Income Tax Severed Letters - 2013-10-23


2013 Ruling 2012-0470281R3 - Reduction of paid-up capital

CRA Tags
212(2), 15(1), 84(2), 84(4.1)

Principal Issues: Whether reduction of paid-up capital of a public corporation qualifies as a reorganization under 84(2) so that 84(4.1) does not apply.

Position: Yes.

Reasons: Complies with the law and CRA administrative positions.

2013 Ruling 2012-0443081R3 - Distribution of pre-72 Capital Surplus on Hand

CRA Tags
88(2.2), 88(2), 88(2.1)

Principal Issues: The distribution of the pre-72 CSOH of ACo to its shareholders without winding-up ACo under subsection 88(2).

Position: Yes.

Reasons: Previous GAAR Committee conclusions and legislation.

2012 Ruling 2012-0463231R3 - Reg 1106 and excluded production

CRA Tags
ITR 1101(5k.1), ITR 1100(1)(m), 125.4, ITR 1106

Principal Issues: 1- Will the granting of the Option by the production company (Prodco), a qualified corporation, to a related company (Master Distributor), a prescribed taxable Canadian corporation, cause the 25-year copyright ownership requirement not to be met? 2- Will the exercise of the Option by Master Distributor cause the 25-year copyright ownership requirement not to be met? 3- Upon the exercise of the Option by Master Distributor, will the production be a Class 10(x) property to Master Distributor?

Position: 1 & 2– No. 3– Yes, provided the production does not subsequently become an excluded production (i.e. the 25-year copyright ownership requirement continues to be met) and the production meets the other requirements of a Canadian film or video production under subsection 1106(4) of the Regulations.

Reasons: 1 & 2– Clause 1106(1)(a)(iii)(A) of the definition of "excluded production" in the Regulations contemplates a transfer of the copyright between a qualified corporation and a related prescribed taxable Canadian corporation. 3– Wording of provisions (including subsection 1101(5k.1) of the Regulations which contemplates a transfer of the production between a qualified corporation and a related corporation).

Ministerial Correspondence

23 August 2013 Ministerial Correspondence 2013-0497191M4 - Tax Issues Relating to microFIT

CRA Tags

Principal Issues: 1. Taxpayer requested clarification of rules relating to the microFIT program.

Position: 1. No technical reply provided.

Reasons: 1. A previous technical interpretation addressed the taxpayer's enquiry.

20 August 2013 Ministerial Correspondence 2013-0494491M4 - General information- Rulings and Interpretations

Principal Issues: 1. General information on rulings and technical interpretations.

Position: 1. No position taken.

Reasons: 1. Service related letter.

Technical Interpretation - External

25 September 2013 External T.I. 2013-0488571E5 F - Repayment of a dividend

taxpayer generally cannot change his legal position through a subsequent board or shareholder resolution
dividend declared cannot be nullified by subsequent board or shareholder resolution

Principales Questions: Whether part of a dividend received during a taxation year may be subsequently cancelled by a repayment.

Position Adoptée: No.

Raisons: General comments provided.

2 August 2013 External T.I. 2013-0475261E5 - Eligible Dividend - Late Filing 89(14.1) & 184(3)

CRA Tags
184(2), 89(14), 89(14.1), 184(3)

Principal Issues: Whether, in the context of the particular hypothetical situation, subsection 89(14.1) of the Income Tax Act (the "Act") would apply at the time that an election is made for the purposes of subsection 184(3), such that the designation under subsection 89(14) would be deemed to be made at the time the designation is required to be made, with the result that the separate taxable dividend pursuant to subsection 184(3) is designated to be an eligible dividend?

Position: Clarifications provided.

Reasons: In accordance with the Act.


8 October 2010 CTF Roundtable, 2013-0507191C6 - Monetization of Securities - 2010 CTF Conference

CRA Tags
245, 248(1), 20(1)(c)
payment under an equity swap not a capital loss because no disposition (and on income account)

Principal Issues: Status of CRA's position on monetization arrangements.

Position: See below.

Reasons: See below.

28 November 2010 Annual CTF Roundtable, 2010-0385891C6 - Functional Currency Tax Reporting - CTF 2010

CRA Tags
Subco in Cdn-dollar group must use foreign currency in business transactions and "presented" financial statements

Principal Issues: Functional Currency Tax Reporting

Position: See below.

Reasons: See below.

28 November 2010 Annual CTF Roundtable, 2013-0507301C6 - Cost of Travel as Medical Expense - 2010 CTF

CRA Tags
118.2, 118.2(2)(h)

Principal Issues: The Cost of Travel as a Medical Expense

Position: See below.

Reasons: See below.

Technical Interpretation - Internal

18 June 2013 Internal T.I. 2011-0393451I7 - Treaty Exemption - Fixed Base available in Canada

CRA Tags
115, Treaties Article V, 2(3)

Principal Issues: Whether an individual, who is resident in Ireland but practising XXXXXXXXXX in Canada under a contract for service for approximately one year, is subject to Canadian income tax on his income earned in Canada.

Position: Likely not, under the circumstances.

Reasons: Question of fact. However, it remains difficult to distinguish the current situation from the facts considered by the Federal Court of Appeal in Dudney.

30 April 2013 Internal T.I. 2012-0439741I7 -

CRA Tags
20(3), 20(1)(c)

Temporarily removed.