Income Tax Severed Letters - 2015-05-06

Ruling

2015 Ruling 2014-0552291R3 - Paragraph 1102(5)(a) of the Regulations

CRA Tags
ITR Schedule II - Class 13, ITR 1102(5)(a), 245(2), ITR Schedule II - Class 1
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(5)
applied to finishing, not erecting, building

Principal Issues: Whether paragraph 1102(5)(a) of the Regulations would apply to reallocate the costs of the construction of the Apartment Finishes to Class 1 of Schedule II of the Regulations.

Position: Yes.

Reasons: Paragraph 1102(5)(a) of the Regulations will apply to the proposed transactions to prevent the lessee from classifying what would otherwise be considered the cost of a building or structure, or part of a building or structure, as a Class 13 leasehold improvement.

2014 Ruling 2014-0530961R3 - Cross-Border Butterfly

CRA Tags
143.3, 212.1, 55(3.2)(h), 55(2), 8(6.1), 55(3)(b), 55(3.1)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution
U.S./Cda b/f including conversion of Foreign Spinco and TC from fiscally disregarded to regarded for Code purposes/2-stage transfer to TC of cash assets/post-b/f dividend by DC/s. 86.1 treatment/proportionate allocation of Foreign Spinco debt
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(b) - Subparagraph 55(3.1)(b)(i)
pro rata allocation of Foreign Spinco debt
Summary Under
Tax Topics - Income Tax Act - Section 86.1 - Subsection 86.1(2)
spin-off by U.S. pubco of U.S. spinco after Canadian butterfly

Principal Issues: Whether the Canadian "spin-off butterfly" transactions in the context of a cross-border butterfly described below meet legislative and administrative requirements.

Position: Transactions meet requirements.

Reasons: Consistent with law and administrative requirements

Technical Interpretation - External

22 April 2015 External T.I. 2014-0550451E5 - Interpretation of paragraph 5907(2.01) of the Regulations.

CRA Tags
ITR 5907(2.01)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(2.01)
"consideration received" includes assumed liabilities

Principal Issues: Does the assumption by an acquiring foreign affiliate of liabilities of a disposing foreign affiliate constitute "consideration received" by the disposing affiliate for purposes of paragraph 5907(2.01) of the Regulations?

Position: Yes.

Reasons: Jurisprudence.

16 April 2015 External T.I. 2014-0561061E5 - Specified Foreign Property

CRA Tags
248(1), 233.3(1)
Summary Under
Tax Topics - Income Tax Act - Section 122.1 - Subsection 122.1(1) - Non-portfolio Property
digital currency holdings of a foreign partnership not used in active business
Summary Under
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Foreign Property
digital currency holdings of a foreign partnership not used in active business (para. (j))

Principal Issues: Whether 1. a digital currency (e.g. Bitcoins) and 2. a foreign partnership holding digital currency (i.e. Bitcoins) are "specified foreign property" as defined in subsection 233.3(1).

Position: 1. Yes and 2. Yes, to the extent the partnership is not a "specified Canadian entity" as defined in subsection 233.3(1).

Reasons: 1. Digital currency is funds or intangible property and "specified foreign property" includes funds or intangible property held outside of Canada. 2. Paragraph (e) in the definition of "specified foreign property" includes an interest in a partnership that owns or holds specified foreign property and paragraph (o) of the same definition excludes an interest in a partnership that is a specified Canadian entity.