Income Tax Severed Letters - 2015-03-18

Ruling

2014 Ruling 2014-0547871R3 - Supplemental ruling

CRA Tags
40(2)(e.1), 88(1), 53(1)(f.1), 245(2), 39(2), 80.01(4), 51.1, 248(1), 80(1)

Principal Issues: Amendment to a proposed transaction brought to our attention.

Position: Paragraph 17 and Ruling J of the original Ruling no. 2013-051419 are deleted. Confirmation that, subject to the amendments and to the conditions, limitations, qualifications, and comments set out therein, the original Ruling no. 2013-051419 (except Ruling J) will continue to be binding on the CRA.

Reasons: In compliance with the law.

Technical Interpretation - External

25 February 2015 External T.I. 2014-0517511E5 - Withholding tax and deemed resident trust

CRA Tags
215, 94(3), 104(6), 227(6), 227(7)
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(3) - Paragraph 94(3)(a) - Subparagraph 94(3)(a)(viii)
recovering Part XIII tax on a capital dividend
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(3) - Paragraph 94(3)(g)
Part XIII withholding on capital or taxable dividend then distributed by trust to resident beneficiaries can be recovered

Principal Issues: Specific hypothetical scenario set out where deemed resident trust receives Capital dividend and taxable dividends from a Canadian resident corporation, whether trust is entitled to claim withholding to be deemed to have been paid on account of Part I taxes.

Position: Yes... in certain scenarios... otherwise subsection 227(6)/227(7) may be available.

Reasons: 94(3)(g) -- must include an amount in income of the deemed trust in order to be applicable.

26 January 2015 External T.I. 2014-0547501E5 - Certificates of residency and partnerships

CRA Tags
102(1), 250
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 102 - Subsection 102(1)
certification of Canadian partnership at request of authorized representative
Summary Under
Tax Topics - Income Tax Act - Section 2 - Subsection 2(1)
certification of Canadian partnership at request of authorized representative

Principal Issues: Whether a certificate of residency can be issued to a partnership?

Position: No.

Reasons: A partnership is not considered resident in Canada. However, each partner of a partnership can ask for a certificate of residency, or an authorized representative can make a request on behalf of the partners for CRA to certify that the partnership is a "Canadian partnership" in accordance with subsection 102(1) of the Income Tax Act as of a particular time.

26 January 2015 External T.I. 2014-0545051E5 - Subsections 98(1) and 98.1(1)

CRA Tags
96(1.01), 98.1, 98(1), (1.1)
Summary Under
Tax Topics - Income Tax Act - Section 98 - Subsection 98(1)
non-application to former partner

Principal Issues: Is only a person who was a partner at the time that the partnership ceased to exist deemed by paragraph 98(1)(a) not to have ceased to be a partner?

Position: Yes.

Reasons: Based on the text, context and purpose of the provision. Section 98.1 would govern in a situation where a partner has ceased to be a member of a partnership but continues to have a residual interest in the partnership.

19 January 2015 External T.I. 2014-0547271E5 F - SERP and Lump-Sum Averaging

CRA Tags
248(1) "salary deferral arrangement", 248(1) "retirement compensation arrangement", 56(1)(a), 110.2, 120.31, 56(1)(x), 248(1) "superannuation or pension benefit"
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.2 - Subsection 110.2(1) - Qualifying Amount
generally available for lump sum commutation from funded or unfunded SERP/T1198 recommended
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Superannuation or Pension Benefit
lump sum payment from funded or unfunded SERP is included
Words and Phrases
pension plan

Principales Questions: (1) Whether a lump-sum received in satisfaction of a series of periodic payments from a SERP is a qualifying amount for the purposes of sections 110.2 and 120.31? (2) Whether a T1198 Form has to be filed when a retroactive lump-sum payment of a SERP is a qualifying amount and is $3,000 or more?

Position Adoptée: (1) Yes, provided that the SERP does not fall under the definition of "salary deferral arrangement" in subsection 248(1). (2) No.

Raisons: (1) Depending upon the terms of the plan, the amount paid may be considered as a "superannuation or pension benefit", as defined in subsection 248(1), and may be a "qualifying amount" under subsection 110.2(1). (2) There is no legislated requirement in the Act or in the Income Tax Regulations that requires a payor to issue a Form T1198. However, it would seem appropriate for a payor to issue a Form T1198, thereby permitting the recipient to benefit from the lump-sum averaging provisions.

15 December 2014 External T.I. 2014-0548041E5 - Leasing Properties

CRA Tags
220(3.2), ITR 600, 16.1(1), ITR 1100(1.13)(a), ITR 8200
Summary Under
Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1)
no late election
Summary Under
Tax Topics - Income Tax Regulations - Regulation 8000 - Paragraph 8000(a)
primary purpose of logging trucks not highway use

Principal Issues: 1) Can the election under subsection 16(1) of the Act be late filed? 2) Whether logging trucks specifically designed for transporting logs on dirt and gravel logging roads are "exempt property" and therefore, "prescribed property" as defined in Reg. 8200 for purposes of section 16.1?

Position: 1) A completed copy of the subsection 16.1(1) election form is to be filed by both the lessor and the lessee with their returns of income under Part I for their respective taxation years that include the time at which the lease commenced. A subsection 16.1(1) election cannot be late-filed. 2) Logging trucks designed and built specifically for use on dirt or gravel roads and not for highways are not prescribed property for purposes of Income Tax Regulation 8200.

Reasons: 1) Wording in the Act. 2) The primary purpose of the logging trucks in question is that they are to be used on dirt roads and not built specifically for the transport of freight on the highway.