Income Tax Severed Letters - 2013-10-09

Technical Interpretation - External

25 September 2013 External T.I. 2011-0428941E5 F - Transfer of Stock Options to Protective Trust

CRA Tags
7(1.1), 7(1)(a), 7(3)(a), 7(1)(c)
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a)
transfer out of protective trust before exercise

Principales Questions: Whether subsection 7(1.1) may apply in a situation where an employee transfers unexercised stock options to a protective trust, which later distributes the unexercised options to the employee for exercise?

Position Adoptée: Yes, provided the conditions of subsection 7(1.1) are met.

Raisons: Subsection 7(1.1) may apply if the options are exercised by the employee and the benefit arises under paragraph 7(1)(a).

25 July 2013 External T.I. 2013-0478091E5 - CCA Restrictions on Leasing Properties

CRA Tags
ITR 1100(14), ITR 1100(1), ITR 1100(16), ITR 1100(17), 16.1(1), ITR 1100(27), ITR 1100(26), ITR 1100(15), 20(1)(a), ITR 1100(24), ITR 1100(28), ITR 1100(25)

Principal Issues: Whether ITR 1100(16) exempts a corporation from the CCA restrictions imposed by ITR 1100(15) where the leasing asset is Solar PV Electrical Generating Equipment?

Position: Question of Fact.

Reasons: See below.

11 July 2013 External T.I. 2013-0490591E5 F - Montant pour une personne à charge

CRA Tags
118(4), 118(1)(b), 2, 248(1) "cohabiting spouse of common-law partner"
Summary Under
Tax Topics - Income Tax Act - Section 118 - Subsection 118(1) - Paragraph 118(1)(b) - Subparagraph 118(1)(b)(ii)
conditions not satisfied where children did not live with non-supporting husband following separation
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Common-Law Partner
can be in a conjugal relationship even if live in the same home for only half of each year
Words and Phrases
conjugal relationship
Summary Under
Tax Topics - Income Tax Act - Section 2 - Subsection 2(1)
sole fact of a non-resident having a conjugal relationship with a Canadian resident does not render him a resident

Principales Questions: 1. Est-ce que les exigences de l'alinéa 118(1)b) de la Loi de l'impôt sur le revenu ("Loi"), en ce qui a trait à Monsieur, sont respectées au cours de l'année de la séparation? Are the criteria of subsection 118(1)b) of the Income Tax Act ("Act") respected, with respect to Monsieur, during the year of separation?
2. Dans un cas donné, quelle est la résidence d'une personne? In a particular situation, what is the residency of an individual?

Position Adoptée: 1. Question de faits. Question of fact.
2. Question de faits. Question of fact.

Raisons: 1. Application des conditions de l'alinéa 118(1)b) de la Loi. Application of the conditions of subsection 118(1)b) of the Act.
2. Les facteurs à prendre en considération pour déterminer le statut de résidence d'un particulier aux fins de l'impôt sur le revenu sont décrits dans le Folio de l'impôt sur le revenu S5-F1-C1 The factors to be taken into account in making the determination of an individual's residency status for the purpose of income tax are described in the Income Tax Folio S5-F1-C1.

Conference

1 December 2012 Roundtable, 2012-0468911C6 - Income Tax Folio Update

Principal Issues: At the Fall TEI Roundtable, various questions were posed about the status of the Income Tax Folios.

Position: Comments provided.

Reasons: See below.

25 November 2012 Roundtable, 2013-0479401C6 F - Employés et Achat Ltée – commentaires panel ARC

CRA Tags
84.1
Summary Under
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c)
Buyco that is formed by employer to purchases departing employees’ shares is NAL
Summary Under
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) - Paragraph 84.1(1)(b)
generally a deemed dividend on repurchase of departing employees’ shares by employer-funded Buyco

Principales Questions: Dividende réputé selon 84.1 dans une structure composée d'employés et d'Achat Ltée

Position Adoptée: Nous sommes d'avis que de façon générale, les employés et Achat Ltée auront entre eux un lien de dépendance.

Raisons: Positions précédentes et jurisprudence.

25 November 2012 CTF Roundtable, 2013-0479402C6 - Employee Buycos - comments from CRA Panel

CRA Tags
84.1
Summary Under
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c)
stock option share Buyco not at arm's length
Summary Under
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1)
stock option Buyco not at arm's length

Principal Issues: Whether 84.1 applies to deem a dividend in employee buyco structures

Position: It is our view that, generally, the employees and the Buyco are not dealing at arm's length.

Reasons: Previous positions and jurisprudence.

28 November 2010 CTF Annual Roundtable Q. 4, 2010-0386341C6 - CTF Q#4: Penalties for Late-Filed T2 returns

CRA Tags
162(2), 162(2.1), 162(1), 162(7), 150(1)
Summary Under
Tax Topics - Income Tax Act - Section 162 - Subsection 162(7)
indulgence where nil income

Principal Issues: Whether a penalty under paragraph 162(7)(b) of the Act would apply to a corporation resident in Canada that has no taxable income or a loss for tax purposes.

Position: It is possible.

Reasons: A strict interpretation of the relevant provisions, read in conjunction with the decision reached in Exida.com Limited Liability Company v The Queen [2010 FCA 159] would suggest that a corporation resident in Canada that did not file a T2 income tax return could be subject to the penalty described in subsection 162(7) of the Act.

28 November 2010 CTF Annual Roundtable Q. 8, 2010-0386311C6 - Subsection 40(3.4)

CRA Tags
40(3.4)
Summary Under
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.4)

Principal Issues: Whether the deeming rule in subsection 40(3.4) of the Act applies to the entire Act.

Position: The deeming rule applies for purposes of allowing partners of a dissolved partnership to claim losses that have been deferred under subsection 40(3.4).

Reasons: Reading of the law and purpose of the legislation.

27 November 2011 CTF Annual Roundtable Q. 15, 2011-0426271C6 - Subsection 96(3) election

CRA Tags
96(3), 22
Summary Under
Tax Topics - Income Tax Act - Section 22 - Subsection 22(1)

Principal Issues: Circumstances of elections made under subsection 96(3).

Position: General comments

Reasons: See below.

28 November 2010 CTF Annual Roundtable Q. 19, 2010-0386041C6 - Deemed ownership of shares

CRA Tags
88(1)(c)(vi)(B)(II)
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c) - Subparagraph 88(1)(c)(vi) - Clause 88(1)(c)(vi)(B) - Subclause 88(1)(c)(vi)(B)(II)
"all the shares" not restricted to target

Principal Issues: Is the reference to "all of the shares" in subclause 88(1)(c)(vi)(B)(II) a reference only to shares of a subsidiary that is subsequently wound-up into its parent?

Position: The reference to "all of the shares" in subclause 88(1)(c)(vi)(B)(II) is a reference to any shares owned by a person who acquires property distributed to the parent on the winding-up.

Reasons: See below.