Submitted by narmstrong on Thu, 03/07/2024 - 03:25
CRA after the GAAR amendments will continue to rule on post-mortem pipelines complying with its published policies, but not on inter vivos surplus stripping by individuals
Regarding the status of post-mortem pipeline transactions following the amended GAAR rule, the Directorate stated:
The Directorate does not...
The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.
CRA after the GAAR amendments will continue to rule on post-mortem pipelines complying with its published policies, but not on inter vivos surplus stripping by individuals
250
Principal Issues: To provide the Tax Avoidance Division with an update on the treatment by the Income Tax Rulings Directorate of certain requests for advance income tax rulings involving post-mortem pipeline transactions and certain non-arm’s length transactions involving the realization of capital gains in conjunction with the extraction of corporate earnings.
Position: The Directorate will continue to issue favourable Rulings on the non-application of the amended GAAR in the context of post-mortem pipeline transactions that meet our existing administrative guidelines described in document 2018-0748381C6. The Directorate will not provide Rulings in similar circumstances to the example provided in the explanatory notes accompanying the Department of Finance's amendments to section 245 contained in Bill C-59, where an individual shareholder proposes to engage in non-arm’s length transactions, one of the main purposes of which is to create cost basis to extract retained earnings.
Submitted by narmstrong on Sun, 03/10/2024 - 01:37
a Liechtenstein stiftung was a trust for ITA purposes
A Liechtenstein stiftung was formed as a family foundation (later changed to a private-benefit foundation), with a capital contribution from the...
The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.
Principal Issues: Whether a particular Liechtenstein stiftung is properly classified as a trust or a corporation for Canadian tax purposes.
Position: The particular Liechtenstein stiftung is properly classified as a trust for Canadian tax purposes.
Reasons: Based upon the "two-step approach" to entity classification, the particular Liechtenstein stiftung has more in common with a trust than it does with a corporation under Canadian commercial law.
s. 69(2) ruling continued to apply post-s. 247(2)/ OECD principles re interest on related-party debt
249
Principal Issues: 1. Whether an advance tax ruling issued to a taxpayer limits the Compliance Programs Branch from reassessing the taxpayer on subsequent transactions. 2. Whether the CRA remains bound by an advance tax ruling issued prior to the introduction of section 247. 3. Whether the expected yield to maturity of a debt instrument at the time the instrument was issued is appropriate when considering whether the arm's length standard has been met in the context of a transfer pricing analysis?
Position: 1. Where the subsequent transactions were not part of the ruling, no. 2. If the ruling can continue to be supported by new legislation, yes. 3. Yes.
Reasons: 1. A ruling is binding upon the CRA with respect to the recipient taxpayer and the described transactions, but does not limit the Compliance Programs Branch from reassessing subsequent transactions that were not part of the ruling and which are not those described in the ruling. 2. A ruling issued prior to the introduction of section 247 will remain binding as long as it can continue to be supported. 3. A proper application of the arm's length principle requires that regard be had for the economically relevant characteristics of the circumstances, which may include the interest rate set on a debt instrument at the time of its execution.
