7 October 2022 APFF Financial Strategies and Instruments Roundtable

This page contains our summaries of questions posed at the 7 October 2022 APFF Financial Strategies and Instruments Federal Roundtable held in Montreal, Quebec together with our translations of the full text of the Income Tax Ruling Directorate’s provisional written answers (which were orally presented by Mélanie Beaulieu, Chantale Bouchard and Lauchlin MacEachern). We use our own titles.

The 7 October 2022 APFF (regular) Roundtable is provided on a separate page.

The final versions of these APFF Roundtable items have not yet been released under the Income Tax Ruling Directorate's severed letter program, at which time we will also provide a full-text translation of the questions posed.

Q.1 - Cryptocurrency situs

S. 233.3 of the Income Tax Act [1] requires a "specified Canadian entity" to report its "specified foreign property" on Form T1135 [2] generally for a taxation year where the total cost of specified foreign property (defined to include "funds or intangible property … situated, deposited or held outside Canada") exceeds $100,000 at any time in the year.

2014-0561061E5 [3] indicated that cryptocurrencies constitutes funds or intangible property, and must be disclosed on the taxpayer's Form T1135 to the extent that they are located, deposited, or held outside Canada and is not used or held exclusively in an active business; and 2021-0896021C6 [4] indicated that the question of where cryptocurrency is located, deposited or held was under consideration.

What is the status of this study, and have there been any developments?

CRA Response

Given the decentralized nature of cryptocurrency, the question of where a cryptocurrency is located, deposited or held within the meaning of section 233.3 is complex. This issue is still under active consideration by the CRA.

In conducting its review, the CRA must consider the purpose of Form T1135, which is to promote compliance and tax fairness, and to assist the CRA in obtaining information on certain types of assets held by Canadian residents outside of Canada that would otherwise be difficult to obtain. Given the quasi-anonymity of crypto-assets, including crypto-currencies and tokens, their intangible nature, and the fact that they can be traded anywhere in the world without the intervention of traditional financial intermediaries and without any central administrator having full visibility over transactions made or crypto-assets held, crypto-assets, by their very nature, are more difficult to track than traditional assets. Consequently, they carry a material risk of tax evasion or non-compliance, regardless of their situs. The CRA believes that, in general, reporting of crypto-assets would facilitate tax compliance in this growing sector. The CRA is currently considering several options, including changes to certain forms, schedules and guides that would increase disclosure for this type of asset and promote tax compliance.

In parallel, work is underway at the Organization for Economic Co-operation and Development ("OECD") to develop the Crypto-Asset Reporting Framework ("CARF"), a new global tax transparency framework that will include requirements for reporting to tax administrations and procedures for exchanging information relating to taxpayers' transactions with crypto-asset service providers. A public consultation process on the CARF was launched on March 22, 2022 and closed on April 29, 2022. A report on CARF is expected in October 2022. Further information is available on the OECD website.

The CRA is also aware that crypto-assets are a relatively recent innovation that is evolving very quickly and may create a degree of uncertainty for taxpayers regarding their tax obligations in this area. In this regard, the Guide for Cryptocurrency Users and Tax Professionals, which is available on the CRA's website, provides general guidelines explaining to Canadian taxpayers their tax obligations with respect to cryptocurrency. [5] In particular, taxpayers who trade in crypto-assets are required to keep proper financial records of all their activities, including records relating to the acquisition or disposition of crypto-assets. [6] Subsection 230(1) specifically requires taxpayers to keep records and books of account containing information that will be used to determine taxes payable under the Income Tax Act. Pursuant to paragraph 231.1(1)(a), a taxpayer's books and records may also be inspected, audited or examined by an authorized person of the CRA. As the Canadian tax system is based on the principle of self-assessment, the CRA expects taxpayers to properly report their transactions and meet their tax obligations related to cryptocurrencies and other crypto-assets. The CRA is currently conducting audit activities related to crypto-assets, including audits of individuals who acquired and disposed of crypto-assets as well as crypto-asset businesses involved in the development, mining, staking or trading of crypto-assets.

Q.2 - S. 246(1) where Holdco pays premiums and sub is beneficiary

2009-0347291C6 [7] indicated a change in policy regarding the application of s. 15(1), such that where Subco is the owner and pays the premiums on a life insurance policy, and the sole shareholder of Subco (Parentco) is the beneficiary, Subco will be considered to be conferring a benefit on Parentco by paying the premiums, so that Parentco would be required to include a benefit in its income.

2010-0359421C6 [8] indicated that s. 246(1) could apply where a corporation (Parentco) holds a life insurance policy for which it pays the premiums and designates its subsidiary (Subco) as the beneficiary, and that in an actual situation it would be necessary to determine, with all the relevant documentation, whether the reimbursement of premiums should be included in the income of the corporate life insurance policyholder (Parentco) under s. 9 or 12(1)(x) where its subsidiary (Subco) was named as the irrevocable beneficiary of the life insurance policy and reimbursed Parentco for the premiums paid by Parentco.

Also note that where the policyholder and beneficiary differ and the death giving rise to the insurance proceeds received by the corporation occurs after March 21, 2016, the addition under para. (d) of the capital dividend account definition is reduced by the adjusted cost basis ("ACB") of any interest in the policy.

Suppose that two brothers resident in Canada each have a Holdco owning 50% of Opco and that, in order to fund the buy-sell agreement on the death of an ultimate shareholder, each Holdco has purchased insurance on the life of its sole shareholder, with Opco as a revocable beneficiary of both insurance policies, and the Holdcos paying the insurance premiums out of their after-tax accumulated profits without reimbursement by Opco.

(a) Would s. 246(1) apply given the non-arm's length relationship between Holdco and Opco?

(b) Would s. 246(1) still apply if the two business partners dealt with each other at arm's length?

(c) Would s. 246(1) still apply if Opco reimbursed the Holdcos for the cost to them of the premiums?

(d) Would your answer to Q.2(c) change if the beneficiary designation was revocable?

(e) If the premium reimbursements were taxable to the Holdcos, would they be entitled to deduct a portion of the life insurance premiums paid?

CRA Response

Preliminary remarks

Given the broad scope of section 9, paragraph 12(1)(x), subsections 15(1) and 246(1) , it would be necessary to conduct a review of all of the facts and circumstances relating to a particular situation to determine whether any of these provisions may apply. Such a review would normally be done as part of the compliance process for the relevant arrangement or transactions or, where an arrangement involves proposed transactions, as part of a request for advance rulings submitted in accordance with the procedures set out in Information Circular IC 70-6R.12 [9] We are, however, able to provide the following general comments.

The determination of whether section 9 , subsections 15(1) or 246(1) or paragraph 12(1)(x) may apply to a particular situation is made independently of the tax impact resulting from the 2016 legislative amendments to paragraph (d) of the definition of CDA in subsection 89(1) and must take into account the facts of each situation.

However, it has been our longstanding position that a benefit is generally conferred on a shareholder under subsection 15(1) where a corporation pays the premiums on a life insurance policy under which its shareholder or a person related to the shareholder is the beneficiary. The amount of the benefit that would be required to be included in computing the shareholder's income in a particular taxation year is generally equal to the amount of insurance premiums paid by the corporation for that year. However, a review of all the facts relevant to a particular situation is necessary to determine the value of the benefit conferred.

That position is consistent with the recent decision in Harding v. The Queen. [10] In that case, the Tax Court of Canada found that a shareholder benefit had been conferred pursuant to subsection 15(1) by a corporation that paid the premiums on life insurance policies of its sole shareholder and the shareholder's spouse, and whose beneficiaries were the shareholder's spouse and stepchildren. The positions set out in Technical Interpretations 2009-0347291C6, 2009-0329911C6 and 2010-0359421C6 still represent the CRA's position on this issue.

Q.2(a)

The application of subsection 246(1) is based on an assessment of the specific facts of a particular situation. However, in light of the foregoing and in accordance with the position set out in Technical Interpretation 2010-0359421C6, we are of the view that subsection 246(1) could apply in the situation where a parent corporation owns and pays the premiums on a life insurance policy and its subsidiary is designated as the beneficiary. Thus, in the situation you describe, we are of the view that the provisions of subsection 246(1) could apply in respect of Opco, subject to a review of the specific facts of a particular situation.

Q.2(b)

Assuming that the two sole shareholders of Holdco are dealing at arm's length with each other, one of the issues to be determined is whether the transaction otherwise giving rise to a benefit is bona fide and not pursuant to, or as part of, any other transaction and not to effect payment, in whole or in part, of an existing or future obligation, since the exception provided for in subsection 246(2) is only applicable where all of the conditions set out therein are satisfied. These are questions of fact that could only be resolved after an examination of all relevant facts and circumstances. Furthermore, it is important to note that, pursuant to paragraph 251(1)(c), the question of whether unrelated persons are dealing at arm's length with each other at a particular time is a question of fact. Unrelated persons may not be dealing with each other at arm's length depending on the circumstances. If such a relationship were demonstrated, subsection 246(2) would be inapplicable, as one of the conditions for its application would not be satisfied.

Where it is established that a transaction was entered into by persons dealing at arm’s length, bona fide and not pursuant to, or as part of, any other transaction and not to effect payment, in whole or in part, of an existing or future obligation, no party thereto shall be regarded, for the purpose of this section, as having conferred a benefit on a party with whom the first-mentioned party was so dealing.

Q.2(c) and (d)

In the situation where Opco, as (revocable or irrevocable) beneficiary of the life insurance policies, reimburses the Holdcos, the policyholders, for the related premiums, it would be necessary to examine all the relevant facts and documentation to be able to determine whether the reimbursement should be included in the income of the Holdcos pursuant to section 9 or paragraph 12(1)(x).

Q.2(e)

Generally, premiums paid under a life insurance policy are not deductible in computing a taxpayer's business income because they are capital expenditures which are not deductible pursuant to paragraph 18(1)(b). Paragraph 20(1)(e.2) does, however, provide an exception whereby such premiums may be deductible under certain specified conditions. Paragraph 20(1)(e.2) requires, inter alia, that the acquisition of the life insurance policy be required by a financial institution as security for a loan. These conditions do not seem to apply in the situation described. Thus, we are of the view that the premiums paid by the Holdcos would not be deductible, even if they included the reimbursement of premiums received from Opco in computing their income.

Q.3 - Use of average FX rates

The "spot rate of exchange" for a particular day is defined in s. 261(1) as the rate quoted by the Bank of Canada on that day, or such other rate of exchange as is acceptable to the Minister. Folio S5-F4-C1, para. 1.6.1 [11] indicates that the CRA may, for practical reasons, also accept a taxpayer's use of an average exchange rate over a period of time in order to convert certain items that are relevant to computing income.

When is it acceptable to use an average exchange rate and what constitutes an acceptable period for use of an average rate?

CRA Response

The CRA's acceptance of the use of an average exchange rate for a period in certain circumstances emanates from a long-standing administrative policy established prior to the enactment of subsection 261(2). The purpose of this policy is to alleviate the administrative burden that could result from determining a series of daily exchange rates and multiple calculations for a taxpayer who has a significant stream of foreign currency transactions in a given period. While improvements in accounting software and other technologies have reduced the compliance burden associated with daily rate conversions, the CRA continues to apply its administrative policy. As explained in more detail below, the CRA's acceptance of an average rate is based on the fundamental principle that it must be reasonable to conclude that the use of the average rate will result in a fair approximation of the taxpayer's income as if the taxpayer had used daily exchange rates.

Consequently, for purposes of determining a taxpayer's income, the CRA will generally accept the use of an average exchange rate over a given period of time (e.g., annual, quarterly or monthly) to convert amounts arising from foreign currency transactions, if all of the following conditions are met:

  • the amounts (as determined in foreign currency) are relatively stable and evenly distributed over the given period
  • the amounts arising in the particular period are sufficiently frequent that they do not distort income
  • the relevant exchange rate does not fluctuate significantly over the period; and
  • the chosen approach is used consistently from year to year.

For example, if a taxpayer receives monthly interest payments in a foreign currency in an equal or similar amount in a taxation year, the CRA will generally accept the use of an average annual exchange rate to convert the amounts to Canadian dollars. However, if there are no transaction flows, or if there are very few transactions (e.g. annual, semi-annual or quarterly payments), the use of the applicable daily exchange rates will be required.

Disposition of capital property

As a general rule, the CRA will not accept the conversion of a gain or loss on the disposition of a capital property using an average exchange rate. A gain or loss is simply the arithmetic difference usually resulting from two or more separate transactions, a purchase and a sale, which generally occur on different dates. Consequently, the daily exchange rate for the particular dates should be used to determine, in Canadian dollars, the adjusted cost base ("ACB") of such property and any proceeds of disposition from its disposition.

Foreign currency held by an individual on capital account

As stated in Technical Interpretation 2014-0538631C6, [12] the use of an average exchange rate to compute capital gains and losses for the purposes of subsections 39(1) and 39(2) is not permitted. However, the CRA will generally accept an individual’s use of an average exchange rate to compute capital gains and losses pursuant to subsection 39(1.1) as a result of the disposition of foreign currency.

Fairness of the tax system is the fundamental principle from which the CRA's administrative policies emanate. An appropriate and fair application of a CRA policy on the use of average exchange rates must be tax neutral and must not provide any tax advantage. If the CRA determines that a taxpayer is abusing this administrative policy to gain a tax advantage, the CRA will compute the tax using the daily exchange rates for that and subsequent taxation years.

Q.4 - Superficial and suspended loss formulae

S. 53(1)(f) requires a taxpayer, in computing a property’s ACB, to add to the taxpayer's cost of the property, where the property is a replacement property of the taxpayer, the loss that was, because of the taxpayer's acquisition of the property, a superficial loss that a taxpayer incurred on the disposition of the property.

CRA has applied the following formula in determining the amount of a superficial loss, or a suspended loss under s. 40(3.4):

Deemed nil loss = (the lesser of S, P and B) / S x L

where

S = number of shares disposed of at that time

P = number of shares acquired in the period from 30 days before to 30 days after the disposition

B = number of shares remaining at the end of that period

L = loss on disposition otherwise determined

Consider the following examples:

Hypothetical Situation 1

On March 15, 2022, an individual disposes of all of his shares (being 2,000) of ABC Pubco, and realizes a capital loss of $10,000. On March 16, 2022, his spouse acquires 2,000 shares of ABC Pubco. In addition, his RRSP had acquired 1,000 shares of ABC Pubco on March 10, 2022. Finally, the individual acquires 500 shares of ABC Pubco on April 13, 2022.

Hypothetical Situation 2

On March 15, 2022, a corporation disposes of all of its shares (being 2,000) of ABC Pubco, and realizes a capital loss of $10,000. On March 16, 2022, its sole shareholder acquires 2,500 shares of ABC Pubco. In addition, the shareholder’s RRSP had acquired 1,500 shares of ABC Pubco on March 10, 2022. On May 20, 2022, the RRSP disposes of 1,500 shares of ABC Pubco and the shareholder disposes of 500 shares.

Hypothetical Situation 3

On March 15, 2022, a corporation disposes of all of its shares (being 2,000) of ABC Pubco and realizes a capital loss of $10,000. On March 16, 2022, its sole shareholder acquires 2,500 shares of ABC Pubco. In addition, the shareholder’s RRSP, acquires 1,500 shares of ABC Pubco on April 10, 2022. On April 30, 2022, the shareholder disposes of 500 shares, and on May 20, the RRSP disposes of 1,500 shares.

(a) In Hypothetical Situation 1, the identical properties acquired by the individual and affiliated persons in the period from 30 days before to 30 days after the disposition exceed the number of securities disposed of by the individual. In this situation, how should the ACB of the substituted property be adjusted?

(b) Similarly, how will the $10,000 loss deemed to be nil pursuant to ss. 40(3.3) and (3.4) in Hypothetical Situations 2 and 3 be recognized?

(c) Does Variable B above ("the number of shares remaining at the end of such period") include only the number of shares remaining of the shares acquired during such period without taking into account shares acquired prior to such period?

CRA Response to Q.4(a)

As stated in the question, paragraph 53(1)(f) allows a taxpayer who owns a substituted property to add the amount of a superficial loss in computing the ACB of that property.

The adjustment provided for in paragraph 53(1)(f) is, however, more difficult to make in certain circumstances. This is particularly the case where the number of substituted properties on hand at the end of the period beginning 30 days before and ending 30 days after the disposition of the shares to the taxpayer or an affiliated person is less than at the time of the disposition. As indicated in paragraph 12 of Interpretation Bulletin IT-456R, [13] the CRA allows the actual loss on the properties considered to be redeemed or the average loss on each property multiplied by the number of properties considered to be reacquired to be the superficial loss in this case. For this purpose, the CRA accepts that the amount of the superficial loss is to be determined according to the formula: Deemed nil loss = (the lesser of S, P and B) / S x L referred to in the question.

Paragraph 12 of IT-456R further states that if a taxpayer and/or affiliated persons are involved in the disposition and acquisition of identical property, the superficial loss should initially be determined as if all the parties were one person and subsequently prorated on the basis of actual substituted property held by a person at the end of the period.

Hypothetical Situation 1

With respect to Hypothetical Situation 1, it is the CRA's view that the formula (Deemed nil loss = (the lesser of S, P and B) / S x L) referred to in the question does not apply since the number of substituted properties on hand at the end of the period beginning 30 days before and ending 30 days after the disposition of the shares to the taxpayer or an affiliated person is greater than at the time of the disposition.

However, it is the CRA's view that the superficial loss in Hypothetical Situation 1 should be determined using the method referred to in paragraph 12 of Interpretation Bulletin IT-456R, i.e., as if all the parties involved were one person, and then prorated on the basis of all the substituted properties held by each party at the end of the period.

Consequently, the $10,000 superficial loss in Hypothetical Situation 1 must be allocated proportionately between the taxpayer and all persons affiliated with the taxpayer by taking into account all substituted property held by these persons at the end of the period, namely the 3,500 shares of the capital stock of ABC Pubco held by the trust governed by an RRSP under which the taxpayer is the annuitant, the taxpayer and the taxpayer’s spouse.

The ACB of the 1,000 shares of the capital stock of ABC Pubco acquired on March 10, 2022 by the trust governed by an RRSP under which the taxpayer was the annuitant will therefore be adjusted by the amount of the superficial loss in proportion to the number of shares held by the trust in relation to the total number of substituted properties held by the taxpayer and all affiliated persons of the taxpayer, i.e. 1,000 shares / 3,500 shares x $10,000.

Similarly, the ACB of the 2,000 shares of the capital stock of ABC Pubco acquired on March 16, 2022 by the taxpayer's spouse will be adjusted by the amount of the superficial loss in proportion to the number of shares held by the spouse in relation to the total number of substituted properties held by the taxpayer and all of the affiliated persons of the taxpayer, i.e., 2,000 shares /3,500 shares x $10,000

Finally, the ACB of the 500 shares of the capital stock of ABC Pubco acquired on April 13, 2022 by the taxpayer will be adjusted by the amount of the superficial loss in proportion to the number of shares held by the taxpayer in relation to the total number of replacement properties held by the taxpayer and all of the taxpayer's affiliates, i.e. 500 shares /3,500 shares x $10,000

CRA Response to Q.4(b)

Subsection 40(3.4) applies where the conditions set out in subsection 40(3.3) are satisfied:

(a) a corporation, trust or partnership (referred to in subsections 40(3.3) and 40(3.4) as the "transferor") disposes of capital property, other than depreciable property of a prescribed class, otherwise than in a disposition described in any of paragraphs (c) to (g) of the definition "superficial loss" in section 54;

(b) during the period that begins 30 days before and ends 30 days after the disposition, the transferor or a person affiliated with the transferor acquires a property (in subsection 40(3.3) and subsection 40(3.4) referred to as the “substituted property”) that is, or is identical to, the particular property; and

(c) at the end of the period, the transferor or a person affiliated with the transferor owns the substituted property.

Where these conditions are met, section 40(3.4) provides, inter alia, that:

(a) the transferor's loss from the disposition is deemed to be nil; and

(b) the transferor's loss from the disposition, determined without reference to paragraph 40(2)(g) and subsection 40(3.4), is deemed to be a loss of the transferor from a disposition of the property that occurred immediately before the earliest of the times described in subparagraphs 40(3.4)(b)(i) to (v) that is subsequent to the disposition.

Specifically, the time described in subparagraph 40(3.4)(b)(i) is the beginning of a 30-day period throughout which neither the transferor nor a person affiliated with the transferor owns the substituted property or a property that is identical to the substituted property and that was acquired after the day that is 31 days before the period began.

Hypothetical Situation 2

In view of the above, in order to answer the question regarding Hypothetical Situation 2, it must first be determined whether all the conditions for the application of subsection 40(3.3) are satisfied.

First, the corporation disposes of 2,000 shares of the capital stock of ABC Pubco (the "Relevant Shares") on March 15 that are capital property of the corporation (paragraph 40(3.3)(a)). This disposition results in a capital loss.

Then, during the period beginning 30 days before and ending 30 days after the disposition of the Relevant Shares, persons affiliated with the transferor, i.e., the trust governed by an RRSP under which the sole shareholder of the corporation is the annuitant (the "Trust") and the sole shareholder of the corporation (the "Shareholder"), acquire property identical to the relevant Shares, i.e., 4,000 shares of the capital stock of ABC Pubco (the "Substituted Property") (s. 40(3.3)(b)).

Finally, at the end of the 61-day period described in paragraph 40(3.3)(b), the Trust and Shareholder still own the Substituted Property, namely the 1,500 shares of the capital stock of ABC Pubco acquired by the Trust on March 10 and the 2,500 shares of the capital stock of ABC Pubco acquired by the Shareholder on March 16 (paragraph 40(3.3)(c)).

Since the conditions set out in subsection 40(3.3) are satisfied, subsection 40(3.4) would apply. The corporation's loss would be deemed to be its loss from a disposition of the property immediately before the earliest of the times described in subparagraphs 40(3.4)(b)(i) to (v) that would be subsequent to the disposition of the 2,000 shares of the capital stock of ABC Pubco by the corporation.

For greater certainty, no portion of the corporation's loss could be recognized while the Shareholder owned shares of the capital stock of ABC Pubco constituting Substituted Property.

Hypothetical Situation 3

For the same reasons as in Hypothetical Situation 2, all of the corporation's loss would be deemed to be nil pursuant to paragraph 40(3.4)(a). In addition, no portion of the corporation's loss could be recognized provided the Shareholder owns shares of the capital stock of ABC Pubco that constitute Substituted Property.

CRA Response to Q.4(c)

In general, we are of the view that the number of shares remaining at the end of the period that begins 30 days before the individual disposes of the shares and ends 30 days after that disposition means all shares that are identical, including shares acquired before that period.

Q.5 - Pledge fee paid by shareholder

An individual, a sole shareholder of a corporation, borrows money in order to earn business or property income. To secure his personal loan, his corporation grants a mortgage on a building it owns. The shareholder makes all principal and interest payments on this personal loan. In addition, he pays his corporation a reasonable fee for the grant of the security (a “guarantee fee”).

a) Can the shareholder deduct in computing income the amount as a reasonable guarantee fee paid to the corporation where the borrowed money is used by the individual to earn business or property income?

(b) Does the reasonable guarantee fee received by the corporation constitute taxable income from an active business or income from property of the corporation?

(c) Since the shareholder is paying a reasonable guarantee fee, is there no taxable benefit under s. 15(1)?

CRA Response to Q.5(a)

It must first be determined whether the guarantee fee is an expenditure of a current nature or an expenditure of a capital nature coming within paragraph 18(1)(b). The facts submitted do not allow us to make a definitive statement in this regard. However, in such a situation, the guarantee fee would generally be a capital expenditure. Therefore, for the purposes of the following comments, we have assumed that the guarantee fee is a capital expenditure.

An amount payable by a taxpayer (other than a payment specifically excluded by paragraph 20(1)(e.1), e.g. a payment that is computed by reference to profits) as a guarantee fee in a taxation year is deductible pursuant to paragraph 20(1)(e.1), where it can reasonably be regarded as relating only to the year and the taxpayer incurs it for the purpose of borrowing money to be used by the taxpayer for the purpose of earning income from business or property (other than money that the taxpayer uses for the purpose of acquiring property the income from which would be exempt).

Paragraph 20(1)(e.1) would not apply in the situation described above if the guarantee fee is a one-off amount paid at the time the loan is granted for the duration of the loan and the loan has a term of a number of years.

In a situation such as described above, a reasonable one-time guarantee fee (other than an "excluded amount" as defined in subparagraph 20(1)(e)(iv.1)) paid respecting the term of the loan would generally be deductible pursuant to paragraph 20(1)(e), taking into account the application of subsection 18(9), if applicable.

CRA Response to Q.5(b)

Where a taxpayer receives a guarantee fee in a situation such as that described in the question, the CRA generally considers that the guarantee fee is received for a service. This position is supported in particular by The Queen v. Audet [14] where the Federal Court concluded that the amount received for the endorsement of a note was received for a service.

Whether the provision of a service, such as the giving of a guarantee, constitutes a "business" within the meaning of subsection 248(1) is, however, a question of fact that can only be resolved after an examination of all the relevant facts of a particular situation.

Subsection 248(1) provides an extended meaning to the concept of "business" by defining it as including activities of any kind:

“[B]usiness includes a profession, calling, trade, manufacture or undertaking of any kind whatever and, except for the purposes of paragraph 18(2)(c), section 54.2, subsection 95(1) and paragraph 110.6(14)(f), an adventure or concern in the nature of trade but does not include an office or employment.”

The Federal Court of Appeal held in Timmins v. The Queen, [15] that the provision of services under contract for a fee may be a business within the meaning of subsection 248(1) by virtue of being an undertaking of any kind whatever:

"[12] Applying this definition, it seems clear that even if it could be said that the Department was not carrying on a business in the ordinary sense, it was at least engaged in an “undertaking of any kind whatever,” namely the provision of services under a contract for a fee. As such it was carrying on business under a contract as contemplated by ss. 8(10) and 122.3(1)."

Furthermore, in Audet, [16] the Federal Court specifically found that the giving of a guarantee is a business within the meaning of subsection 248(1) by being an undertaking of any kind whatever [TaxInterpretations translation]:

"[12] The act of endorsement, of taking a risk, is in my view an undertaking, even if there is no consideration attached to the service. If there is consideration attached to the endorsement, in my opinion the profit from it is that of a business as that term is described in section 139(1)(e) [(now defined in section 248(1)]."

Where a taxpayer's activity constitutes a "business", the second stage is determining whether that business is "carried on". In this regard, the Federal Court of Appeal commented on the term "carrying on a business" in Timmins [17] as follows:

“[9] The expressions “carry on business,” “carrying on business” or “carried on business,” while undefined must, when regard is had to the ordinary meaning of the words refer to the ongoing conduct or carriage of a business. It would seem to follow that where one “carries on” a business in the ordinary sense or by pursuing one or more of the included activities under ss. 248(1) over time, one is “carrying on business” under the Act”.

However, the question of whether a business is carried on remains a question of fact that can only be resolved after an examination of all relevant facts.

CRA Response to Q.5(c)

The question of whether subsection 15(1) could apply can only be resolved in light of all the relevant facts and circumstances of a particular situation. The facts presented in the situation described above do not appear to us to be sufficient for the CRA to be able to confirm that the shareholder would not be taxable on a benefit pursuant to subsection 15(1).

However, the CRA would not generally apply subsection 15(1) solely as a result of the granting of a guarantee where the CRA is of the view that the individual pays the individual’s corporation a reasonable guarantee fee as consideration for the individual’s corporation granting a mortgage guarantee of a personal loan of the individual.

Q.6 - Premiums on critical illness policy assigned to lender

A corporation has a critical illness insurance policy ("CII policy") that it purchased for its sole shareholder. This policy was assigned as security at the request of the lender (by way of a movable hypothec) in connection with a loan taken out to earn income from a business or property.

a) Does the CRA agree with the conclusion set out in Interpretation Letter 19-045061-001 [18] rendered on January 28, 2020 by the Agence du revenu du Québec, which recognized that a taxpayer, in computing business or property income could deduct, as a guarantee expense, the premiums on a CII policy contracted and assigned to the lender at the latter's request, pursuant to s. 176.4 of the Taxation Act [19] , which corresponds to s. 20(1)(e.1) of the I.T.A.?

(b) Does the answer remain the same where the lender is named as beneficiary of the CII policy and no movable hypothec is granted?

CRA Response

No, our position remains the same as that expressed in Technical Interpretation 2004-0090181E5 [20] . In this regard, it is our view that premiums payable in respect of a CII policy assigned as security for a loan of the corporation cannot be deducted in computing its income from a business or property by virtue of paragraph 18(1)(b) since they constitute capital expenditures. Furthermore, such premiums are also not deductible pursuant to paragraphs 20(1)(e), 20(1)(e.1) and 20(1)(e.2).

In addition, the CII policy being assigned to the lender by naming the lender as the beneficiary of the policy or by way of a movable hypothec does not change our position as stated above.

Q.7 - Timing of reduction to HBP balance

An individual separates in September 2021 and wishes to use the individual’s HBP to purchase a new qualifying home in January 2022. All eligibility requirements for the HBP are otherwise met. However, having previously participated in the HBP, there is a balance of $5,000 remaining to be repaid at the time of the HBP withdrawal on January 20, 2022. The individual intends to make an RRSP contribution of $5,000 in February 2022, following the HBP withdrawal, and report this as a repayment of his HBP balance for the 2021 taxation year.

Would this satisfy the condition in s. 146.01(1) – regular eligible amount - para. (i) that the HBP balance be nil at the beginning of the calendar year that includes the time of the RRSP withdrawal, i.e., January 1, 2022?

CRA Response

Where an individual receives an amount as a benefit under an RRSP that is an "excluded withdrawal" as defined in subsection 146.01(1), that amount is not required to be included in computing the individual's income by virtue of subsection 146(8).

For HBP purposes, an excluded withdrawal is a withdrawal that is, among other things, a "regular eligible amount", as defined in subsection 146.01(1). Among the conditions for an amount to qualify as a "regular eligible amount" within the meaning of that definition, paragraph (i) requires that the individual's HBP balance, at the beginning of the calendar year in which the individual receives the amount as a benefit under an RRSP, is nil.

Under the definition of "HBP balance" in subsection 146.01(1), and subsection 146.01(3), amounts paid by an individual to an RRSP under which the individual is the annuitant (including, during the first 60 days of the year), the total of which is reported, within the limits set out in subsection 146.01(3), in prescribed form filed with the annuitant's income tax return, as a repayment for HBP purposes for the preceding year, will be taken into account in determining whether the annuitant's HBP balance at a particular time in the year [23] is nil.

Thus, only after the individual has actually contributed amounts to the individual’s RRSP, no later than the first 60 days of the year, and indicated the total amount contributed as an HBP repayment for the previous taxation year on the prescribed form[24] attached to the individual’s income tax return, will the individual be able to declare that the individual’s HBP balance is nil at the beginning of the calendar year.

In the situation described, when the individual makes a withdrawal from the individual’s RRSP on January 20, 2022, his HBP balance at the beginning of the year 2022 for the purposes of the definition of "regular eligible amount" will be $5,000. This is because the individual's HBP balance will not be nil because no HBP repayments have yet been made and reported on the prescribed form.

By the time the individual is required to complete Form T1036 on January 20, 2022,[25] it will not be possible for the individual to answer "yes" to question 3(c) of that form ("Was your repayable balance from your previous HBP participation zero on January 1 of this year?") or to sign the certification in section C, since by that time the individual will not have reduced the individual’s HBP balance by an eligible amount pursuant to subsection 146.01(3) for the 2021 taxation year.

Q.8 - Premature death of spousal RRIF beneficiary

2020-0867001E5 [26] took the position that for an amount to qualify as a "designated benefit" as defined in s. 146.3(1), the eligible survivor must be alive at the time the benefit is paid or the joint election is made.

There is nothing in the "designated benefit" definition or in the definition of "refund of premiums" in s. 146(1) indicating that the spouse or common-law partner ("Spouse") must be alive at the time of receipt of the benefit and there is no rule similar to the requirement for indefeasible vesting (as for rollovers for capital property under s. 70(6), which should be read with s. 248(9.2)) for transfers from registered plans following death.

Can CRA explain its position?

CRA Response

Where the last annuitant under a registered retirement income fund ("RRIF") dies, that annuitant is deemed to have received, immediately before death, an amount out of or under the registered retirement income fund equal to the fair market value of the property of the fund at the time of the death, pursuant to subsection 146.3(6). This amount is included in the annuitant's income in the year of death, pursuant to subsection 146.3(5) and paragraph 56(1)(t). However, subsection 146.3(6.2) provides for a calculation that, under certain conditions, reduces the amount that the deceased is deemed to have received immediately before death pursuant to subsection 146.3(6). In order for subsection 146.3(6.2) to apply, an amount that qualifies as a designated benefit must have been paid. [27]

The term "designated benefit" is defined in subsection 146.3(1) and under that definition two types of amounts can be a designated benefit. The first type is provided for in paragraph (a) of the definition "designated benefit" in subsection 146.3(1) and corresponds to amounts paid out of or under a RRIF, after the death of its last annuitant, to the legal representative of the annuitant that meet the following conditions:

(i) They would be "refunds of premiums" as defined in subsection 146(1),[28] assuming that the amounts were paid to the individual out of the RRIF and assuming that the RRIF was an unmatured RRSP before the annuitant's death.

(ii) They are designated jointly by the legal representative and the individual in prescribed form filed with the Minister.

For the purposes of the situation described, the individual is, for the purposes of paragraph (a), the Spouse.[29] Since the joint designation must be made jointly by the deceased annuitant's legal representative and the Spouse, in order for the designation to be valid, the Spouse must be alive at the time the joint designation is made. A joint designation made by the deceased annuitant's legal representative and the deceased Spouse's legal representative would not satisfy this requirement.

The second type of amount that qualifies as a designated benefit is provided for in paragraph (b) of that definition. Under that paragraph, a designated benefit refers to amounts paid out of a RRIF to the individual who is, inter alia, a Spouse,[30] after the death of the last annuitant, which would be refunds of premiums, assuming that the RRIF was an unmatured RRSP prior to the death. Paragraph (b) therefore covers situations where amounts are not paid to the deceased annuitant's legal representative but rather are paid directly to the individual referred to in paragraph (b).

Thus, in the situation described, in order for this condition to be satisfied, the amounts must be paid directly to the Spouse. The payment of the amounts to the Spouse's estate does not satisfy this condition.

The Spouse's estate is not the individual referred to in the definition of "designated benefit" in subsection 146.3(1) and therefore cannot receive or be deemed to have received a designated benefit. Only a contemplated individual, in this case, the Spouse, can receive an amount that is a designated benefit.

In sum, the Spouse must be alive at the time the amounts are paid to the Spouse or, if applicable, at the time the joint designation is made.

Finally, the fact that the definitions of "designated benefit" in subsection 146.3(1) and "refund of premiums" in subsection 146(1) do not include any requirement that property has vested indefeasibly in the Spouse, as is the case in subsections 70(6) and 248(9.2), has no impact on our conclusions.

Q.9 - Bequest of capital interest in charitable remainder trust

2017-0734261E5 [31] and 2016-0625841E5 [32] appear to indicate that, where an individual has by will made a gift to a qualified done of the capital interest in a charitable remainder trust (“CRT”), such capital interest cannot be considered for purposes of s. 118.1(5.1) to have been acquired by the graduated rate estate (“GRE”) on or as a consequence of the individual's death, so that s. 118.1(5.1) is unavailable, no donation credit may be claimed in the T1 returns of the deceased for the year of death or the preceding year, and only the GRE will be able to claim such credit for the taxation year in which the gift is in fact made or for any of the five subsequent taxation years.

(a) Is this correct?

(b) Why does CRA consider that the capital interest in the CRT cannot have been acquired by the estate, when in fact the assets that will be in the CRT necessarily flow through the GRE and only after the clearance certificate is obtained will the executor be able to pass on the assets that will form part of the capital of the CRT?

(c) Is the GRE considered to have made the gift at the time of the CRT’s creation or when the capital interest in the CRT is actually delivered to the qualified donee?

CRA Response to Q.9(a)

To determine whether an individual is eligible for the donation tax credit pursuant to subsection 118.1(3) for a taxation year, an individual must, inter alia, determine the individual's "total gifts" [33] for the particular taxation year, which include, inter alia, the individual's "total charitable gifts" [34] for the year.

Under subsections 118.1(4.1) and 118.1(5), for deaths after 2015, where a gift is made by a deceased individual's will, the gift is deemed to be made by the deceased individual's estate and not by any other taxpayer at the time that the property that is the subject of the gift is transferred to the qualified donee [35] and not at any other time.

The definition of "total charitable gifts" in subsection 118.1(1) (the "Definition") sets out the conditions under which the eligible amount of a gift may be included in the total charitable gifts of an individual other than a trust for a particular taxation year. Clause 118.1(1)(c)(i)(C) provides that, in the case of a gift from an individual's estate, the gift can only be included in the individual's total charitable gifts if subsection 118.1(5.1) applies to the gift.

Subsection 118.1(5.1) applies to a gift made by an individual’s graduated rate estate of an individual whose death occurs after 2015, provided that the gift is made within a period of not more than 60 months after the death, including where the subject matter of the gift is property that was acquired by the estate on and as a consequence of the individual's death or is property that was substituted for that property.

In the case of a gift of a capital interest in a CRT, the subject matter of the gift is that interest and not the property that is transferred to the CRT by the GRE. The CRA's position is that this capital interest in the CRT cannot have been acquired by the GRE on and as a consequence of the individual's death, nor can it be a substituted property for a property so acquired by the GRE. Consequently, subsection 118.1(5.1) does not apply to such a gift.

It follows that the requirement in clause 118.1(1)(c)(i)(C) of the Definition is not satisfied in the case of a gift of a capital interest in a CRT created by will. Thus, the amount of such a gift cannot be added to the deceased individual's total charitable gifts for either the taxation year of death or the preceding taxation year.

On the other hand, a gift of a capital interest in a CRT created by will to a qualified donee may qualify for the donation tax credit to the deceased individual's estate, which is deemed to have made the gift by virtue of subsections 118.1(4.1) and 118.1(5). As stated in Technical Interpretations 2016-0625841E5 and 2017-0734261E5, the eligible amount of such a gift could be included, pursuant to clause 118.1(1)(c)(ii)(A), in computing the total charitable gifts of the GRE for the taxation year in which the gift is made or for the five subsequent taxation years.

This conclusion, which follows from the amendments made by the Economic Action Plan Act, 2014, No. 2 [36] differs from the one that prevailed under the previous rules. For deaths before 2016, former subsection 118.1(5) provided that an individual who made a gift by will was deemed to have made the gift immediately before death. [37] The eligible amount of a gift of a capital interest in a CRT could therefore be considered a charitable gift of the deceased individual (and not of the individual’s estate) for the purposes of subsection 118.1(3). The gift tax credit could be claimed for the taxation year of death or, as the case may be, for the preceding taxation year, provided that the gift to the qualified donee qualified as a gift made by will under the terms of the will.[38]

It is therefore correct that for deaths after 2015, the deceased individual is no longer eligible for the charitable donations tax credit under subsection 118.1(3) where the subject of the gift is a capital interest in a CRT created by will.

CRA Response to Q.9(b)

Paragraph 118.1(5.1)(b) applies to a gift made by the GRE of an individual whose death occurs after 2015 if, inter alia, the subject of the gift is property that was acquired by the estate on and as a consequence of the death or is property that was substituted for that property, and the gift is made no more than 60 months after the death.

As noted in the answer to Question 9(a), the property that is the subject of the gift is the capital interest in the CRT and not the property transferred to the GRE or CRT. A capital interest in a CRT provided by will is created after the taxpayer's death, and after the GRE has acquired the deceased's property as a consequence of the death. The CRT acquires the property from the GRE while the subject of the gift to the qualified donee is a capital interest in the CRT.

The capital interest in the CRT is not an asset acquired by the GRE, nor is it an asset substituted for one or more assets acquired by the GRE. Indeed, the GRE does not acquire anything in return for the assets it transfers to the CRT. Since the GRE does not acquire the capital interest in the CRT, the capital interest is not substituted for property that was acquired by the GRE on and as a consequence of the death.

CRA Response to Q.9(c)

By virtue of paragraph 118.1(5)(b), a gift by will is deemed to have been made at the time the property that is the subject of the gift is transferred to the donee and not at any other time. Interpretation Bulletin IT-226R [39] states in paragraph 4 that a gift of a capital interest in a trust is made when the transfer of the property to the trust has been completed and the equitable interest in the trust has vested in the qualified donee. Paragraph 2 of this Bulletin sets out all of the conditions that must be satisfied in order to consider that a gift of a capital interest in a trust has been made. In particular, it states that a gift is vested where, among other conditions, the size of the qualified donee's interest can be ascertained and it is clear that the qualified donee will eventually receive full ownership of the transferred property.

Consequently, the GRE could be considered to have made a gift of the capital interest in the CRT to the qualified donee at the time the CRT is created by GRE and the capital interest vests in the qualified donee, provided that all of the conditions set out in paragraph 2 of IT-226R are satisfied.

Q.10 - Capital gain on GIC from commission waiver

A 3-year ABC Bank guaranteed investment certificate ("GIC") with an interest rate of 2.71% is issued by ABC Bank to a client of XYZ Brokerage (the "Client") for a face value of $21,000 (the price at which the security is issued and repaid at maturity, excluding interest). ABC Bank pays a commissioned employee of XYZ Brokerage (the "Advisor") a commission of 0.75% of the face value of the GIC, or $157.50 so that, upon issuance, ABC Bank receives a net amount of $20,842.50.

However, suppose that the Advisor waives the commission, so that the Client will only pay $20,842.50 to purchase the GIC, and will still receive $21,000 on maturity. Under s. 54, the adjusted cost base (“ACB”) of a property is its cost plus the expenditures incurred to acquire the property, plus or minus adjustments under ss. 53(1) and (2). The Client pays $20,842.50 to purchase the GIC. When the Advisor waives the commission, no commission is added to the ACB. At maturity, the Client receives the face value of $21,000, realizing a capital gain of $157.50.

Can CRA confirm such tax treatment of the Client?

CRA Response

Firstly, because the statement in this question only briefly describes a particular situation, we cannot give a definitive opinion on the tax treatment of this type of arrangement. However, we can offer the following general comments.

Our understanding of the facts is that the $21,000 invested by the Client in the GIC was derived from two sources: (1) $20,842.50 from the Client's patrimony; and (2) $157.50 representing the commission received by the Advisor from ABC Bank which was applied by the Advisor to the payment of the Client's GIC. Therefore, the cost of the GIC to the Client is $21,000.

Generally, any inducement payment, such as the one described above, received by a taxpayer is included under section 9 (or any other applicable provision) in computing the taxpayer's income from a business or property for a taxation year. If the amount is not otherwise included under section 9 (or any other applicable provision), then it may be included under paragraph 12(1)(x).

In summary, paragraph 12(1)(x) provides, inter alia, that a taxpayer shall include in computing income from a business or property an amount (other than a prescribed amount) received by the taxpayer in the year, while earning income from a business or property, from a person who pays the amount for the purpose of earning income from a business or property, where the amount can reasonably be considered to have been received as an inducement, whether as a grant, subsidy, forgivable loan, deduction from tax, allowance or any other form of inducement, subject to the exceptions set out in subparagraphs 12(1)(x)(v) to (viii).

The amount of the Adviser's commission received by the Client could be included pursuant to paragraph 12(1)(x), if all the conditions for the application of that paragraph were satisfied.

In addition, subparagraph 12(1)(x)(vii) provides, inter alia, that paragraph 12(1)(x) does not apply to the amount by which the cost of the property is reduced under paragraph 53(2)(s).

Generally, subsection 53(2.1) provides that for the purpose of paragraph 53(2)(s), where in a taxation year a taxpayer receives an amount that would otherwise be included in the taxpayer’s income under paragraph 12(1)(x) in respect of the cost of a property (other than depreciable property) acquired by the taxpayer in the year, the taxpayer may elect on or before the date on or before which the taxpayer’s return of income for the year is required to be filed to reduce the cost of the property by such amount not exceeding the least of the adjusted cost base, determined without reference to paragraph 53(2)(s), at the time the property was acquired and the amount so received by the taxpayer.

Thus, provided the Client acquires and holds the GIC as capital property, the Client could make the election under subsection 52(2.1) to avoid the application of paragraph 12(1)(x) and reduce the cost of the GIC by the amount of the commission pursuant to paragraph 53(2)(s).

Footnotes

1 R.S.C. 1985, c. 1 (5th Supp.) ("I.T.A.")

2 Canada Revenue Agency, Form T1135, "Foreign Income Verification Statement".

3 Canada Revenue Agency, Technical Interpretation 2014-0561061E5, April 16, 2015.

4 Canada Revenue Agency, Technical Interpretation 2021-0896021C6, October 7, 2021.

5 For more details, visit the CRA website to view the virtual currency Guide for cryptocurrency users and tax professionals (online: https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/digital-currency/cryptocurrency-guide.html).

6 Canada Revenue Agency (online: https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2022/keeping-records-cryptocurrency-transaction.html), "Keeping records of your cryptocurrency transaction", March 2, 2022.

7 Canada Revenue Agency, Technical Interpretation 2009-0347291C6, November 24, 2009 and Canada Revenue Agency, Technical Interpretation 2009-0329911C6, October 9, 2009.

8 Canada Revenue Agency, Technical Interpretation 2010-0359421C6, May 4, 2010.

9 Canada Revenue Agency, Information Circular IC 70-6R12, "Advance Income Tax Rulings and Technical Interpretations", April 1, 2022.

10 2022 TCC 3.

11 Canada Revenue Agency, Income Tax Folio S5-F4-C1, "Reporting Currency", February 27, 2019

12 Canada Revenue Agency, Technical Interpretation 2014-0538631C6, October 10, 2014

13 CANADA REVENUE AGENCY, Interpretation Bulletin IT-456R (archived), "Capital Property - Some Adjustments to Cost Base," July 9, 1990.

14 78 D.T.C. 6554 (F.C.T.D.) ("Audet").

15 [1999] 2 F.C. 563 ("Timmins").

16 Audet, supra, note 14, para. 12.

17 Timmins, supra, note 15, para. 9.

18 REVENU QUÉBEC, Interpretation Letter 19-045061-001, "Calculation of Business Income - Deduction of Critical Illness Insurance Premiums - Assignment of Policy as Security - Commercial Loan", January 28, 2020.

19 RLRQ, c. I-3 (the “T.A.”)

20 Canada Revenue Agency, Technical Interpretation 2004-0090181E5, November 30, 2004

23 In this case, the beginning of the calendar year, which is the relevant time for the purposes of paragraph (i) of the definition "regular eligible amount" in subsection 146.01(1).

24 Form 5000-S7 Schedule 7, "RRSPs, PRPPs and SPPs - Unused Contributions, Transfers and HBP or LLP Activities (for all)", Part B.

25 Among the conditions for an amount to qualify as a "regular eligible amount" within the meaning of this definition in subsection 146.01(1), paragraph (a) provides that, in order to receive an amount as a benefit under an individual's RRSP, the individual must apply in writing for the amount in prescribed form (in this case, Form T1036).

26 Canada Revenue Agency, Technical Interpretation 2020-0867001E5, March 12, 2021

27 The amount, if any, by which the amount deemed to be received by the deceased annuitant under subsection 146.3(6) is reduced will not be taxable in the income of the deceased annuitant, but rather in the income of the taxpayer who receives the amount.

28 Generally, a "refund of premiums" within the meaning of subsection 146(1) includes any amount paid out of an RRSP as a consequence of the death of the annuitant of the RRSP to an individual who was, immediately before the annuitant's death, either the annuitant's Spouse (where the annuitant dies before the maturity of the plan) or the annuitant's financially dependent child or grandchild, other than a tax-paid amount as defined in subsection 146(1), in respect of the RRSP. Where the Spouse is named as the beneficiary of the RRSP from the RRSP contract, the CRA considers that the amount so received is paid out of an RRSP as a consequence of the death of the annuitant. The amount received by the Spouse may be considered a refund of premiums without any further formality.

29 The individual could also have been the child or grandchild of the annuitant who, immediately before the annuitant's death, was financially dependent on the annuitant.

30 As with paragraph (a), the individual could also have been a child or grandchild of the annuitant who, immediately before the annuitant's death, was financially dependent on the annuitant.

31 Canada Revenue Agency, Technical Interpretation 2017-0734261E5, December 2, 2020.

32 Canada Revenue Agency, Technical Interpretation 2016-0625841E5, April 19, 2017.

33 Within the meaning of subsection 118.1(1).

34 Within the meaning of subsection 118.1(1).

35 Within the meaning of subsection 248(1).

36 Economic Action Plan 2014 Act, No.2, S.C. 2014, c. 39.

37 Or in the preceding taxation year, pursuant to subsection 118.1(4), if an amount in respect of that gift was not deducted in computing tax payable for the year of death.

38 Existing subsection 118.1(4) applies to deaths that occur before 2016. It provides that if subsection 118.1(4) or 118.1(5), as they read for the taxation year in which the death occurred, applied to deem the individual to have made a gift at a time before death, then the gift is deemed to have been made by the deceased individual at that time and not by any other taxpayer or at any other time.

39 Canada Revenue Agency, Interpretation Bulletin IT-226R (archived), "Gift to a charity of a residual interest in real property or an equitable interest in a trust," November 29, 1991.