Income Tax Severed Letters - 2014-08-20

Technical Interpretation - External

11 July 2014 External T.I. 2013-0497381E5 - REIT investment in a US IRA.

CRA Tags
Treaties Article X, Treaties Article XXII, Treaties Article VI, Treaties Article XXI, 212(1)(c), 104(16), Treaties Article XIII, 122.1(1), Treaties Article XI
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 10
SIFT distributions respected as dividends
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 22
REIT income distributions to IRA at 15%

Principal Issues: Whether distributions of income from a REIT resident in Canada to a US IRA for the benefit of a US resident individual are subject to withholdings in Canada?

Position: Yes.

Reasons: Distributions from the Canadian-resident REIT are subject to paragraph 212(1)(c) of the Act and article XXII(2) of the Canada-US Treaty.

7 July 2014 External T.I. 2014-0518561E5 F - Superficial loss

CRA Tags
54, 40(2)(g)(i), 88(1)
Summary Under
Tax Topics - Income Tax Act - Section 54 - Superficial Loss
shares of Holdco as identical property to shares of Opco/transferred corporation wound-up but not dissolved within 30 days
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1)
transferred corporation wound-up but not dissolved within 30 days

Principales Questions: An individual disposes of shares of the capital stock of a corporation (Opco) in favour of a corporation (Holdco) affiliated with him. Opco is then wound up into Holdco. Whether the loss resulting from the disposition of the Opco shares by the individual is a superficial loss where (1) the corporation is wound up and dissolved within 30 days after the disposition, and (2) where the corporation is wound up but not dissolved within the 30 day period.

Position Adoptée: (1) To the extent that the Holdco shares that may be received by the individual are not substituted property, no. (2) To the extent that the Holdco shares are not substituted property, the winding-up meets the requirements mentioned in paragraph 5 of IT-126R2, and the loss is a true economic loss and not an artificial loss, no.

Raisons: (1) The law. (2) The law and administrative position set out in paragraphs 5 and 9 of IT-126R2.

27 June 2014 External T.I. 2013-0500701E5 F - Déductibilité de certaines dépenses

CRA Tags
9, 18(1)(a), 67.1, 67
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose
distinction between principal and secondary reason for incurring expense

Principales Questions: Est-ce que des dépenses encourues XXXXXXXXXX peuvent être considérées comme des dépenses déductibles? Could the expenses incurred in XXXXXXXXXX be deductible?

Position Adoptée: Question de fait. Question of fact.

Raisons: Voir lettre ci-dessous. See letter below.

Technical Interpretation - Internal

26 June 2014 Internal T.I. 2014-0518621I7 - Government-owned housing

CRA Tags
6(1)(a), 3, 63, 56(1), 6(6)

Principal Issues: Whether a taxable benefit arises where government-owned housing is rented to employees of other government departments, retirees or to members of the general public?

Position: Employees of other government department and retirees - It is a question of fact, most likely yes. General public – most likely no.

Reasons: See response.