Income Tax Severed Letters - 2012-11-28

Ruling

2012 Ruling 2011-0416001R3 - Split-up butterfly

CRA Tags
Paragraph 55(3)(b)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution
CCPC split-up b/f with Part IV/div. refund circularity issue

Summary under s. 55(1) - distribution.

Principal Issues: Whether the butterfly dividends arising on the proposed transactions are exempt under paragraph 55(3)(b) from the application of subsection 55(2)

Position: Yes

Reasons: Proposed transactions meet the requirements of paragraph 55(3)(b)

2012 Ruling 2011-0431891R3 - XXXXXXXXXX

CRA Tags
142.5, 207.01(1), 214(8), 142.2, 12(4), 116(6), ITR 4900, 7000, 12(3), 212(1)(b)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Fully exempt interest

Summary under s. 212(3) - fully exempt interest.

Principal Issues: 1) Are XXXXXXXXXX prescribed debt obligations?
2) Does withholding apply in respect of interest paid on XXXXXXXXXX held by non-resident investors?

Position: 1) No.
2) No.

Reasons: 1) Paragraphs 7000(1)(a) to (d) of the Regulations are not applicable.
2) The interest paid is considered to be 'fully exempt interest' as defined in subsection 212(3) of the Act for the purposes of subparagraph 212(1)(b)(i) of the Act.

Technical Interpretation - External

22 October 2012 External T.I. 2012-0432241E5 F - Impôt des enfants mineurs - gain en capital

CRA Tags
110.6(2.1), 120.4(4)
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(4)
purported dirty s. 85(1) capital gains crystallization by minor child instead generates dividend

Principal Issues: Dans le contexte où les actions d’une société sont détenues en part égale par un parent et son enfant mineur, est-ce que le paragraphe 120.4(4) s'applique à l'enfant mineur qui voudrait "cristalliser" sa déduction pour gain en capital prévue au paragraphe 110.6(2.1) ?
POSITION ADOPTÉE: Oui

Raisons: Texte de loi

19 October 2012 External T.I. 2012-0440071E5 - Section 67 of the Income Tax Act

CRA Tags
Section 67
Summary Under
Tax Topics - Income Tax Act - Section 214 - Subsection 214(3) - Paragraph 214(3)(a)
corresponding adjustment to recipient
Summary Under
Tax Topics - Income Tax Act - Section 67
correlative income reduction to recipient where s. 67 denial

Summaries under s. 67 and s. 214(3)(a).

Principal Issues: Is the CRA's response to question No. 39, made during the Revenue Canada Round Table, at the 1986 Canadian Tax Foundation's Annual Conference still valid?

Position: Yes.

Reasons: In the absence of special situations, such as abuses, it remains the Agency's policy not to tax the same amount twice. This policy may have application where the issue concerns the matter of reasonableness. Where a taxpayer has been reassessed for a disallowance pursuant to section 67 and the unreasonable amount has been reported by the recipient corporation, the agency will, upon receipt of a written request from the recipient, make the appropriate adjustment(s) granting alleviation provided that the recipient agrees to refund the excess to the taxpayer.

12 October 2012 External T.I. 2012-0441251E5 - Union employer

CRA Tags
252.1, 153, ITR 108(1.2), ITR 108(1)

Principal Issues: Whether section 252.1 of the Income Tax Act (the "Act") only deems each local of a union to be a single employer for the purposes of items listed in subsection 252.1(a) to (d) of the Act.

Position: Yes.

Reasons: Section 252.1 of the Act provides that a union and its locals and branches are considered to be a single employer for the purposes of certain of the retirement savings rules.

Technical Interpretation - Internal

17 October 2012 Internal T.I. 2011-0427981I7 - Communal Corporation as 149(1)(k)

CRA Tags
149(1)(k)

Principal Issues: Is the communal corporation a benevolent or fraternal benefit society under paragraph 149(1)(k) of the Act?

Position: No.

Reasons: The corporation is not the type of organization contemplated in paragraph 149(1)(k). The members have not banded together for their mutual aid and benefit and the corporation is not providing benefits for its members.

27 August 2012 Internal T.I. 2012-0435571I7 F - Opposition à une cotisation

CRA Tags
152(4)b)(iii), 152(4)a)(i), 152(3.1), 165(1.13)
Summary Under
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1)
Act does not limit the reasons for an objection (taxpayer can change mind up to objection time)

Principal Issues: Est-ce qu’un contribuable peut s'opposer à l’entièreté d’une nouvelle cotisation, y incluant les redressements auxquels il avait auparavant acceptés et qui avaient été pris en compte lors de l’établissement d’une cotisation précédente?
POSITION ADOPTÉE: Oui

Raisons: En s’opposant à une nouvelle cotisation, le contribuable s’oppose à l’impôt fixé par le ministre ainsi qu’aux intérêts et pénalités payables. Bien que pour fixer l’impôt, le revenu d’un contribuable doit être calculé, rien dans la Loi ne limite le droit d’opposition du contribuable aux redressements apportés par le ministre au calcul du revenu du contribuable en vue de l’établissement de la nouvelle cotisation.