Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:12
Canadian data centre
The taxpayers (USCo and its indirect subsidiary, NRCo) run various websites and related mobile services in order to gain advertising revenue, and...
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Principal Issues: A Canadian company provides data hosting services to a related Non-Resident Company. The Non-Resident places its website on a server in Canada owned by the Canadian. Does the Non-Resident have a permanent establishment in Canada as a result?
Position: No
Reasons: The web-hosting services provided by the Canadian to the Non-Resident would not, in and of themselves, constitute a PE of the Non-Resident.
Principal Issues: Whether 6(1)(e.1) applies to an employer's contribution to a group business travel accident insurance plan and a group occupational accident insurance plan.
Position: It is a question of fact but likely yes.
Reasons: Likely applies where the benefits are not payable on a periodic basis and/or the benefits are payable in respect of a sickness or accident when there is no loss of employment income.
Principal Issues: 1. Whether an investment acquired before March 23, 2011 by an RRSP or RRIF that was a qualified investment because of subsection 4900(12) of the Regulations will continue to retain its qualified investment status under that provision after March 22, 2011. 2. Whether section 5001 of the Regulations can apply to cause such an investment to become a prohibited investment after March 22, 2011. 3. Does the relieving rule in subsection 207.04(3) of the Act apply to an investment acquired before March 23, 2011 that was both a prohibited and non-qualified investment on that date?
Position: 1. Yes. 2. No. 3. No.
Reasons: Application of the law and coming-into-force provisions in Bill C-13.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:12
Husband and Wife own 51% and 49% of the shares of a non-resident corporation (ForeignCo) and 49% and 51% of the shares of CanadaCo. The two...
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Principal Issues: 1. Whether a foreign corporation and a Canadian corporation that are jointly owned by a husband and wife are associated. 2. Whether the foreign corporation is a foreign affiliate of the Canadian corporation. 3. Application of debt forgiveness rules.
Position: 1. Yes. 2. General comment provided. 3. Possibly.
Reasons: 1. Pursuant to paragraph 256(1)(b)-(c). 2. Question of fact. 3. Question of fact.
Submitted by narmstrong on Sat, 09/15/2018 - 20:06
no adjustment made for dividend received from connected CCPC sold over 4 years before 2006
Corporation A, which held 40% of the shares of Corporation B (also a Canadian-controlled private corporation), received a (s. 112(1) deductible)...
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Principal Issues: A corporation (Aco) owns 40% of the shares of the capital stock of another corporation (Bco). Aco is a CCPC. Aco receives a dividend from Bco on January 10, 2001. On January 26, 2001, all of the shares of the capital stock of Bco are acquired by a non-resident. Bco's full rate taxable income for its taxation year beginning on January 1, 2001 and ending on January 25, 2001 is nil. In determining the amount to be included in the GRIP addition for 2006 of Aco, whether the dividend paid by Bco would be described in paragraph (c) of variable A in subsection 89(7).
Position Adoptée: No.
Raisons: It is not reasonable to consider, having regard to all the circumstances, that the dividend was attributable to an amount that is described in paragraph (a), (b) or (c) of variable A in subsection 89(7) in respect of Bco.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:15
IFRS not followed
A non-resident corporation (NRco) transferred its shares of Canco, having a cost and paid-up capital of $100 and a fair market value of $1,000 to...
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Principal Issues: Whether amount purported to be added to corporation's contributed surplus would constitute contributed surplus for the purposes of clause 18(4)(a)(ii)(B).
Position: Unlikely.
Reasons: Does not appear that addition to contributed surplus account would conform to GAAP.
Principal Issues: Whether a disposition of taxable Canadian property results from the amalgamation of two corporations in a foreign country.
Position: Possibly.
Reasons: To be determined substantially by the legal consequences flowing from the foreign corporate law under which the predecessor corporations are amalgamated.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:17
application to non-resident beneficiary
In the course of a general response respecting the obligations of a Canadian estate with Polish beneficiaries, CRA indicated that when the estate...
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Principal Issues: 1)Does the executor have any obligation to withhold any portion of the income or capital interest payable to the non-resident beneficiaries on the wind-up of the estate? 2) If so, what percentage must be withheld and how is this accomplished? 3) Does such an obligation exist if the estate retains the income and forwards the beneficiaries the full amount of the bequest? 4) Do the non-resident beneficiaries receive any recognition for the obligation met under the relevant tax treaty?
Position: 1) Yes, if any income is payable to the beneficiaries prior to the wind-up of the estate. 2) Article 21 of the Canada-Poland Tax Convention reduces the 25% rate to 15% where the income is taxable in Poland. The tax must be withheld by the trust and remitted to the Receiver General on behalf of the non-resident along with the NR4 form. 3) The income is taxable in the hands of the trust and the trust must file a T3 tax return for each taxation year. A T1 tax return is not required to be filed by the non-resident beneficiary unless the individual has a taxable capital gain or disposes of taxable Canadian property, otherwise from an excluded disposition. 4) See the answer to question 2.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:15
The Legislative Policy Directorate had addressed a situation where a taxpayer with permanent establishments in a province and in a country other...
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Principal Issues: 1. Does subsection 402(4.1) of the Income Tax Regulations apply to shipments of non-manufactured goods?
2. If so, how would gross revenue from such shipments be attributed to the permanent establishment(s)?
Position: 1. Yes, subsection 402(4.1) does apply to non-manufactured goods.
2. The taxpayer would return to the general rule found in subsection 402(3) and reasonably allocate the gross revenue to a permanent establishment.
Reasons: 1. Paragraph 402(4.1)(a) applies to "shipments of merchandise" and does not specify that the merchandise must be manufactured or produced by the corporation.
2. Based on operation of the provisions.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:15
Respecting a distribution of Canadian real property by a personal trust resulting in a disposition of the beneficiary's capital interest, CRA...
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Principal Issues: Does paragraph 107(2)(a) change the timing of the disposition for the purposes of section 116?
Position: No
Reasons: The deeming rule in paragraph 107(2)(a) only determines the proceeds of disposition of the property to the non-resident trust. It does not actually create a separate disposition apart from, or change the timing of, the actual disposition by the non-resident trust to the beneficiary.
Principal Issues: 1.Whether variable "M" in the formula provided in subsection 49(7) can ever be zero or a negative amount. 2. Whether variable "M" is the ITC pool at the end of 2008. 3. Whether the ITCs claimed in 2008 are included in the "adjusted Ontario SR&ED incentive balance".
Position: 1. No 2. No 3. Yes
Reasons: 1. Variable "M" consists of cumulative unexpired ITCs earned at the end of 2008, it is not reduced by ITCs claimed. Variable "M" can not be zero or a negative amount 2. Variable "M" does not represent the ITC pool at the end of 2008 as it is not reduced by ITCs claimed. 3. Variable "M" includes ITCs earned up until the end of 2008, variable "P" generally excludes ITCs claimed in 2007 and prior years, and therefore the ITCs claimed in 2008 are included in the "adjusted Ontario SR&ED incentive balance".
