Income Tax Severed Letters - 2011-03-25


2011 Ruling 2010-0363361R3 - Group Contribution Payments

Unedited CRA Tags
15(1), 56(2), 85.1(3), 95(2)(a)(ii)(B), 246(1), Reg 5907(1), definition of "earnings", Reg 5907(2) adjustments to earnings

Principal Issues: A foreign affiliate of Canco (CFA 2) will make various Group Contribution Payments under the domestic tax law of the country in which it is resident to other foreign affiliates of Canco resident in that same country (CFA 1 and CFA 3) as follows:
a direct payment from CFA 2 to an indirect parent company (CFA 3) that will be paid out of earnings from an active business. The payment will be designated as a Group Contribution Payment from CFA 2 to CFA 3.
a direct payment from CFA 2 to its direct parent company (CFA 1) that will be paid out of earnings from an active business. The payment will be designated as a Group Contribution Payment from CFA 2 to CFA 1.
a direct payment from CFA 2 to an indirect parent company (CFA 3) that will immediately be contributed back. The payment will be designated as a Group Contribution Payment from CFA 2 to CFA 3.
a direct payment from CFA 2 to an indirect parent company (CFA 3) that will immediately be contributed back. In addition, CFA 3 will make a capital contribution for the same amount down the chain of intermediary entities to CFA 1. The payment by CFA 2 to CFA 3 will be designated as a Group Contribution Payment from CFA 2 to CFA 3, and the capital contribution from CFA 3 down the chain of intermediary entities to CFA 1 will also be designated as a Group Contribution Payment from CFA 3 to CFA 1.
Will the Group Contribution Payments result in a reduction in CFA 2's exempt surplus, and an increase in CFA 1 or CFA 3's exempt surplus?


the payment reduces CFA 2's earnings from an active business computed in accordance with the domestic tax law of that country, and will be recharacterized as income from an active business to CFA 3 by clause 95(2)(a)(ii)(B)
the payment reduces CFA 2's earnings from an active business computed in accordance with the domestic tax law of that country, and will be recharacterized as income from an active business to CFA 1 by clause 95(2)(a)(ii)(B)
the payment will be contributed back under a contract and the designation of it as a Group Contribution Payment will not affect the earnings of CFA 2 or CFA 3
the payment from CFA 2 to CFA 3 will be contributed back under a contract and the designation of the payment from CFA 2 to CFA 3, and from CFA 3 down the chain of intermediary entities to CFA 1 as Group Contribution Payments will not affect the earnings of CFA 1, CFA 2 or CFA 3

2011 Ruling 2010-0379741R3 - Reorganization of a group of related corporations

Unedited CRA Tags
55(3)(a); 80(1); 88(1)

Principal Issues: 1. Will subsection 55(2) apply to the redemptions of the shares described in the proposed transactions?
2. Will Canco1 be able to designate an amount, in accordance with paragraph 88(1)(d), in respect of the shares of the capital stock of Canco2 that were held by Canco4 (Canco4 being wound-up into Canco1)?
3. Will there be a "forgiven amount" within the meaning of subsections 80(1) or 80.01(1) when the mutually-held notes are set-off against the other?

Position: 1. No
2. Subject to some conditions, yes.
3. In the particular situation, no.

Reasons: 1. The exception provided in paragraph 55(3)(a) will apply.
2. Subject to some conditions, the shares of the capital stock of Canco2 do not appear to be ineligible property.
3. The notes are of an equal amount.

2010 Ruling 2010-0381371R3 - Merger of LSVCC

Unedited CRA Tags
204.8(1), 204.81(1), 204.85(3), 211.7, reg 6701

Principal Issues: Whether transaction qualifies as a "merger" pursuant to ss204.85(3)?

Position: Yes.

Reasons: In accordance with the Act and conforms to tax policy described by Department of Finance.

Ministerial Correspondence

16 March 2011 Ministerial Correspondence 2010-0396361M4 - Principal Residence

Unedited CRA Tags

Principal Issues: Whether the disposition of shares held in a corporation that owns a residential apartment building, which it leases at cost to its shareholders, qualifies for the principal residence exemption under paragraph 40(2)(b) of the Act.

Position: Question of fact.

Reasons: Shares of a single purpose corporation are not a housing unit, a leasehold interest in a housing unit, or a share of the capital stock of a co-operative housing corporation, if such share is acquired for the sole purpose of obtaining the right to inhabit a housing unit owned by that corporation. However, under specific circumstances, where there is an indivisible unit composed of shares of a corporation and a lease entitling the owner to inhabit a housing unit owned by the corporation, the CRA has been of the view that the shares and lease may be considered a "housing unit" for purposes of the definition of principal residence.

Technical Interpretation - External

22 March 2011 External T.I. 2010-0391131E5 F - Gains ouvrant droit à pension - RPC/RRQ

zero should be entered in Box 26 re QPP if employee under 18

Principales Questions: 1) Est-ce que le montant devant figurer à la Case 26 du feuillet T4 doit être zéro ou doit plutôt être laisser en blanc lorsqu'un employé a moins de 18 ans pendant toute l'année d'imposition au cours de laquelle il a reçu un salaire au Québec?
2) À partir de quelle date le montant devant figurer à la Case 26 du feuillet T4 doit être comptabilisé dans une situation où un employé a atteint l'âge de 18 ans au cours d'une année d'imposition donnée dans laquelle il a reçu un salaire au Québec?

Position Adoptée: 1) Zéro
2) À partir de la première paie du mois suivant celui où l'employé a atteint l'âge de 18 ans.

Raisons: 1) RC4120
2) Analyse législative

16 March 2011 External T.I. 2010-0380571E5 F - Application de 251(5)b)(ii) et 256(1.4)b)

Unedited CRA Tags
251(5)b)(ii); 256(1.4)b)
s. 251(5)(b)(ii) does not apply where corporation is required to redeem shares of declared fraudster
potential application even where no control over triggering of precondition

Principales Questions: Est-ce la position prise dans l'interprétation technique 980787 représente toujours la position de l'ARC et si oui, est-ce que cette position pourrait s'appliquer au sous-alinéa 251(5)b)(ii)?

Position Adoptée: Notre position actuelle concernant l'interprétation du sous-alinéa 251(5)b)(ii) et de l'alinéa 256(1.4)b) est que leur libellé est suffisamment large pour s'appliquer à une situation où une personne donnée n'aurait pas le contrôle sur le déclenchement d'un événement, autre que le décès, la faillite ou l'invalidité permanente d'un particulier, qui lui donnerait le droit d'obliger une société à racheter, acquérir ou annuler des actions de son capital-actions dont un autre actionnaire serait propriétaire. Toutefois, nous avons jugé par le passé que ces deux dispositions ne devraient généralement pas s'appliquer à une situation où une société a l'obligation de racheter ou d'acheter les actions de son capital-actions détenues par un actionnaire trouvé coupable de fraude envers la société.

Raisons: Analyse législative et positions déjà prises.

15 March 2011 External T.I. 2010-0376321E5 - Health and Welfare Trust

Unedited CRA Tags

Principal Issues: Various questions regarding the administration of a health and welfare trust.

Position: General comments provided

Reasons: See response.

15 March 2011 External T.I. 2010-0391431E5 - Settlement - general damages

Unedited CRA Tags
5(1); 6(1)(a); 6(3)

Principal Issues: Whether a settlement amount for general damages, following a loss of employment, is non-taxable or a retiring allowance?

Position: Question of fact.

Reasons: As noted in paragraph 12 of IT-337R4, only where general damages are received in respect of personal injuries sustained before or after the loss of employment (for example, in situations of harassment during employment or defamation after dismissal), or where a loss of employment involves a human rights violation and is settled out of court, will general damages be viewed as unrelated to the loss of employment and therefore non-taxable.

14 March 2011 External T.I. 2011-0395271E5 - Reserve for quadrennial survey

Unedited CRA Tags
12(1)(h), 18(1)(a), 18(1b), 18(1)(h), 20(1)(o), Regulations 3600(1), 3600(2)

Principal Issues: If a tugboat operator did not claim a 20(1)(o) reserve in the calculation of its income in any of the three taxation years prior to a quadrennial survey , would the tugboat operator be able to claim a full deduction in the fourth taxation year.

Position: Yes if the conditions in paragraph 18(1)(a), 18(1)(b) and 18(1)(h) are met.

Reasons: The deduction for quadrennial reserves in subsection 20(1)(o) of the Act is a discretionary deduction, and as such the taxpayer need not claim the maximum amount

14 March 2011 External T.I. 2010-0374891E5 - Wage Loss Replacement Plans

Unedited CRA Tags
144.1; 6(1)(f)

Principal Issues: Whether a long-term disability plan funded entirely by employee contributions could be held in a HWT or an ELHT.

Position: Question of fact.

Reasons: In this case, where the employee contributions are not used to purchase insurance coverage from a third party insurance provider and no one has assumed the risk of indemnifying the parties, it is likely that the plan will not be a plan in the nature of insurance and consequently, will not be considered a "group sickness of accident insurance plan".

14 March 2011 External T.I. 2011-0395531E5 - Various medical expenses

Unedited CRA Tags
118.2(2), Regulation 5700

Principal Issues: Whether various expenditures qualify as medical expenses

Position: Some

Reasons: Some conditions in subsection 118.2(2) are met

14 March 2011 External T.I. 2010-0386121E5 - Deductibility of soft cost

Unedited CRA Tags
10, 10(1.1), 10(1.01), 18(2), 18(3.1)

Principal Issues: Is subsection 18(3.1) applicable to soft costs incurred on vacant land?

Position: Question of fact.

Reasons: If the costs relate to the construction period, then subsection 18(3.1) will be applicable. If they are pre-construction costs, then subsection 18(3.1) is not applicable, however, subsection 18(2) may be applicable. In which period an expense is considered to have been incurred, is a question of fact.

10 March 2011 External T.I. 2008-0302851E5 - Application of subsection 96(1) to capital gains

Unedited CRA Tags
96(1), paragraph (a) of the definition of "exempt earnings" in subsection 5907(1)
allocation of exempt portion of partnership gain

Principal Issues: Whether a foreign affiliate partner in a partnership is allocated its share of the capital gain of the partnership.

Position: Yes

Reasons: Context, scheme, and object of the provisions in question.

10 March 2011 External T.I. 2011-0397511E5 - Withholding Requirements for Non-resident Employee

Unedited CRA Tags
153(1)(a); sections 101 to 104 of the Regulations;

Principal Issues: Whether section 101 of the Regulations applies where a non-resident individual is employed by a Canadian corporation but performs all of the duties of employment outside of Canada.

Position: Question of fact.

Reasons: Based on the facts described in the letter, section 101 would not apply

10 March 2011 External T.I. 2010-0389041E5 - Principal Residence, Capital Gain Exemption

Unedited CRA Tags
54, 70(5), 40(2)(b), 248(1) definition of disposition

Principal Issues: Does the principal residence capital gains exemption apply when title on a property is not in the taxpayer's name at the time of death.

Position: Yes, if the taxpayer is the beneficial owner.

Reasons: Definition of "disposition" in 248(1) does not include a disposition if there is no change in beneficial ownership. Since there was no change in beneficial ownership when the title was transferred there was no disposition at the time. Taxpayer is deemed to dispose of property at time of death.

10 March 2011 External T.I. 2010-0387251E5 - Clergy residence

Unedited CRA Tags

Principal Issues: Is an ordained minister who works as a Spiritual Care Coordinator in a medical service centre eligible for a clergy residence deduction pursuant to paragraph 8(1)(c) of the Income tax Act (the "Act") ?

Position: Yes.

Reasons: Satisfies both the status and function tests.

10 March 2011 External T.I. 2011-0395721E5 - Overseas Employment Tax Credit

Unedited CRA Tags

Principal Issues: Is the "all or substantially all" test in paragraph 122.3(1)(b) of the Act applied to each separate qualifying employment or is it computed on the basis of all employment duties performed during a qualifying period.

Position: The test is applied to each qualifying employment.

Reasons: Consistent with paragraph 3 of IT-497R4.

9 March 2011 External T.I. 2003-0017231E5 - Application of section 17

Principal Issues: (1) Is the phrase "owes an amount" limited to money that is loaned? (2) What is the relevant time in determining when an amount remains outstanding under subsection 17(1) in a situation where a non-interest bearing loan from a foreign affiliate (FA) of a corporation resident in Canada (Canco) to another non-resident (Forco) is transferred to Canco? (3) Does a deposit in a Bank constitute a loan for the purpose of applying subsection 17(11.2)?

Position: (1) No. (2) The relevant time period for subsection 17(1) is the time period for which the amount is owed by a Forco to Canco. (3) Yes.

Reasons: (1) Reading of subsection 17(1) and definition of "amount" in subsection 248(1). (2) See above. (3) It is our long-standing position that a deposit is considered a loan to the Bank.

9 March 2011 External T.I. 2010-0391171E5 - Ont. Apprenticeship Employer Signing Bonus & ATTC

Unedited CRA Tags
Section 89, Taxation Act, 2007 [Ontario] (OTA)

Principal Issues: 1. Is the Ontario's Apprenticeship Employer Signing Bonus (AESB) considered "government assistance" for purposes of computing the Ontario Apprentice Training Tax Credit (ATTC)? 2. If the answer to (1) is yes, which taxation years' eligible expenditures are reduced by the AESB payments?

Position: 1. Yes. 2. A taxation year's otherwise eligible expenditures are reduced by an AESB payment if on the taxpayer's filing-due date for the taxation year, the taxpayer has received, is entitled to receive or may reasonably expect to receive the AESB payment.

Reasons: 1. The definition of "government assistance" in subsection 89(19) of the OTA. 2. Description of parameter "G" in the formula in Subsection 89(13) of the OTA

8 March 2011 External T.I. 2011-0394921E5 - Wage loss replacement income - Indian

Unedited CRA Tags

Principal Issues: Is wage loss replacement income of an Indian exempt from tax when received by virtue of employment income that was exempt from tax?

Position: Yes.

Reasons: Wage loss replacement income arising from employment income will be taxed in the same manner as the employment income from which it is derived.

4 March 2011 External T.I. 2010-0384921E5 - Overpayment of tax.

Unedited CRA Tags
125(7), 152(3.1), 164(1) & (1.5), 221.2(1).

Principal Issues: Whether the overpayment of tax can be refunded or applied to another year, whether the carryback of an SRED tax credit can be reversed, and whether instalment payments can be re-appropriated to another amount that is or may become payable in a subsequent year.

Position: Depends on the facts.

Reasons: See below.

3 March 2011 External T.I. 2010-0379181E5 F - Jeux de hasard sur Internet

Unedited CRA Tags
on-line poker winnings would be non-taxable if absence of conduct of serious business person

Principales Questions: Un contribuable qui a une activité quotidienne de jouer à des jeux de hasard sur Internet, par le biais de casinos virtuels, exploite-t-il une entreprise au sens de la Loi de l'impôt sur le revenu?

Position Adoptée: Question de fait. Généralement de telles activités ne constitueront pas une source de revenus.

Raisons: Loi de l'impôt sur le revenu.

25 February 2011 External T.I. 2011-0392061E5 - Commodities and mutual Funds

Unedited CRA Tags

Principal Issues: Are the transactions in commodities futures on account of income or capital?

Position: On account of income

Reasons: Part of the business of mutual fund corporation

14 February 2011 External T.I. 2010-0381561E5 - Deductibility of Trustee Fee

Unedited CRA Tags

Principal Issues: What portion of trustee fees paid for certain services is deductible under 20(1)(bb)

Position: It depends

Reasons: Both the relevant services rendered in respect of shares or securities held by a taxpayer and the business of the recipient of the payment for the services rendered must meet the requirements in 20(1)(bb)


8 October 2010 Roundtable, 2010-0370481C6 F - Don, vente d'actions acquises en vertu 7(1)

Unedited CRA Tags
110(2.1); 110(1)d.01); 7(1)
donation funded with proceeds of short hedge put on immediately on s. 7 exercise does not qualify
cashless exercise does not satisfy ss. 110(2.1) and 110(1)(d.01)

Principales Questions: Est-ce que le don du produit de disposition d'un titre constatant une option d'employé respecte les critères du paragraphe 110(2.1) lorsque l'option est levée sans encaissement ("cashless exercice").

Position Adoptée: Non

Raisons: Libellé de 110(2.1)

8 October 2010 Roundtable, 2010-0378521C6 F - Déduction des primes d'assurance frais généraux

Unedited CRA Tags
pro rata deduction of premiums for overhead expense insurance policy where other risks are also covered

Principales Questions: Quelle est la position de l'ARC sur la déductibilité des primes payées pour une assurance "frais généraux"?

Position Adoptée: La position énoncée au bulletin d'interprétation IT-223 représente toujours la position de l'ARC.

Raisons: La position est conforme à la Loi.

8 October 2010 Roundtable, 2010-0371901C6 F - avantage à l'actionnaire, assurance-vie

Unedited CRA Tags
15(1); 9; 12(1)x); 245(2); 246(1)
CRA will examine if there is a s. 246(1) benefit where subsidiary is beneficiary of life insurance policy held and paid for by parent
reimbursement by sub of premiums potentially includible under s. s. 12(1)(x) where it is the beneficiary of life insurance policy held by parent

Principales Questions: Est-ce que l'ARC pourrait préciser sa position quant à l'application de l'article 9 et de l'alinéa 12(1)x) dans la situation où une police d'assurance-vie est détenue par un groupe de société lorsque le titulaire de la police est une société du groupe et le bénéficiaire de la police est une autre société du groupe.

Position Adoptée: Il s'agit d'une question de fait.

Raisons: L'ARC examinera ces situations à la lumière de la nature juridique des transactions et selon les faits pertinents au dossier.

8 October 2010 Roundtable, 2010-0371961C6 F - Époux et conjoint de fait et CÉLI au décès

Unedited CRA Tags
CRA will itself allocate where a surviving spouse and common-law partner designate more than the exempt contribution amount for one survivor scenario

Principales Questions: Dans quelles circonstances le ministre prévoit-il, en vertu du sous-alinéa d)(iii) de la définition de " cotisation exclue " au paragraphe 207.01(1), permettre une cotisation d'un montant supérieur à zéro, malgré le fait que des paiements au survivant soient faits à plus d'un survivant?

Position Adoptée: En règle générale, le ministre pourrait permettre de telles cotisations à condition que le montant total à être désigné par les deux survivants soit inférieur ou égal (sans l'excéder) au montant qui autrement serait admissible à la désignation de cotisation exclue, en vertu de l'alinéa d), s'il n'y avait qu'un seul survivant.

Raisons: Commentaires généraux fournis par la Direction du traitement des déclarations et des paiements des particuliers.

8 October 2010 Roundtable, 2010-0371921C6 F - RPA et RPDB - Montants versés à une succession

Unedited CRA Tags
56(1)a)(i), 56(1)(i), 104(13.1), 153(1)b), 153(1)h), 100(1) R.I.R., 103(4) R.I.R., 103(6) R.I.R
partial s. 104(13.1) designation can be made
lump sum paid out of RPP to estate for adult children is subject to withholding for account of estate

Principales Questions: 1) Est-ce que le paragraphe 104(13.1) peut s'appliquer de manière à ce que des sommes reçues par une succession en vertu d'un RPA ou d'un RPDB dans une année d'imposition et payées ou payables aux bénéficiaires dans la même année d'imposition soient imposées soit au niveau de la succession, soit au niveau des bénéficiaires, soit en partie au niveau de la succession et en partie au niveau des bénéficiaires?
2) Est-ce que des retenues d'impôt doivent être effectuées lors du versement d'un paiement forfaitaire effectué, suite au décès d'un employé participant à un RPA ou à un RPDB, à sa succession?
3) Les retenues à la source effectuées au moment du versement des sommes à la succession peuvent-elles être réparties entre la succession et les bénéficiaires dans les mêmes proportions que les sommes sur lesquelles ils s'imposent?

Position Adoptée: 1) Oui.
2) Oui.
3) Non. L'impôt retenu sera pris en compte pour déterminer le solde dû par la succession ou le remboursement auquel elle a droit, lequel remboursement, le cas échéant, pourra être distribué aux bénéficiaires.

Raisons: 1) Libellé du paragraphe 104(13.1).
2) Une prestation de retraite ou de pension, comme un paiement versé aux termes d'un RPDB, constitue une " rémunération " versée par un " employeur " à un " employé " selon les définitions prévues au paragraphe 100(1) R.I.R.
3) Aucune disposition de la loi ne permet une telle répartition.

8 October 2010 Roundtable, 2010-0370501C6 F - Options, don, coût moyen, PBR

Unedited CRA Tags
7(1.3); 7(1.31); 47(3); 110(1)d); 110(1)d.01)
taxpayer who does not make the s. 7(1.31) identification is subject to s. 7(1.3)
not identifying gifted shares under s. 7(1.31) could result in s. 110(1)(d.01) not being satisfied

Principales Questions: Est-ce qu'un contribuable est obligé de se prévaloir du paragraphe 7(1.31)?

Position Adoptée: Non

Raisons: Il s'agit d'une décision élective. En l'absence de l'application du paragraphe 7(1.31), c'est le paragraphe 7(1.3) qui va déterminer l'ordre de disposition des titres. Dans un contexte de don, ne pas faire ce choix peut venir compromettre l'admissibilité à la déduction de l'alinéa 110(1)d.01).

8 October 2010 Roundtable, 2010-0370511C6 F - Don par un fiduciaire

Unedited CRA Tags
118.1(5); 70(6)

Principales Questions: 1) En présence d'une fiducie testamentaire au profit du conjoint, comment sont traités les différents distributions/dons effectuées par le fiduciaire de la fiducie testamentaire?
2) Est-ce que ces distributions peuvent affecter la qualification de fiducie au profit du conjoint?

Position Adoptée: 1) Selon les circonstances, peut être soit un don d'une participation résiduelle dans une fiducie qui permet de réclamer un crédit d'impôt pour don dans la déclaration finale du défunt soit un don par la fiducie qui permet à la fiducie de réclamer le crédit d'impôt pour don.
2) Non, si les distributions/dons sont possibles et effectué qu'après le décès du conjoint.

Raisons: Question de fait, selon les termes du testament

8 October 2010 Roundtable, 2010-0371951C6 F - Transfert d'un REER ou d'un FERR au décès

Unedited CRA Tags
s. 248(23.1)(b) does not allow the annuitant to share with the annuitant’s deceased spouse
s. 146.3(6) does not apply as a result of death of non-annuitant spouse

Principales Questions: Application de l'alinéa 248(23.1)b) dans une situation particulière.

Position Adoptée: Commentaires généraux.

Raisons: L'alinéa 248(23.1)b) ne s'applique que pour modifier, par une présomption, le moment du transfert et n'a pas pour effet de permettre le transfert direct à un REER ou un FERR du défunt lorsqu'aucune autre disposition de la L.I.R. ne le permet.

8 October 2010 Roundtable, 2010-0370491C6 F - Don d'actions

Unedited CRA Tags
gift of shares is not made by will where the number of gifted shares is subject to a tax-reduction direction to be applied in executors’ discretion
Words and Phrases
by will

Principales Questions: Est-ce qu'un don d'action se qualifie de don par testament aux fins du paragraphe 118.1(5)?

Position Adoptée: C'est une question de fait

Raisons: Il faut tenir compte du testament et du droit privé applicable.

Technical Interpretation - Internal

18 March 2011 Internal T.I. 2011-0392021I7 - Cost of automobile for subsection 6(2) of the Act

Unedited CRA Tags

Principal Issues: In the particular fact situation provided, what costs and charges should be included in the "cost of the automobile to the employer where the employer owns the vehicle" for the purposes of element "C" in the calculation of a standby charge in subsection 6(2) of the Act?

Position: Question of fact, but "cost" in element "C" of 6(2) should generally include all amounts that form the purchase price to the employer for the vehicle, including any additions, options, accessories, fees and taxes thereon (such as GST, HST or PST), net of applicable rebates.

Reasons: IT-63R5 and the ordinary meaning of "cost".

15 March 2011 Internal T.I. 2011-0394091I7 F - Rev imp. gagné dans une province par une société

Unedited CRA Tags
96(1)f); 402(1) à (3) Règ.; 402(6) Règ.
allocation of taxable income takes into account PEs of partnership in partnership year ending in taxpayer’s year
if first taxation year of partnership ends after the taxpayer’s year, no immediate impact of the partnership’s PEs on taxpayer’s taxable income allocation

Principales Questions: Dans une situation donnée, est-ce qu'une contribuable devait attribuer son revenu imposable pour l'année d'imposition terminée le 16 octobre 2006 entre les provinces dans lesquelles elle avait un établissement stable, incluant les établissements stables d'une société de personnes dans laquelle elle est associée au cours de l'année d'imposition donnée, conformément au paragraphe 402(3) du Règlement si au cours de l'année d'imposition de la contribuable ladite société de personnes avait alors des établissements stables que dans une province?

Position Adoptée: Nous sommes d'avis que la meilleure position dans une telle situation est la contribuable devait attribuer son revenu imposable pour l'année d'imposition terminée le 16 octobre 2006 entre les provinces dans lesquelles elle avait un établissement stable, incluant les établissements stables que la société de personnes avait au cours de son année d'imposition qui s'est terminée le 31 octobre 2005.

Raisons: Politique fiscale sous-jacente aux règles d'attribution du revenu entre les provinces

12 August 2010 Internal T.I. 2009-0328671I7 - Deduction pursuant to paragraph 20(1)(e)

relate solely to year of restructuing where debt is eliminated

Principal Issues: 1. Is the application of paragraph 20(1)(e) of the Income Tax Act restricted when a corporation is under CCAA protection?
2. What are the factors that determine whether the expenses related to restructuring may be an eligible capital expenditure?
3. Are costs related to acquisition of shares, in the course of reorganization, considered to be within the provisions of paragraph 20(1)(e) of the Act?

Position: 1. No
2. Question of fact
3. No

Reasons: 1. Application of paragraph 20(1)(e) of the Act does not depend on whether a taxpayer is under bankruptcy proceedings or under CCAA protection.
2. It is a question of fact.
3. The purpose of paragraph 20(1)(e) is to allow the deduction of financing expenses only.