Income Tax Severed Letters - 2014-11-05

Technical Interpretation - External

21 October 2014 External T.I. 2014-0543041E5 - Class 43.2 - Photovoltaic System

CRA Tags
ITR 1100(1)(a)(xxix.1), ITR 1102(1)(c), ITR 1100(27), 13(30), 132(6), ITR 1100(28), ITR Schedule II - Class 43.1 (d)(vi), 13(27), ITR 1100(26), 13(29), ITR Schedule II - Class 43.2, 13(28), ITR 1100(29), ITR 1100(24), ITR 1100(25), 1101(5m), 13(31)
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 43.2
solar panels

Principal Issues: 1. Whether Class 43.2 of Schedule II of the Income Tax Regulations, which provides for an accelerated capital cost allowance rate of 50%, is still available for new renewable energy projects?
2. Whether new solar photovoltaic (pv) system projects for businesses will qualify for inclusion under Class 43.2?

Position: 1. & 2. Possible, depends on the facts.

Reasons: Mixed fact and law.

3 October 2014 External T.I. 2013-0509751E5 - RRSP or RRIF payments to a resident of New Zealand

CRA Tags
Income Tax Conventions Interpretation Act 5, Treaties Article XVIII, 212(1)(l), 212(1)(q)
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 18
meaning of periodic pension payment in NZ Treaty

Principal Issues: What is the main difference between the treatment of a lump sum pension payment from an RRSP or a RRIF in Canada to a resident of New Zealand under the current Convention Between the Government of Canada and the Government of New Zealand signed on May 13, 1980 and the Convention between Canada and New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income signed on May 3, 2012 which has not entered into force as of the date of this letter?

Position: The Current Treaty may apply a 15% withholding tax rate to lump-sum pension payments, however, the New Treaty limits the 15% reduced rate to only periodic pension payments.

Reasons: Pursuant to the terms of the Treaties.

24 September 2014 External T.I. 2014-0543071E5 F - Article XIII of the Canada-France Treaty

CRA Tags
2, Treaties Article XIII, 3 and 38 ITA, Treaties Article VI
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 13
taxation by Canada and France of gain from immovable

Principales Questions: Whether Article XIII of the Canada-France Treaty applies to the gain from the disposition by an individual resident in Canada of an immovable property situated in France with respect to which he is the bare owner, such that the individual would only be taxed in France?

Position Adoptée: No

Raisons: Subparagraph 1(a) of Article XIII of the Canada-France Treaty does not grant France the exclusive right to tax the gain.

5 September 2014 External T.I. 2014-0534941E5 - Flow-through share ss 66(15) of the Income Tax Act

CRA Tags
66(15)
Summary Under
Tax Topics - Income Tax Act - Section 66 - Subsection 66(15) - Flow-Through Share
shares underlying flow-through warrant not required to be flow-through shares

Principal Issues: Whether a right (other than a prescribed right) to acquire a share of the capital stock of a principal business corporation will be a flow-through share where the capital stock to be acquired under the right does not qualify or will not qualify as a flow-through share but the right otherwise satisfies the conditions of the definition of a flow-through share under subsection 66(15) of the Income Tax Act?

Position: Yes.

Reasons: The Law.

14 November 2013 External T.I. 2013-0499121E5 - upstream loan

CRA Tags
90(14), 90(8)(a), 90(6), 90(9)
Summary Under
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6)
application of s. 248(24) where otherwise double inclusion from wind-up/repayment of loan by Amalco also is repayment received by predecessor

Principal Issues: 1. Whether there is any relief available to Canco in respect of multiple income inclusions where an outstanding loan from a foreign affiliate (FA2) to Canco is transferred to another foreign affiliate (FA1) as a result of the liquidation of FA2 into FA1? 2. Whether Canco is required to include any amount in its income where an outstanding loan from a foreign affiliate is transferred within a foreign affiliate group as a result of the amalgamation of two foreign affiliates ("Amalco Loan") and the Amalco Loan is legally offset with a payable due by Amalco to Canco?

Position: 1. Yes 2. No

Reasons: 1. Paragraph 248(28)(a) should apply to avoid double taxation. 2. Since the FA1 Loan is repaid before the August 19, 2014 deadline set out in the coming into force provisions of the Explanatory Notes it is not deemed to be a separate loan received by Canco on August 20, 2014. Accordingly, subsection 90(6) of the Act does not apply to require Canco to include an amount in respect of the FA1 Loan in its income in any taxation year. Pursuant to paragraph 90(8)(a), subsection 90(6) does not apply to the Amalco Loan since it was repaid (by legal set off) within two years of the day the indebtedness arose.