habitual abode determined in context based inter alia on relative stays and nature of activities
137
Principal Issues: What is an habitual abode of an individual as referenced in Canadian tax treaties and what factors does the CRA review to make a determination?
Position: It is the place an individual normally lives during the relevant period of time. Various factors are considered, including frequency of stays and lifestyle in the country.
Reasons: Plain meaning of words, as well as various TCC and FCA positions and OECD Model Convention Commentary.
condo inventory did not qualify as “goods” under s. 95(3)(b)
202
Principal Issues: Does real estate inventory, such as residential condominiums, held for sale in the regular course of business qualify as “goods” for purposes of paragraph 95(3)(b)?
Position: No.
Reasons: Goods are generally accepted to mean tangible, moveable, personal property intended for sale. Since real property is not moveable or personal property, it would not be considered a good.
Submitted by narmstrong on Thu, 05/26/2022 - 01:26
s. 113 deductions denied if there is insufficient documentation to support the FA’s surplus computations (even where Pt. I tax computations do not depend thereon)
Regarding a request for additional guidance on the documentation required in light of the CRA position noted at 5 May 2019 IFA Roundtable Q.9,
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Principal Issues: Guidance on required documentation and best practices in preparing surplus account calculations.
Paragraph 113(1)(a), definition of "exempt surplus" and "exempt earnings" in subsection 5907(1) of the Regulations, subsection 5907(11.2) of the Regulations, and subsection 230(1).
exempt surplus calculations must be supported by records showing that the FA’s CMC was exercised in a Treaty country
208
Principal Issues: What information, in addition to exempt surplus calculations, should taxpayers keep to support a deduction under paragraph 113(1)(a)?
Position: In addition to exempt surplus calculations, taxpayers should keep records to enable the determination of the residency of the foreign affiliate in a designated treaty country under common law principles. Taxpayers must keep records and books of account in such form and containing such information sufficient to substantiate that the conditions for claiming a deduction under paragraph 113(1)(a) have been met.
Reasons: In order to accumulate exempt earnings, the foreign affiliate must be resident in a designated treaty country, which requires the foreign affiliate to be resident in such country under common law principles and subsection 5907(11.2) of the Regulations must not apply to deem the foreign affiliate not to be resident in such country. Pursuant to subsection 230(1), and as described in IC77-9R, taxpayers must retain records and books of account sufficient to substantiate deductions claimed under section 113 in respect of dividends received from a foreign affiliate.
The question of where a cryptocurrency is located, deposited...
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Principal Issues: Whether the CRA will issue guidance on when cryptocurrency is considered situated, deposited or held outside of Canada for foreign reporting requirements pursuant to section 233.3 of the Act.
Position: The question is currently under review by the CRA.
Reasons: Awaiting for the OECD to complete work on developing a cryptocurrency reporting framework that provides for the exchange of information on cryptocurrency transactions.
Submitted by narmstrong on Fri, 05/27/2022 - 00:28
no COVID extension of 6-month deadline under s. 247(4) to complete contemporaneous documentation
Will CRA provide any COVID-related relief regarding the requirement under s. 247(4) to complete contemporaneous documentation (“CD”) meeting...
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Principal Issues: Whether the CRA considers, in the context of the COVID-19 pandemic, to apply an administrative concession to extend the documentation-due date of a taxpayer or partnership for the purposes of the contemporaneous documentation rules in subsection 247(4), or to otherwise administratively relieve taxpayers or partnerships from their duty to meet their obligations under subsection 247(4).
Position: No.
Reasons: The CRA recommends that taxpayers or partnerships determine their transfer pricing on an on-going basis during the year even if the Act allows them to make or obtain the documentation up to the documentation due-date.
Submitted by narmstrong on Fri, 05/27/2022 - 00:55
board meeting situs not determinative of CMC
Regarding a query as to whether CRA will continue to have “too much focus on the location of board meetings” in determining corporate...
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Principal Issues: Whether CRA is considering changes to its approach to corporate residency, given that we are now in the age of video conferencing and ESG concerns.
Position: Our approach to corporate residency is based on relevant statutory rules and common law principles.
Reasons: The role of the CRA is to administer the Income Tax Act in accordance with its provisions and based on principles established by common law.
requirement to issue s. 110(1.9) notice to employees re RSUs could be avoided by designating them as non-qualified securities under s. 110(1.4)
357
Principal Issues: Whether penalties under subsection 162(7) would be imposed for an employer's failure to file an information return and notify employees with respect to non-qualified securities, 50% of the benefits from which cannot be deducted by the employee under paragraph 110(1)(d).
Position: Part of larger issue under consideration by Department of Finance.
Reasons: Given the policy objectives underlying the new employee stock options rules, the question raises the larger issue of whether securities to be sold or issued under an agreement that would never entitle the recipient employee to a deduction under paragraph 110(1)(d) should even reduce, or count towards, the employee’s $200,000 annual vesting limit under these new rules.
CRA is monitoring PPT compliance on a priority basis
317
Principal Issues: 1) The numbers of matters in which CRA has recommended applying the PPT and whether GAAR is being applied. 2) Has CRA received any PPT ruling requests.
Position: 1) CRA has not to date issued assessment on the basis of the PPT. 2) Other than the one pre-ruling consultation request discussed at the 2021 IFA Conference, CRA has not to date received any other ruling or pre-ruling consultation request relating to the PPT.
Submitted by narmstrong on Tue, 05/31/2022 - 01:16
proposition applied (regarding a s. 90(3) PUC distribution election) that a partnership cannot be a related person
A limited partnership (LP) - whose 90% general partner is FA1 (held by Canco1) and whose 10% limited partner is FA2 (held by Canco2, which is...
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Principal Issues: Who should make a subsection 90(3) election when a dividend is paid to a partnership.
Position: A subsection 90(3) election will be valid if made by a member of the partnership who has authority to act for the partnership provided the election is made in accordance with subsection 96(3) and within the timeframe specified in subparagraph 5911(6)(a)(i) of the Regulations.
Reasons: On the facts of this Question 14 and on the assumption that the partnership is the relevant taxpayer in subsection 90(3), there is no connected person or partnership in respect of the taxpayer as defined in subsection 90(4).
