Income Tax Severed Letters

This Week's Release

Ruling

2020 Ruling 2020-0854091R3 - Safe Income and Section 47

Unedited CRA Tags
47, 55(2.1)(c), 85(1)(g) and 88(1)(b)
safe income of common shares acquired on a s. 88(1) wind-up averaged with directly-purchased common shares/no safe income reduction on redemption of high ACB prefs
new common shares (on dirty s. 85 exchange to isolate cost base in new prefs) are distinguished from old common shares by different shareholder meeting notice period

Principal Issues: Whether safe income can be averaged across common shares of the same class that are acquired in two separate transactions and whether following a subsection 85(1) transfer where common shares are exchanged for preferred shares and new common shares will the redemption of the preferred shares for their ACB result in a reduction of the safe income associated with the common shares?

Position: The safe income on hand should be averaged across shares of the same class acquired in separate transactions and if there is no inherent gain associated with the preferred shares the redemption of the preferred shares will not result in a reduction of the safe income associated with the common shares.

Reasons: The allocation of safe income on a pro rata basis is consistent with the CRA's existing administrative positions. The safe income on hand associated with common shares that are exchanged for new preferred shares and new common shares should be allocated based on the inherent gain of the shares received if the exchange is made on a rollover basis and the ACB of the shares received equals the ACB of the shares exchanged.

Technical Interpretation - External

13 July 2021 External T.I. 2021-0887941E5 - Registered Clinical Counsellors - METC

Unedited CRA Tags
118.4(2)

Principal Issues: Whether Registered Clinical Counsellors in BC can be added to the CRA's list of "Authorized medical practitioners by province or territory for the purposes of claiming medical expenses".

Position: No.

Reasons: RCCs do not meet the requirements of being an authorized medical practitioner for purposes of the Act.

3 June 2021 External T.I. 2021-0884531E5 - Australian self-managed super fund

Unedited CRA Tags
56(1)(a)(i); 6(1)(g)

Principal Issues: What are the Canadian income tax implications of holding an interest in an Australian self-managed super fund (SMSF), at the time of immigration to Canada, and subsequently as a resident of Canada?

Position: General comments provided.

Reasons: Due to insufficient information, we are unable to provide determinative comments.

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