Income Tax Severed Letters - 2005-10-28


2005 Ruling 2005-0133561R3 - withholding tax exemption

Unedited CRA Tags
212(1)(b)(vii) 245(2) XXXXXXXXXX

Principal Issues: Can a corporation re-loan money to a partnership and qualify for the exemption from Part XIII withholding tax under paragraph 212(1)(b)(vii)?

Position: Yes

Reasons: previous rulings

2005 Ruling 2005-0133041R3 - Investors not dealing non-arm's length

Unedited CRA Tags
248(1) taxable Canadian property 251(1)(c)

Principal Issues: Whether Investors that collectively own XXXXXXXXXX % of a Canadian corporation are "acting in concert", and therefore not at arm's length when they wind up the structure in order to sell the shares?

Position: Winding up the structure will not, in itself, cause the Investors to deal at arm's length.

Reasons: The shares are very widely held, and each Investor acts in his/its own interest.

2005 Ruling 2005-0113361R3 - Paragraph 149(1)(c) ruling.

Unedited CRA Tags

Principal Issues: Whether paragraph 149(1)(c) will apply to exempt the business income earned by a Society from XXXXXXXXXX . The issue is twofold: can the Society be considered a "public body" and can it be considered to be "performing a function of government".

Position: Yes.

Reasons: Based on the facts, the Society can be considered a public body and, since it is involved in negotiating a treaty, among other things, it can be considered to be "performing a function of government" pursuant to our established policy in this regard.

XXXXXXXXXX 2005-011336

2005 Ruling 2005-0129801R3 - labour sponsored venture capital corporations

Unedited CRA Tags

Principal Issues: whether series of transactions is a "merger" for purposes of 204.85

Position: yes

Reasons: caselaw and corporate law

2005 Ruling 2005-0130171R3 - labour sponsored venture capital corporation

Unedited CRA Tags

Principal Issues: whether series of transactions is a "merger" for purposes of 204.85

Position: yes

Reasons: caselaw and corporate law

2005 Ruling 2005-0142111R3 F - Post Mortem Planning

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

Principal Issues: Post Mortem Planning.

Position: Favourable rulings provided.

Reasons: Meets the requirements of the law.

2005 Ruling 2005-0146031R3 - ATR-Deduct. of Shareholder/Manager Remuneration.

Unedited CRA Tags
67 18(1)(a)

Principal Issues: The deductibility of shareholder/manger remuneration that is paid out of income triggered from the proceeds of a sale of business assets

Position: Remuneration is deductible.

Reasons: Amount is reasonable and incurred for the purpose of earning business income.

Technical Interpretation - External

17 October 2005 External T.I. 2005-0139031E5 F - Activités exercées en dehors de la réserve

Unedited CRA Tags
149(1.2) 149(1)d.6)

Principales Questions:
Aux fins de l'application de l'alinéa 149(1)d.6), le critère des 10 % du revenu est-il respecté lorsque la société confie l'exploitation d'un contrat d'aménagement forestier qu'elle a avec le gouvernement du Québec à une société non liée en contrepartie de redevances?

Position Adoptée:
Question de fait, mais probablement pas.

L'activité génératrice de revenu qui est une redevance calculée en fonction de la récolte de bois a lieu à l'endroit où le bois est récolté. De plus, le paragraphe 149(1.2) ne serait pas applicable.

XXXXXXXXXX 2005-013903
L. J. Roy, CGA
Le 17 octobre 2005

6 October 2005 External T.I. 2005-0139551E5 - Private Health Services Plan

Unedited CRA Tags
6(1)(a)(i) 15(1) 248(1)

Principal Issues: Tax implications relating to a specific fact pattern where benefits provided only to executives and senior managers who are shareholders, to the exclusion of all other employees.

Position: General comments given

Reasons: Question of fact; specific comments would only be provided in the context of an advance income tax ruling submitted in the manner outlined in Information Circular IC 70-6R5.

Technical Interpretation - Internal

20 September 2005 Internal T.I. 2005-0147671I7 - Capital Dividend Account

Unedited CRA Tags

Principal Issues: Where a corporation makes an election under subsection 14(1.01) of the Income Tax Act (the "Act") what is the effective date of the addition to the CDA.

Position: The current legislation allows a taxpayer to make the election in the taxpayer's return of income for a taxation year of the disposition, however, there is a pending amendment that will allow a taxpayer to make both elections on the same day and make the resulting entries to the CDA at that time.

Reasons: Pending legislation for 14(1.01)