CRA publishes written answers to 15 May 2019 IFA Roundtable

19 June 2019 - 12:00am
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Although we summarized most of the oral responses provided at the 2019 IFA CRA Roundtable a month ago, for you convenience the table below provides descriptors and links to the published version of the CRA answers.

Topic Descriptor
15 May 2019 IFA Roundtable Q. 1, 2019-0798831C6 - Thin capitalization Income Tax Act - Section 18 - Subsection 18(5) - Equity Amount - Paragraph (a) - Subparagraph (a)(ii) contributed surplus will cease to be recognized if the contributor ceases to be a specified non-resident shareholder
15 May 2019 IFA Roundtable Q. 2, 2019-0798751C6 - Shared workspaces and PE Treaties - Income Tax Conventions - Article 5 a Canadian shared-work space can readily constitute a PE
15 May 2019 IFA Roundtable Q. 3, 2019-0798741C6 - Participating Debt Interest & US Treaty Treaties - Income Tax Conventions - Article 11 contingent interest under Art. XI(6)(b) of the US Treaty does not taint contemporaneous fixed interest
15 May 2019 IFA Roundtable Q. 4, 2019-0798721C6 - 78(1)(b)(ii) deemed loan & thin capitalization Income Tax Act - Section 18 - Subsection 18(5) - Outstanding Debts to Specified Non-Residents - Paragraph (a) - Subparagraph (a)(ii) unpaid simple interest that is deemed to be a loan by s. 78(1)(b)(ii) generally is not outstanding debts to specified non-residents
Income Tax Act - Section 78 - Subsection 78(1) - Paragraph 78(1)(b) - Subparagraph 78(1)(b)(ii) deemed s. 78(1)(b)(ii) loan is not also deemed to bear interest
15 May 2019 IFA Roundtable Q. 5, 2019-0798811C6 - Functional currency Income Tax Act - Section 261 - Subsection 261(11) a functional currency reporter realizes capital gains or losses from FX fluctuations when it receives a Cdn$ tax refund for an earlier functional currency year
15 May 2019 IFA Roundtable Q. 6, 2019-0798861C6 - Non-resident filing income tax return Income Tax Act - Section 150 - Subsection 150(5) - Paragraph 150(1)(b) non-resident partners of a partnership that has disposed of TCP must file Part I returns even if a s. 116 certificate indicates that all Part I tax is paid
Income Tax Act - Section 150 - Subsection 150(1) - Paragraph 150(1)(a) "tax is payable" even if already paid
15 May 2019 IFA Roundtable Q. 7, 2019-0798821C6 - Subsection 246(1) and Non-Residents Income Tax Act - Section 246 - Subsection 246(1) - Paragraph 246(1)(a) a s. 15(1)-relevant s. 246(1)(a) benefit generally will not subject a non-resident to Part I tax
15 May 2019 IFA Roundtable Q. 8, 2019-0798841C6 - Active Trade or Business Test under the LOB Clause Treaties - Income Tax Conventions - Article 29A Art. XXIX-A(3) Canada-US LOB clause exclusion would be unavailable to income derived by a Canadian subsidiary from an offshore connected-business FA
15 May 2019 IFA Roundtable Q. 9, 2019-0798761C6 - Surplus Documentation Income Tax Regulations - Regulation 5901 - Subsection 5901(2.2) failure by Canco to prepare surplus accounts precludes late- filed Reg. 5901(2)(b) election
Income Tax Act - Section 113 - Subsection 113(1) - Paragraph 113(1)(a) CRA generally denies a s. 113(1) deduction where Canco has failed to prepare surplus accounts
15 May 2019 IFA Roundtable Q. 10, 2019-0798781C6 - Foreign Affiliate Earnings and Foreign Transfer Pricing Adjustments Income Tax Regulations - Regulation 5907 - Subsection 5907(2) - Paragraph 5907(2)(j) MAP settlement resulted in reduction in "earnings" - (a)(i) under Reg. 5907(1) but in increase under Reg. 5907(2)(j)
Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Net Earnings - Paragraph (a) MAP Settlement reduced net earnings when foreign country reassessed to implement income reduction