Income Tax Severed Letters - 2007-05-04

Ruling

2007 Ruling 2006-0219051R3 - Loss-Utilization Proposal

Unedited CRA Tags
20(1)(c) 112(1) 9 12(1)(c)

Principal Issues: Is a loss utilization proposal involving a Holdco-Opco situation, within an affiliated group of corporations acceptable?

Position: YES

Reasons: Reasonable rate and quantum. Meets paragraph 32 of IT-533. No abuse or misuse of the Act read as a whole.

Technical Interpretation - External

23 April 2007 External T.I. 2005-0112891E5 - Provincial Taxable Income Allocation

Unedited CRA Tags
402 of the Regulations

Principal Issues: 1) Application of subsection 402(4.1) of the Regulations where goods are destined for the US 2) Application of subsection 402(6) of the Regulations.

Position: 1) If the gross revenue derived from the sale of the goods destined for the US are not subject to US taxation, the gross revenue is allocated as stipulated by paragraphs 402(4.1)(d) and (e) of the Regulations. 2) Subsection 402(6) of the Regulations applies to allocate a partnership's gross revenue to its partners. The amount so determined is added to any other amount determined for the purposes of subsection 402(3) of the Regulations.

Reasons: 1) See above. 2) See above.

20 April 2007 External T.I. 2006-0214691E5 - Year End on Ceasing to be CCPC - QSBC Share Status

Unedited CRA Tags
110.6(14)(b) 249(3.1)

Principal Issues: Whether new subsection 249(3.1) adversely impacts application of s. 110.6(14)(b)?

Position: No.

Reasons: Where the provision is applicable, s. 249(3.1) deems taxation year of corporation whose CCPC status has changed to have ended immediately before the time of the change (subject to any election under s. 249(3.1)(c)). Even if year end is deemed to have occurred, the determination of whether the shares of the corporation are "qualified small business corporation shares" is still made without regard to any s. 251(5)(b) rights under a purchase and sale agreement relating to a share of the capital stock of the corporation.

20 April 2007 External T.I. 2007-0228421E5 - Clergy residence Deduction

Unedited CRA Tags
8(1)(c)

Principal Issues: Is a Director of Creative Arts entitled to the clergy residence deduction under 8(1)(c)?

Position: No

Reasons: Does not meet status tests

Conference

6 October 2006 Roundtable, 2006-0196011C6 F - PUC Reduction Prior To Wind-Up

Unedited CRA Tags
88(1)(b) 50(1)(b)
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(b)

Principal Issues: In a given situation, where Aco acquires all Bco shares for an amount less than their PUC and, before Bco is wound-up by Aco, Bco reduces the PUC of its shares without payment to match their ACB to Aco in order for Aco to avoid any gain on the deemed disposition of the Bco shares pursuant to 88(1)(b): (1) Whether the CRA would apply the GAAR? (2) What would be the CRA's view about the GAAR if the difference between the ACB and the PUC were the result of a deemed disposition on the basis of subsection 50(1) of the ITA?

Position: (1) Generally, no. (2) None. General comments.

Reasons: (1) Previous position.

6 October 2006 Roundtable, 2006-0196001C6 F - Penalties and Statute Barred Years

Unedited CRA Tags
152(4)(a)(i)

Principal Issues: In a given situation, where a taxpayer transferred public corporation shares to his holding corporation, established the value of the shares without using the CRA's position on the valuation of shares in IC 89-3, provided this value to the professional who prepared the rollover form on his behalf, there is a significant difference between the value attributed to the shares by the taxpayer and their FMV, and, the normal reassessment period applicable to the taxpayer for the year of the share transfer has expired, whether (1) the CRA could reassess the year of the disposition of the shares pursuant to subparagraph 152(4)(a)(i)? and (2) a penalty under subsection 163.2 could apply to the preparer of the taxpayer's rollover form and/or tax return for that year?

Position: (1) Yes. (2) Yes.

Reasons: General comments.

Technical Interpretation - Internal

17 September 1998 Internal T.I. 98206870 - RRSP Benefit, Deceased Annuitant

Unedited CRA Tags
146(8.8)

Principal Issues:
Will amounts received from an RRSP by an estate several years after the annuitant's death be taxable when distributed to the beneficiaries of the estate?

Position: Probably not.

Reasons:
The income earned after the annuitant's death should probably be taxed in the RRSP which is specifically excluded from the definition of benefit.