Submitted by narmstrong on Thu, 07/13/2023 - 03:11
a variable return at note maturity linked to a non-resident company’s stock was not participating debt interest
Proposed Note issuance
A Canadian public corporation (ACO), whose common and preferred shares are traded on an exchange, will issue unsecured and...
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Principal Issues: (1) Whether 212(1)(b)(ii) applies to payments of periodic interest on the Notes? (2) Whether 212(1)(b)(ii) applies to payments at Maturity on the Notes?
Position: (1) No. (2) No.
Reasons: Payments of interest and on Maturity are made to non-resident noteholders who deal arm's length with the issuer. Neither the payments of interest, nor payments on Maturity constitute "participating debt interest" under 212(3) because, consistent with the policy of the provision, the payments are not tied to the profitability of the issuer. In other words, the payments do not represent a disguised payment of profits out of Canada.
idle forest land could cause a property to not qualify as a qualified farm or fishing property
252
Principal Issues: Can the “used principally” requirement in sub-clause 110.6(1.3)(a)(ii)(A)(II) be met is a situation where an individual owns a 70 acre parcel of land of which 25 acres is workable farmland and 45 acres is forest.
Position: Depends on the facts of the particular situation. Where in a particular year, more than 50% of a particular property is being used for some purpose other than farming or fishing or is otherwise vacant or idle, generally speaking, such “non-farming use” would result in the entire property not being considered as being used principally in the business of farming in Canada for the year. However, if the unusable portion is not suitable for any use then it may be excluded from the “used principally” determination.
Submitted by wildtulips on Mon, 08/07/2023 - 16:23
CRA mandate is to interpret the ITA and not provide tax-planning advice
CRA regarded the correspondent’s request regarding a transfer of land as one for assistance in tax planning rather than for interpretation of...
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Principales Questions: On nous demande de quelle façon minimiser les conséquences fiscales découlant d’un transfert de terrain dans une situation particulière. / We are asked how to minimize the tax consequences in a given situation.
Position Adoptée: Aucune / None.
Raisons: En dehors du mandat de la DDI / Outsite the ITRD’s mandate.
ITA: Section 118.2, subsections 118.2(2), 118.4(2); paragraphs 118.2(2)(a), (o), and (q), and 118.2(3)(b).
Principal Issues: Whether the fees paid for a private health plan qualify as an eligible medical expense for the purposes of the METC.
Position: It is a question of fact whether the fees would qualify as an eligible medical expense under subsection 118.2(2) of the Income Tax Act. Where an amount paid to a medical clinic can reasonably be considered a prepayment of services that are to be provided over the course of the year and the services are actually provided in that year the fees (block fees) will generally be an eligible medical expense It is also a question of fact whether a particular arrangement may satisfy the definition of a PHSP for purposes of paragraph 118.2(2)(q) of the Act. Where the plan is not considered to be a PHSP within the meaning of subsection 248(1) of the Act, the fees are not an eligible medical expense for purposes of paragraph 118.2(2)(q) of the Act.
Reasons: Payments made for the availability of medical services or certain lab and diagnostic procedures and services would not qualify as an eligible medical expense under subsection 118.2(2) of the Income Tax Act (Act). However, a block fee is an eligible medical expense for the purpose of the METC where it is paid for eligible medical expenses as described in subsection 118.2(2) of the Act. Where the plan is considered to be a PHSP within the meaning of subsection 248(1) of the Act, the fees for a private health plan may be an eligible medical expense under paragraph 118.2(2)(q) of the Act.
Definition of "mineral resource" in subsection 248(1)
Principal Issues: Does the spodumene (lithium) deposit qualify as a "mineral resource" pursuant to subparagraph (d) of the definition of that term in subsection 248(1)?
Position: Yes.
Reasons: Based on an opinion from Natural Resources Canada.
Principal Issues: (1) Whether Dependency and Indemnity Compensation (DIC) benefits received by a taxpayer resident in Canada from the United States Department of Veterans Affairs are taxable under the Act. (2) Whether such DIC benefits are exempt from taxation in Canada under the Canada-U.S.
Position: (1) Yes. (2) No.
Reasons: (1) The DIC benefits are annuity payments and are included in income under paragraph 56(1)(d). (2) Paragraph 1 of Article XXII of the Canada-U.S. Tax Convention gives Canada the right to tax the DIC benefits regardless of their tax treatment in the U.S.
