Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:14
industrial use by related lessee
Holdco, which leases properties for heavy industrial use to Opco (which is related) with the exception of some leasing of the properties to third...
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Principal Issues: Whether a voluntary disposition of a particular property will meet the definition of a "former business property" in subsection 248(1) of the Act?
Position: Yes.
Reasons: Based on particular facts the property meets definition in subsection 248(1) of the Act.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:16
distribution fees for delivering custom software copies in substance for right to reproduce copyright
Forco, a non-resident tax-exempt organization and a qualifying person (presumably under Art. XXIXA.2 of the Canada-U.S. Convention) will...
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Principal Issues: Where a non-resident payee holds the copyright to custom computer software, are payments made by Canco to the non-resident for the right to distribute that software exempt from Part XIII withholding tax?
Position: Yes, in the circumstances.
Reasons: Payment for distribution rights in this case are considered copyright royalties as the right to distribute is viewed as a component of the right to reproduce the software or is ancillary to such a right.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:11
regular quarter-end advances to parent only for financial statement purposes
underline;">: Structure/accounting standards. Parentco, a non-resident and an indirect subsidiary of non-resident Pubco, wholly-owns Canco....
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Principal Issues: Where a consolidated group of corporations participate in a notional cash pooling arrangement, do four short term loans (e.g., four days each) made over the course of a year by a Canco to its non-resident parent corporation constitute a "series of loans and or other transactions and repayments" as referred to in subsection 15(2.6) when each such loan is of an amount equal to the amount Canco has on deposit with an arm's length bank as part of the notional cash pooling at the time the loan is made and the loans are made for the purpose of satisfying financial reporting requirements that enable the non-resident parent's consolidated group to report the notional cash pooling arrangement on its consolidated balance sheet on a net basis?
Position: No.
Reasons: The "series of loans ... and repayments" referred to in subsection 15(2.6) is intended to prevent, by temporary repayment, a deferral of the recognition as income of amounts that are advanced as loans, rather than paid to the borrower as dividends, fees, bonuses or other amounts that would be included in the borrower's income. The four 4-day loans made in this case are not for the purpose of deferring the recognition of the loaned amounts as income, and the repayment of each loan in this case is not temporary.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:12
transfer to substantially similar new family trust with different Division Date
A family inter vivos trust (the "Trust"), with Father, his wife and XX as trustees, will transfer the Trust property, including the shares of...
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Principal Issues: Whether the transfer of trust property to a new trust will result in a disposition of property by the trust.
Position: No disposition of trust property on trust to trust transfer by virtue of paragraph (f) of the definition of "disposition" in subsection 248(1) of the Act.
Reasons: The new trust will be deemed to be the same trust and a continuation of the transferor trust pursuant to subsection 248(25.1). Subsection 104(5.8) will apply and result in the application of subsection 104(4) to the new trust on the same date that subsection 104(4) would have applied to the transferor trust.
Principal Issues: Request for confirmation from CRA that certain proposed changes to the facts of the Advance Tax Ruling 2011-043185 would not affect the rulings and the opinion given.
Position: Confirmation that, subject to the conditions, limitations, qualifications, and comments set out therein, the original Ruling No. 2011-043185 will continue to be binding on the CRA.
Reasons: The supplemental facts do not affect the validity of the previous Ruling given.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:13
option of related distributor
The granting of the option to acquire the production by the production company (Prodco), a qualified corporation which will claim the Canadian...
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Principal Issues: 1- Will the granting of the Option by the production company (Prodco), a qualified corporation, to a related company (Master Distributor), a prescribed taxable Canadian corporation, cause the 25-year copyright ownership requirement not to be met? 2- Will the exercise of the Option by Master Distributor cause the 25-year copyright ownership requirement not to be met? 3- Upon the exercise of the Option by Master Distributor, will the production be a Class 10(x) property to Master Distributor?
Position: 1 & 2 No. 3 Yes, provided the production does not subsequently become an excluded production (i.e. the 25-year copyright ownership requirement continues to be met) and the production meets the other requirements of a Canadian film or video production under subsection 1106(4) of the Regulations.
Reasons: 1 & 2 Clause 1106(1)(a)(iii)(A) of the definition of "excluded production" in the Regulations contemplates a transfer of the copyright between a qualified corporation and a related prescribed taxable Canadian corporation. 3 Wording of provisions (including subsection 1101(5k.1) of the Regulations which contemplates a transfer of the production between a qualified corporation and a related corporation).
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:16
translation on capital property disposition
On the sale of capital property in foreign currency, the proceeds of disposition are converted using the exchange rate at the time of the sale,...
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Principal Issues: What is the correct method for computing gains or losses on the sale of capital property when the property is denominated in a foreign currency?
Position: All amounts are converted to Canadian dollars, then the adjusted cost base and outlays and expenses are deducted from the proceeds of disposition.
Reasons: Subsection 261(2) of the Act, and the Federal Court of Appeal case, Hope R. Gaynor v The Queen, 91 DTC 5288.
29(1), 28(1), 248(1) "inventory", ITR 1802, ETA Schedule VI - Part IV - 1, ETA, ITR Schedule II - Class 8, s. 123(1) "zero-rated supply", 20(1)(a), 28(1.2), 248(1) - "farming", 28(1.1)
Principal Issues: 1.) Whether zoo keeping is a farming activity. 2.) Whether animals are capital assets or inventory. 3.) If capital, which CCA class.
Position: 1.) Zoo keeping is not farming. 2.) Non-depreciable capital assets. 3.) None.
Reasons: 1.) Zoo animals are not "livestock", hence exhibiting them is not farming under the definition in Act. 2.) The Act and our previous position. 3.) n/a.
Principal Issues: Whether the term "cost" in the definition of "equity amount" in subsection 18(5) of the Act, as applicable to depreciable property, takes into account any depreciation claimed in respect of the property.
Position: No.
Reasons: The term "cost" used in the definition of "equity amount" means the original acquisition cost of the property.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:15
weight reference is to loaded weight determined by manufacturer
Does the gross vehicle weight rating refer to the loaded capacity and does it include the weight of a trailer? CRA stated (TaxInterpretations...
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Principales Questions: Qu'est-ce qu'un « grand routier » dans le contexte de la définition de « grand routier » énoncée au paragraphe 67.1(5)? / What is a "long-haul truck" in the context of the definition of a "long-haul truck" in subsection 67.1(5)?)
Position Adoptée: Il s'agit du poids d'un véhicule auquel on additionne la charge maximale que celui-ci peut tirer selon les indications du fabricant. / It is the weight of a vehicle to which is added the maximum load that the vehicle can pull, based on the manufacturer's specifications.
Raisons: Voir paragraphe 2(1) du Règlement sur la Sécurité des véhicules automobile. / See subsection 2(1) of the Motor Vehicle Safety Regulations.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:12
A.1 of A reduction does not apply in year of sale
In 2008 a taxpayer with nil cumulative eligible capital disposed of the assets of an active business including goodwill to a related corporation...
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Principales Questions: Est-ce que le contribuable doit tenir compte de l'élément A.1 dans le calcul de la valeur de A de la définition du MCIA au paragraphe 14(5) pour l'année de disposition? / Should the taxpayer take into account the item A.1 in the calculation of the value of A in the definition of CEC at subsection 14(5) in the year of disposition?
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:16
"that day" in transitional election refers to Royal assent
The election [in the coming-into-force provision] is intended to provide a taxpayer the benefit of an exception to the transfer price adjustment...
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Principal Issues: Which date is meant by the phrase "that day" used in the coming into-force rule in paragraph 88(2)(a) of Bill C-4 in the application of subsection 247(7.1)?
Position: The relevant coming into-force date referenced by the phrase "that day" is the date of Royal Assent, that is, December 12, 2013.
Reasons: The wording of the provision. Also, the purpose of this election is to give effect to the legislation prior to the coming into-force date.
not necessary to show that expenditure generated income - and potential deduction where 20% personal use
126
Principales Questions: Est-ce qu'un employeur peut déduire dans le calcul de son revenu d'entreprise, une dépense pour l'installation et le recalibrage mensuel d'un alcoomètre dans un véhicule utilisé par un employé? / Can an employer, in computing its business income, deduct expenses related to the installation and recalibration of a alcoholmeter in a vehicle used by an employee?
Position Adoptée: Question de fait / Question of fact
s. 51 applies where issuer had a cash redemption override
208
Principal Issues: 1. Whether subsection 51(1) applied to the conversion of a debt into a share. 2. Whether subparagraph 40(2)(g)(ii) applied to deny the loss.
Position: 1. No. 2. question of fact.
Reasons: 1. The debt was not converted pursuant to its terms. 2. The absence of interest on a debt does not necessarily trigger paragraph 40(2)(g)(ii).
Principal Issues: Whether the Minister could assess a corporation at any time for under remitting Part XIII tax for the XXXXXXXXXX to XXXXXXXXXX taxation years.
Position: Yes.
Reasons: Under subsection 227(10), an assessment of Part XIII tax may be raised at any time. Once raised, Divisions I and J of Part I apply, and the assessment will be treated as though it were issued under section 152. The normal reassessment period, as defined in subsection 152(3.1), would apply once an amount has been assessed under Part XIII.
Principal Issues: 1) Whether a corporation owned by Her Majesty in right of Canada or a province or both is exempt by the Act from filing T2 returns. 2) Whether any exemption would extend to wholly-owned subsidiaries of a corporation owned by the Crown.
Position: 1) No. However, the requirement to file can be waived. 2) Unable to comment.
Reasons: 1) Subsection 220(2.1) provides the authority for the Minister to waive the requirement to file a T2 return under subsection 150(1). 2) Administration of this authority is primarily the responsibility of the Assessment and Benefit Services Branch, including any decision to extend its application.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:12
reduce non-capital loss utilization in statute-barred return
In its original return, the taxpayer reduced its taxable income to nil through the carry-forward of non-capital losses. Outside the normal...
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Principal Issues: Whether changes may be made to a loss application after the end of the normal reassessment period where a nil assessment was issued.
Position: Taxpayers may request changes. Although the Minister is not obligated to accede to the request, the Minister may do so where it is appropriate in the circumstances.
Reasons: Where a nil assessment has been issued, changes that do not result in tax payable do not require the Minister to issue an assessment, reassessment or additional assessment. Therefore, the restrictions in subsection 152(4) of the Act do not apply. However, where it would be inappropriate to accept the request, the Minister can deny it.
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:16
no discretion to extend three year deadline
An extension of time to make a return using s. 220(3) does not alter or affect whether a corporation has factually filed its return of income...
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Principal Issues: Whether subsection 220(2.1) of the Income Tax Act (the "Act") provides the Minister with the discretion to waive the three year filing requirement in subsection 129(1), and therefore allow the Minister to issue a dividend refund.
Position: No.
Reasons: The provisions of subsection 220(2.1) may allow the Minister the discretion to waive the requirement to file a prescribed form, receipt or other document, but does not alter or affect whether a corporation has factually filed its return of income within the three years after the end of the year as required by subsection 129(1).
Submitted by Anonymous (not verified) on Sun, 11/29/2015 - 02:13
pro rata share of JV payroll if shared responsibility
Are joint venture participants permitted, for purposes of provincial income allocation, to include their pro-rata share of the wages and salaries...
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Principal Issues: For provincial income allocation calculation purposes, how are salary and wages allocated among participants in a joint venture?
Position: It's a question of fact. It depends on the joint venture agreement.
Reasons: Where the participants agree to share legal responsibility for the salaries and wages of the employees of the joint venture, the participants would include their pro-rata share of the salary and wages in their respective provincial income allocation calculations.
