Income Tax Severed Letters - 2014-04-30

Ruling

2013 Ruling 2012-0438831R3 - 149(1)(e) Ruling

CRA Tags
149(1)(e)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(e)
contract with commercial distributor for sales to farming producers

Principal Issues: Whether a particular organization qualifies as an agricultural organization for purposes of paragraph 149(1)(e).

Position: See below.

Reasons: See below.

2013 Ruling 2013-0507291R3 - Supplemental Ruling

CRA Tags
107.4(1), 108(2), 107.4(3), 132(6), 248(1), 20(1)(c), 132.2

Principal Issues: Changes to ruling 2013-048835 as a result of modifications to certain facts and the proposed transactions.

Position: Changes accepted and Ruling modified.

Reasons: Changes in facts and proposed transactions do not affect the validity of the rulings given earlier.

Technical Interpretation - External

2 April 2014 External T.I. 2012-0443661E5 - Indian investment income

CRA Tags
81(1)(a)

Principal Issues: Whether Indian investment income is exempt in the various scenarios presented?

Position: Depends on each factual case situation.

Reasons: Bastien & Dubé exempts Indian investment income where: 1) there is a contractual debt obligation (deposit account) between an Indian investor and on-reserve financial institution; 2) the contract is concluded on the reserve; 3) the place of payment of the debt is on the reserve.

27 March 2014 External T.I. 2014-0523171E5 - Deemed year-end pursuant to 249(3.1)

CRA Tags
89(11), 249(3.1)
Summary Under
Tax Topics - Income Tax Act - Section 249 - Subsection 249(3.1)
no application of s. 249(3.1) if s. 89(11) election)

Principal Issues: Whether subsection 249(3.1) would apply when two public corporations become the owners of more than 50% of the voting common shares of the capital stock of a taxpayer. The taxpayer had made an election under subsection 89(11) before that time.

Position: No, subsection 249(3.1) would not apply.

Reasons: For the purposes of subsection 249(3.1), there is no change of status of the taxpayer. The taxpayer was already deemed not to be a CCPC for the purposes of subsection 249(3.1) because it made an election under subsection 89(11). See paragraph (d) of the definition of CCPC in subsection 125(7).

27 March 2014 External T.I. 2014-0524851E5 F - Deemed year-end and CPCC status

CRA Tags
251(1)(b), 249(3.1), 125(7)
Summary Under
Tax Topics - Income Tax Act - Section 249 - Subsection 249(3.1)
Ekamant: s. 251(5)(b) does not vitiate actual control by share owner
Summary Under
Tax Topics - Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b)
sub of public corporation does not become CCPC until time of its actual acquisition of control

Principales Questions: Where a public corporation controls a corporate taxpayer, whether subsection 249(3.1) applies with respect to the taxpayer and whether the taxpayer becomes a CCPC at the time another corporation (which is a CCPC) acquires the rights to acquire all the shares of the capital stock of the taxpayer (such a time being before the acquisition of control of the taxpayer)?

Position Adoptée: Subsection 249(3.1) does not apply and the taxpayer does not become a CCPC at the time of the acquisition of the rights to acquire the shares of the capital stock of the taxpayer.

Raisons: The taxpayer does not meet the conditions provided for in subsection 249(3.1) because it does not become a CCPC at that time. Even if the deeming provision in paragraph 251(5)(b) applies for the purposes of the definition of CCPC in subsection 125(7), the public corporation remains a person which controls the taxpayer.

27 March 2014 External T.I. 2014-0520941E5 F - Industrial mineral mine and related expenditures

CRA Tags
ITR 1102(14.3), ITR 1104(2), ITR 1101(4), 20(1)(a), ITR 1100(1)(g), 20(1)(cc), 13(7.5)(b)
Summary Under
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.5) - Paragraph 13(7.5)(b)
access road deemed to have been "acquired"
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 17
access road to quarry was Class 17 property notwithstanding that not owned
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(1) - Paragraph 1100(1)(g)
ordinary meaning of "mineral"
Words and Phrases
mineral
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Start-Up and Close-Down Expenditures
expenditures deductible where incurred prior to acquisition decision

Principales Questions: How certain expenditures incurred by a corporation with respect to a stone quarry should be treated for tax purposes?

Position Adoptée: Questions of facts.

Raisons: General comments provided.

20 February 2014 External T.I. 2014-0518771E5 - Indian - Employment Income

CRA Tags
81(1)(a), Indian Act - 87

Principal Issues: Whether income of Indian employees would remain exempt should the company relocate off-reserve?

Position: Question of fact.

Reasons: See below.

26 March 2013 External T.I. 2014-0523251E5 F - Acquisition of control and amalgamation

CRA Tags
87(2)(a), 256(9)
Summary Under
Tax Topics - Income Tax Act - Section 249 - Subsection 249(4)
double taxation year ends where transactions occur on the closing date before acquisition and amalgamation
Summary Under
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a)
double taxation year ends where transactions occur on the closing date before acquisition and amalgamation

Principales Questions: Under the specific circumstances described in the letter, whether there would be more than one taxation year on the date of the acquisition of control followed by an amalgamation. Whether the transactions completed at the same date but before the acquisition of control would have to be considered for tax purposes in the taxation year deemed to end immediately before the acquisition of control.

Position Adoptée: Under the assumptions of the hypothetical situation described in the letter, the positions taken in paragraphs 9 and 11 of IT-474R2 do not apply. Under such circumstances, we would consider that two taxation years end on the date of the acquisition of control and amalgamation. One of those taxation years would end immediately before the particular time at which the control was acquired, when an election is made pursuant to subsection 256(9). The other taxation year-end would occur immediately before the amalgamation, which time would be determined according to the ordering provided for in the plan of arrangement or the closing agenda of the transactions completed during the day (therefore following the acquisition of control). The transactions completed during the day before the acquisition of control would have to be considered for tax purposes in the taxation year ending immediately before the acquisition of control, assuming that the order of the transactions is logical.

Raisons: Wording of the Act and previous positions.

Technical Interpretation - Internal

10 April 2014 Internal T.I. 2014-0522091I7 - Whether aquaculture is farming under the Act

CRA Tags
248(1) - "farming", 248(1) "fishing".
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Farming
aquaculture as farming

Principal Issues: Is "aquaculture" considered "farming" or "fishing" as defined in s. 248(1) of the Act?

Position: Question of fact, but generally considered farming.

Reasons: Growing crops and raising fish form part of the common meaning of farming and as such fall within the non-exhaustive definition in the Act.

10 March 2014 Internal T.I. 2013-0493971I7 F - Application of section 120.4

CRA Tags
(1.1), 103(1), 245(2), 120.4, 120.4(1)(c)(ii)(C)(I)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1.1)
allocation of income to partner not responsible for expenses
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1)
income-splitting partnership terms
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Split Income - Paragraph (c)
LP income not from property provision or services

Principales Questions: Dans une situation où XXXXXXXXXX fractionne son revenu professionnel avec sa société en nom collectif à responsabilité limité (SENCRL) dont un des associés est une fiducie au profit des enfants mineurs XXXXXXXXXX, 1. Est-ce que 120.4 s'applique ? 2. Est-ce que 103(1.1) s'applique? 3. Est-ce que la DGAÉ s'applique? / In a situation where a XXXXXXXXXX splits his professional income with its Limited liability partnership (LLP), one of the partners is a trust for the benefit of the XXXXXXXXXX's minor children, 1. Does section 120.4 apply? 2. Does paragraph 103 (1.1) apply? 3. Does the GAAR apply?

Position Adoptée: 1. Non (pour les années d'imposition XXXXXXXXXX) possible pour les années d'imposition 2014 et suivantes 2. Possible, question de faits 3. Non. / 1. No (for the XXXXXXXXXX taxation years) possibly for the taxation years 2014 and after. 2. Possibly, question of facts. 3. No.

Raisons: 1. Dans cette situation, pour les années XXXXXXXXXX, l'article 120.4 ne s'applique pas basé sur le texte de la définition de "revenu fractionné". Les modifications proposées à l'article 120.4 par le Budget 2014 pourraient faire en sortes que l'article 120.4 s'appliquerait aux années d'imposition 2014 et suivantes. 2. Dépendamment des faits pertinents au partage de revenu de la société de personne, le paragraphe 103(1) ou le paragraphe 103(1.1) pourrait s'appliquer pour modifier le partage du revenu des associés de la société de personnes. 3. Étant donné la portée des paragraphes 103(1) et (1.1), la RGAÉ ne s'applique pas à la situation en espèce. / 1. In this situation, section 120.4 does not apply based on the text of the definition of "split income" for the XXXXXXXXXX taxation years. The proposed amendments to section 120.4 of the 2014 Budget changes could render section 120.4 applicable to this situation for the tax years 2014 and later. 2. Depending on the facts, subsection 103 (1) or subsection 103 (1.1) could be applied to change the allocations between the partners of the partnership. Given the scope of paragraphs 103 (1) and (1.1), the GAAR does not apply to this situation.