Income Tax Severed Letters

This Week's Release

Ruling

2019 Ruling 2018-0790001R3 F - Post-mortem Pipeline

Unedited CRA Tags
84(2), 84.1, 245(2)

Principales Questions: 1) Whether subsection 84(2) applies to the proposed transactions. 2) Whether section 84.1 will apply to reduce the PUC on the shares of the new company received as consideration for the disposition of the shares. 3) Whether subsection 245(2) applies to the proposed transactions.

Position Adoptée: 1) No. Favourable ruling given. 2) No. Favourable ruling given. 3) No. Favourable ruling given.

Raisons: In accordance with the provisions of the Act and the previous provisions.

Technical Interpretation - External

16 August 2019 External T.I. 2018-0742431E5 - Election under 104(13.4)

Unedited CRA Tags
104(13.4); 104(6); 104(13.1); 104(13.2); 111
s. 104(13.4)(b) cannot be used to redirect only a targeted portion of a trust’s income

Principal Issues: Can a joint election be made such that 104(13.4)(b) is applicable in respect of only part of the deemed income arising from the application of 104(4) in a testamentary post-1971 spousal or common law partner trust?

Position: No, the election can only be made with respect to all of the trust's income. However, if the election is made, a designation under subsections 104(13.1) or (13.2) may be available.

Reasons: Wording of the provision.

Technical Interpretation - Internal

7 October 2019 Internal T.I. 2019-0801871I7 - Loanbacks

Unedited CRA Tags
110.1(6), 118.1(16)

Principal Issues: Whether subsections 110.1(6) and 118.1(16) apply in two particular scenarios to reduce the fair market value of the gift.

Position: Yes.

Reasons: Within 60 months of the time of the gift, the donor or non-arm's length person uses property of the charity under an agreement that was made or modified after the time that is 60 months before the time of the gift.

8 August 2019 Internal T.I. 2019-0804641I7 - Professional Dues 8(1)(i)(i)

Unedited CRA Tags
8(1)(i)(i), 118.5(d) of the Act and Section 18, Part VI of Schedule V, of the Excise Tax Act
“recognized by statute” can include recognition in a statute’s supporting regulations (but not in by-laws)
recognition by statute can include recognition by regulation

Principal Issues: Whether the words “professional status recognized by statute” (or “un statut professionnel reconnu par la loi” in French) found in subparagraph 8(1)(i)(i) of the Income Tax Act includes recognition in the regulations made under legislation for purposes of the professional dues deduction.

Position: Notwithstanding our previous position in 2014-0530691E5, the words “professional status recognized by statute” found in subparagraph 8(1)(i)(i) of the Income Tax Act includes recognition in the supporting regulations.

Reasons: Legislative schemes depend on regulations to make them work and regulations must strictly conform to the limits established by the Act that authorizes the regulation. Therefore, even if the word statute is interpreted only in the narrower sense to include Acts that are passed by a legislative body, applying a textual, contextual and purposive analysis, a professional status can be recognized by a statute even if it is only recognized in the supporting regulations of an Act.

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