Income Tax Severed Letters - 2012-07-20


2012 Ruling 2011-0419121R3 - Professional partnership reorganization

Unedited CRA Tags
125(7); 256(2.1)

Principal Issues: Whether the reorganization of a partnership so that professional services would be provided by corporations wholly owned by the partners would result in the application of the restrictions for "personal services business" or "specified partnership business" so that the corporations would not be entitled to the full small business deduction on their contract income.

Position: No.

Reasons: The proposed reorganization complies with all of our restrictions for such reorganizations.

2012 Ruling 2010-0355721R3 - Canadian Exploration Expenses--New Mine

Unedited CRA Tags

Principal Issues: Whether expenses relating to a proposed new mine will qualify for inclusion under paragraph (g) of the definition of CEE.

Position: Some of the expenses will qualify.

Reasons: Based upon the facts and a written opinion from Natural Resources Canada.

2011 Ruling 2011-0407891R3 - Professional corporation contracting with partnership

Unedited CRA Tags
125(7); 256(2)

Principal Issues: Whether the income earned by a professional's corporation from providing professional services to a partnership in which the professional is a Partner would qualify for the small business deduction and would not be restricted under the rules for specified partnership income and personal services business.

Position: Yes.

Reasons: The facts and proposed transactions conform to the standards set out in similar rulings.

2011 Ruling 2009-0346131R3 - XXXXXXXXXX Fonds Commun de Placement

Unedited CRA Tags

Principal Issues: Whether it is reasonable to consider a XXXXXXXXXX Fonds Commun de Placement to be a co-ownership arrangement.

Position: Yes

Reasons: Its attributes more closely resemble a co-ownership than any known entity under Canadian tax law.

Technical Interpretation - External

9 July 2012 External T.I. 2012-0438751E5 F - Police d'assurance-vie

Unedited CRA Tags
56(1)j), 148(1) 148(9), 237(1.1), 239(2.3), 217(2) Règlement
proceeds of disposition arise when policy settled and are calculated by insurer
provision of SIN by holder of matured policy to insurer is required

Principal Issues: 1. Est-ce que le contribuable doit inclure un montant dans le calcul de son revenu lors du règlement de sa police d'assurance-vie à 65 ans (avant son décès)? 2. Est-ce que le contribuable doit fournir son numéro d'assurance sociale à l'assureur si un montant doit être inclus dans son revenu en vertu de l'alinéa 56(1)j) et du paragraphe 148(1)?

Position: 1. Possiblement. 2. Oui.

Reasons: 1. 56(1)j) et 148(1). L'assureur doit effectuer le calcul. 2. 237(1.1)

3 July 2012 External T.I. 2012-0449701E5 - Subsection 40(3.12) and tiered ptnshps

Unedited CRA Tags
40(3.12); 40(3.1)

Principal Issues: Whether a partnership that is a member of a partnership can make an election under subsection 40(3.12)?

Position: No.

Reasons: Subsection 40(3.12) refers to corporations, individuals (other than trusts) and testamentary trusts.

3 July 2012 External T.I. 2011-0431141E5 - Joint ventures and subsection 34.2(14)

Unedited CRA Tags

Principal Issues: Whether subsection 34.2(14), which provides for a deemed continuity of interest in certain situations for purposes of allowing partners to claim the QTI reserve even if they have disposed of their interest in the particular partnership, would be extended to joint venture participants that dispose of their interests in a joint venture to allow them to continue to claim the "QTI" reserve for joint ventures.

Position: No.

Reasons: The QTI reserve for joint ventures is an administrative position, and a joint venture participant will have to include any remaining balance in the reserve at the end of a taxation year in which it no longer holds an interest in the joint venture.

25 June 2012 External T.I. 2012-0448091E5 - Joint Venture policy re no separate fiscal period

Unedited CRA Tags

Principal Issues: Whether the adjusted stub period accrual method set out for partnerships in section 34.2 can be used in the case of joint ventures.

Position: No.

Reasons: A joint venture does not have a separate taxation year.


3 May 2011 IFA Roundtable, 2011-0404511C6 - 212(1)(d)(vi)

Unedited CRA Tags

Principal Issues: What is CRA's position in respect of withholding requirements on cross-border payments in respect of a copyright of a literary, dramatic, musical or artistic work?

Position: While we are undergoing an in depth review of relevant sources we will be following the position set out in paragraph 3 of IT-303SR-- all payments in respect of the copyright of a literary, dramatic, musical or artistic work are not subject to withholdings unless that payment is for a right referred to in subsection 212(5) of the Act.