Principal Issues: Whether the sale of a standard commercial financial product, which unbeknownst to the sales person is subsequently combined with other tax strategies within a series of transactions that includes an avoidance transaction that is a “reportable transaction” as defined in subsection 237.3(1) of the Act, results in a reporting requirement for the sales person pursuant to subsection 237.3(2) of the Act.
Position: Question of fact.
Reasons: Would require all of the facts and circumstances to answer the question definitively.
Submitted by narmstrong on Tue, 07/05/2022 - 02:11
disposition is “by reason of death” if a causal link/ if s. 84.1(2.3)(a) applies, s. 84.1 inapplicable if the transaction with the purchaser is not within s. 84.1
The Taxpayer, age 65, retired in the summer of 2021 and thereupon sold and transferred (the “First Disposition”) all the shares (the...
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disposition is “by reason of death” if a causal link/ if s. 84.1(2.3)(a) applies, s. 84.1 inapplicable if the transaction with the purchaser is not within s. 84.1
disposition is “by reason of death” if a causal link/ if s. 84.1(2.3)(a) applies, s. 84.1 inapplicable if the transaction with the purchaser is not within s. 84.1
excess s. 60(s) amount cannot be recognized in other years
279
Principal Issues: Where a taxpayer repays a policy loan and is entitled to a deduction in accordance with paragraph 60(s) of the Act that exceeds the taxpayer's income for the year, can such excess amount be deducted by the taxpayer in any other taxation year?
Position: The excess amount cannot be deducted by the taxpayer in any other taxation year.
Submitted by narmstrong on Thu, 07/28/2022 - 01:31
s. 15(1) might apply where a corporation pays the premiums on a segregated fund insurance policy under which its shareholder or spouse is the beneficiary
Mr. A owns all the shares of a Canadian-controlled private corporation (Holdco) owning a segregated fund insurance policy (the Policy) under which...
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Principal Issues: Does a shareholder or other benefit arise on making a revocable segregated fund beneficiary designation?
Principal Issues: Whether an arrangement involving life insurance shares could result in the application of the shareholder benefit rules in subsection 15(1) or the application of the benefit provisions in subsections 56(2) or 246(1).
Position: General comments provided.
Reasons: The determination of whether these provisions apply to a particular arrangement is a question of fact that can only be ascertained on a case-by-case basis following a review of all the facts and circumstances of the arrangement.
Submitted by narmstrong on Thu, 07/28/2022 - 02:20
a life insurance policy’s sale to an employee for less than FMV could produce a s. 6(1)(a) benefit even where the employer’s payment of premiums had been taxable
An employer (Opco) acquires a term life insurance policy on the life of a key employee with whom it deals at arm’s length. The employee’s...
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Principal Issues: Does the transfer of a life insurance policy from a corporation to an individual result in an employee/shareholder benefit?
Position: Either of subsections 6(1) or 15(1) of the Act may apply to include in the income of the individual, as the case may be, the amount by which the fair market value of the policy exceeds any actual consideration paid by the individual for the policy.
a trust cannot get a deduction for distributing phantom income if the trust deed lacks a phantom income clause
377
Principal Issues: Question 1: Whether a deemed dividend by virtue of subsection 84(2) or (3) can be deducted by the trust where the cash received on the winding-up of the corporation or the redemption of the shares is paid by the trust to the capital beneficiaries in the year the redemption or winding up occurs.
Question 2: What powers must be contained in a trust agreement to allow the trustees to pay cash to income beneficiaries equal to phantom income in the form of a subsection 84(1) deemed dividend or FAPI and have the income allocated to the income beneficiaries.
Position: Question 1: Question of fact based on the terms of the trust agreement and the relevant trust law.
Question 2: Where an amount included in the taxable income of a trust is not recognized as income or capital for trust law purposes (referred to as “phantom income”), the terms of the trust must specifically permit an amount equivalent to the phantom income to be paid or payable or, alternatively, provide the trustees with the discretion to pay out or make payable amounts that are defined as income under the Act in order for the phantom income to become payable to any beneficiary.
Submitted by narmstrong on Tue, 08/16/2022 - 02:29
question of fact whether s. 160 applies to a death payment made out of a segregated fund
In Higgins, the payment of death benefits under a London Life segregated fund to named beneficiaries (the daughters of the tax debtor) was found...
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Principal Issues: Can the CRA confirm its assessing practices under section 160 of the Act in relation to beneficiary designations under segregated fund policies?
Position: General comments provided.
Reasons: Given the unique financial products, and various legislation governing them, the application of section 160 of the Act is decided on a case-by-case basis.
