXXX ")
Position: Other than the date change set out above, we have confirmed our previous ruling.
Principal Issues:
1. Whether the internal reorganization is subject to the provisions of paragraph 55(3)(a)?
2. Whether the PUC reduction is subject to the provisions of subsection 84(2)?
Position:
1. Yes.
2. Yes.
Reasons:
1. It meets the test in paragraph 55(3)(a).
2. The proposed transactions constitute a reorganization of A Co's business.
Principal Issues:
The addition of a redesignation feature to the existing units of a group of mutual fund trusts and the amendment of the declaration of trust to allow multiple Classes of Units for different investor segments so that the manager of the Fund has the flexibility to charge differing management fees to the various investors depending on the size of the investment. The issues are whether the proposed transactions can result in investors (unitholders) being considered to have disposed of their units or being considered to have a greater percentage interest in the income of the Fund than such investor's percentage interest in the capital of the Fund.
Rulings requested are: 1) whether the proposed transactions result in a resettlement of the trust or a disposition of units; 2) whether subsections 104(7.1) and 245(2) apply to the proposed transactions.
Position:
1) Unitholders are not considered to have disposed of their units as a result of the redesignation of the units from one class to another class. Also, the addition of a redesignation feature to the existing units will not result in a disposition of those units; changes to trust indenture are not so significant to precipitate a resettlement. Given that there are no redemption fees on Class Y Units, the fact that on a redesignation of Class X Units to Class Y units, a unitholder will be required to pay an amount equal to any redemption fees that would otherwise have been payable if there had been a redemption merely recognizes that those Class X unitholders who purchased their units on a sales charge basis paid up-front fees, while those who purchased their units on a deferred sales charge basis paid no up-front fees. It thus equalizes the position of all Class X unitholders.
2) Subsections 104(7.1) and 245(2) will not apply to the proposed transactions.
Reasons:
1) Similar positions taken in 990500, 9820753, 9726113 and 9525413.
2) Similar positions taken in 9820753 and 9603753.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:17
A corporation ("TC") previously transferred a property to another corporation ("DC") and received non-voting preferred shares of DC as...
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Principal Issues:
Is the proposed arrangement an Employee Benefit Plan?
Position:
Yes
Reasons:
The plan meets the definition of an EBP and there is no agreement to issue or sell shares to the employee/ beneficiaries of the plan. The employees are income beneficiaries of the plan to ensure compliance with the Department's position stated in our reply to question 28 of the 1985 CTF Round table.
Principal Issues: Income tax implications to Canco and an existing Canco warrant holder when NewCanco common shares are delivered to such holder by Canco pursuant to the NewCanco warrant agreement between Canco and NewCanco.
Position: Canco will receive POD equal to the FMV of the NewCanco Common Shares at the time they are so disposed of to the extent that such POD are not already recognized. A Canco warrant holder receiving NewCanco common shares will generally not have a 15(1) benefit equal to the FMV of those shares at that time if they were dealing at arm's length with Canco and NewCanco.
An individual (the Claimant ) sustained personal injuries when XXXXXXXXXX was involved in a motor vehicle accident. The individual commenced an action against the other driver. Pursuant to court settlement, the defendants' insurers will agree to make periodic payments to the Claimant and if the Claimant dies within the 20 year guarantee period, to the Claimant's estate.
The issue is the income tax treatment of the periodic payments.
This aspect of the ruling is similar to that which we ruled favourably on in file # 993252, dated XXXXXXXXXX , 2000. The main issues were the same as previous and included the application of sections 18.1 and 143.2, and subsection 96(2.2).
Position: Similar rulings as issued previously.
Reasons: Based on our reading of the legislation and prior rulings given for files 992719, 993252 and 963097.
Principal Issues: Incorporation of Newco by a municipality (XXXXXXXXXX %) and a society (XXXXXXXXXX %) which will acquire shares of a TCC. 149(10) is not applicable because of split of shareholdings of Newco. Is GAAR applicable?
Position: No
Reasons: GAAR Referral the purpose of the transactions is to acquire property owned by the TCC but the shareholders will only sell shares to avail themselves of capital gains election
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.
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.
PRINCIPAL ISSUES: A winding up under subsection 88(1) and the bump under paragraph 88(1)(c). Whether the note is substituted property which taints the bump?
POSITION: No, the note was secured by cash and was repaid instantaneously.
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.
Request that we rule on whether, provided the taxpayer carries on business throughout a particular taxation year, following a change in control, in the manner described in the original ruling request (991245), for profit or with a reasonable expectation of profit, that such business will be considered the same business as that in which the non-capital losses were incurred.
Position:
Cannot rule, but can provide comments that the contingent facts would not in and of themselves prevent a finding that the business would be considered the same business as that in which the non-capital losses were incurred.
Principal Issues: Application of 111(5) - Are the non-capital losses of XXXXXXXXXX from its money lending business available after an acquisition of control if it continues to operate a money lending business?
Position: Question of fact but yes.
Reasons: Based on facts existing money lending business has not ceased, nor is it proposed to cease - the current loans will continue to be serviced by XXXXXXXXXX and as well as new loans will be undertaken and serviced by XXXXXXXXXX.
Principal Issues:
1) Will the proposed amendments to the trust agreement which will allow the Trustee, at year end, to allocate capital gains to unitholders who redeemed their units during the year be legally effective?
2) On the redemption of a unit will the Proceeds of Disposition equal the amount paid less the allocable capital gains allocated in respect of that unit?
3) Will subsection 104(7.1) apply to the proposed transactions?
4) Will subsection 245(2) apply to the proposed transactions?
Position: 1) Yes; 2) Yes; 3) No; 4) No.
Reasons: XXXXXXXXXX, the proposed amendments to the trust agreement in respect of the allocation of capital gains to unitholders who have redeemed their units will be legally effective and subsection 104(7.1) will not apply to the proposed transactions. It was also their view that there was a good argument that Proceeds of Disposition on the redemption of a unit equals the amount paid less any capital gains allocated in respect of that unit. Also, see Doc # 32954. As there are good business reasons for undertaking the proposed transactions, the proposals are not avoidance transactions and GAAR should not be applied.
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.
XXXXXXXXXX 991772
Attention: XXXXXXXXXX
XXXXXXXXXX, 1999
Dear Sirs:
Re: Advance Income Tax Ruling for XXXXXXXXXX
(collectively, Fund 1 through Fund XXXXXXXXXX, inclusive, will be referred to as the "Funds", and individually may be referred to as a "Fund")
Principal Issues: Amendments and time extension request.
Position: ok
Reasons: Time extension request is a result of a request from the bank to delay the offering of the units until XXXXXXXXXX due to XXXXXXXXXX and Y2K issues. This along with updated facts do not affect the ruling.
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.
XXXXXXXXXX 991913
Attention: XXXXXXXXXX
XXXXXXXXXX, 1999
Dear Sirs:
Re: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Advance Income Tax Ruling 983067
Position: Inter-corporate dividends not subject to subsection 55(2)
Reasons: Purpose of the dividends was not to reduce any gain inherent in the shares. No intention to sell the shares on which the dividends will be paid
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.
XXXXXXXXXX
XXXXXXXXXX 982596
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1998
Dear Sirs:
Re: Proposed Reorganization of XXXXXXXXXX
XXXXXXXXXX
Principal Issues: Where an employer contributes to a trust established for the benefit of its employees and the trust uses the contributions to acquire treasury shares of a corporation related to the employer, would section 7 apply to the plan or arrangement?
Position: Yes.
Reasons: There is an agreement to sell or issue shares of the employer or of a corporation related to the employer.
Principal Issues: Can a bond issued by a charitable organization to an RRSP be forgiven and the charitable donation tax credit claimed by the annuitant?
Position: No.
Reasons: It would be the RRSP that has made the donation, not the annuitant. The tax credit would only be available to the RRSP. Also, the annuitant may be subject to an income inclusion under subsection 146(9).
Principal Issues: Would the reimbursement by an RRSP issuer of early redemption fees constitute a prohibited advantage under paragraph 146(2)(c.4) where the fees result from transferring from one issuer to another?
Position: No
Reasons: The reimbursement into an RRSP is not income from a source to the annuitant, a benefit under the RRSP, contribution to the RRSP or an advantage under 146(2)(c.4).
corporations controlled by the provincial Crown treated as CCPCs
61
Principales Questions:
Gouvernement provincial détient le contrôle directement ou indirectement d'un certain nombre de sociétés privées sous contrôle canadien:
1. Ces sociétés sont-elles associées aux fins de l'application du paragraphe 125(3) de la Loi de l'impôt sur le revenu?
2. Ces sociétés sont-elles liées aux fins de l'article 181.5 de la Loi?
Principal Issues:
Will a withdrawal under the Home Buyers' Plan affect the calculation of Part XI tax in respect of the foreign property held by an RRSP.
Position:
Yes
Reasons:
A withdrawal from an RRSP under the Home Buyers' Plan does not create a debt obligation, loan or mortgage. It is simply a tax-free withdrawal of funds out of the plan which may become taxable if it is not repaid to the plan within a specified period. The withdrawal will reduce the total cost amount of property held in the plan and this in turn may result in the application of Part XI tax if the foreign property held in the plan exceeds the allowable limits based on the reduced cost amount of the property held.
Principal Issues:
Can an amount be transferred from a United Kingdom pension arrangement into a registered pension plan?
Position:
A determination can only be made on the basis of the facts present in a given situation. In general it appears that a UK local government pension scheme is a pension plan and paragraph 60(j) of the Act could apply to permit a transfer to be made on a tax free basis under Canadian tax law.
Reasons:
General documentation available on such schemes appear to support a position that they are pension plans for the purposes of paragraph 60(j) of the Act.
Principal Issues:
i) whether a transfer to an alter ego trust, where the trustee is not related to the settlor would be considered non-arm's length for purposes of paragraph 88(1)(d.2)?
ii) does the vesting of new beneficiaries in an alter ego trust justify the application of paragraph 88(1)(d.3)?
Position:
i) Yes.
ii) No.
Reasons:
i) Proposed paragraph 251(1)(b) states that a taxpayer and a personal trust will be deemed not to deal at arm's length when the taxpayer is beneficially interested in the trust.
Principal Issues: A resident of the United States has contributed to a U.S. pension plan and a U.S. IRA. On his or her death, the pension plan and the IRA make payments to a Canadian resident beneficiary. Will the payments made to a Canadian resident be taxable in Canada?
Position: Yes.
Reasons: The pension payments are taxable under subparagraph 56(1)(a)(i) of the Act and the IRA payments are taxable under clause 56(1)(a)(i)(C.1) of the Act.
Principal Issues: Whether the exchange of units in a group savings plan for a direct interest in the property held in the plan is a disposition for tax purposes.
Position: Yes.
Reasons: The definition of "disposition" in section 54 of the Act and the proposed definition of "disposition" in section 248(1) of the Act.
Principal Issues: Whether interest is deductible on money borrowed from personal line of credit and used to acquire a guaranteed investment certificate.
Position: Depends on particular facts
Reasons: Was borrowed money used for the purpose of earning income from a business or property.
Principal Issues: Will an unfunded supplementary deferred compensation plan affect the additional $1,500 per year of service prior to 1989 of retiring allowance receipts that can be rolled over to an RRSP under paragraph 60(j.1) of the Act?
Position: No.
Reasons: If the "deferred compensation plan" is a "pension plan" as contemplated by clause 60(j.1)(ii)(B), that provision only refers to vested employer contributions to a pension plan or deferred profit sharing plan.
Principal Issues: Whether acquisition of 1,400 acres of farm land can qualify as replacement property for the disposition of 210 acres of land, and the termination of a lease on another 1,200 acres
Position: Question of fact
Reasons: A review of all relevant facts is required
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:16
With respect to a situation where father held, as the sole trustee of a discretionary trust for minor children, 24% of the shares of a...
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Principal Issues: Will "double-counting" occur under subparagraph 256(1.2)(f)(ii) and subsection 256(1.3) in a situation where a father is the sole trustee of a trust, the beneficiaries of which are his children?
Position: No "double-counting".
Reasons: Position taken in 1989 Round Table Q.14 and various interpretation letters.
Principal Issues: Whether the positions as stated in our letter of January 26, 2000 (#992848) in respect of Interpretation Bulletin IT-373R2 would remain applicable.
Position: Yes. However, with respect to the five factors (a) to (e) listed on page 2 of the January 26 letter, item (b) (i.e., the land was cleared to improve or maximize the value of the land) can be deleted as it is already encompassed by (a). Also, the statement in "(d) the price of timber is fixed; and" should be replaced by "( c) the total contract price for the timber sold is fixed, for example, the contract for sale of timber specifies the consideration computed by reference to the timber actually removed within a specified time or from a specified area; and". Interpretation Bulletin IT-373R2 will be revised in due course.
Reasons: This is to clarify our interpretations and to take into consideration the impact of the recent court decisions of the cases of Jens Larsen and Desrosiers.
Principal Issues:
Whether initiatives promised under the 2000 Ontario Budget regarding providing professionals with the ability to carry on their activities through a corporation would change the position in our Document No. 9530795 to permit the individual to claim the 34.2(4) reserve, since there will be some mitigating differences such as no limitation of liability, etc.
Principal Issues:
1.) Whether the situation meets the definition of scramble parking.
2.) If it meets the definition, that we confirm that taxable benefits not be assessed.
3.) In addition, if block heater users are charged a fee for power consumption on a cost recovery basis, would that change our answers to questions 1 and 2 and in what way.
Position:
1.) No
2.) Cannot since taxable benefit
3.) No
Reasons:
In summary, if the number of parking spaces available accommodates most of the employees who want one (not necessarily all employees), there is no scramble parking and the benefit is taxable under paragraph 6(1)(a) of the ITA.
Principal Issues: 1. Does 70(5) apply to a power of appointment and if so, how is it valued?
2. Can a non-resident trust opt out of the application of 107(2) so that the beneficary has an increased cost amount of property received from the trust?
3. Can the cost amount of assets received by the beneficary from the trust after the beneficary became resident in Canada be increased by the value of such assets at the time the beneficiary became resident in Canada?
Position: 1. No, but the existance of such a power may affect the value of any interest in the trust held by that person.
2. Yes.
3. No, but 128.1(1)(b) will apply to the beneficiary's capital interest in the trust provided that the interest is not TCP.
Reasons: 1. A power of appointment is not property but, depending on the facts, may influence the value of the person's interest in the trust.
2. The draft legislation released June 22, 2000 provides for an election in respect of the distibution of TCP and Canadian business property from an NRT- 107(2.001) - as well as for the distribution of other property from an NRT- 107(2.002).
3. The proposed amendments to 107(1.1) ensure that any increase in the cost amount of a capital interest in a personal trust as a result of immigration is preserved.
Principal Issues:
Can a designation under subsection 104(13.1) or subsection 14(13.2) be amended, late-filed or revoked?
Position: Yes
Reasons:
As a result of the Tax Court of Canada decision in Jeannette Lussier v. The Queen, 99 DTC 1029, [1999], the CCRA has taken the view that a designation under subsection 104(13.1) or (13.2) may be amended, late-filed or revoked in certain circumstances.
Principal Issues: Response to question for the 2000 CTF Conference concerning the recent decision of the Tax Court of Canada in the Irving Oil Limited case. In particular, as a result of this decision, does the CCRA accept that refund interest arising in respect of an overpayment of income tax may constitute active business income to be included in adjusted business income for M & P purposes?
Position: No.
Reasons: An appeal has been filed to the Federal Court of Appeal in respect of the above decision. The CCRA remains of the view that the above refund interest constitutes income from property.
Principal Issues:
1. Whether interest on pay equity settlements (and also interest on tax refunds) paid to non-resident individuals is subject to Part XIII tax under paragraph 212(1)(b) of the Act.
2. Whether such interest payments are exempt from Part XIII tax under 212(1)(b)(ii)(C)(I) of the Act.
3. Whether such interest payments are exempt from tax in Canada under the interest article of the following income tax conventions which contain an exemption in respect of indebtedness of the government of Canada: Denmark; Iceland; India; Italy; Kazakhstan; Luxembourg; Mexico; Russia; South Africa; Sweden; Switzerland; Trinidad and Tobago; Ukraine; USA; and Vietnam.
Position:
1. Yes
2. No
3. yes in all conventions except the present Luxembourg convention
Reasons:
1. Such payments constitute interest payments under the Act and under Canada's conventions.
2. The interest exemptions described in subclause 212(1)(b)(ii)(C)(I) of the Act do not apply as the interest payable on pay equity settlements and tax refunds are not payable on a bond, debenture, note, mortgage or similar obligation issued by the Government of Canada. See IT-155R3 -Paragraph 7.
