Income Tax Severed Letters - 2015-06-03

Technical Interpretation - External

13 May 2015 External T.I. 2015-0568411E5 - Release of debt under consumer proposal

CRA Tags
80(1) "commercial obligation", Bankruptcy and Insolvency Act 66.3, 18(1)(t), 80(2)(a), Bankruptcy and Insolvency Act 66.28

Principal Issues: Whether debts released under consumer proposal would result in debt forgiveness under section 80.

Position: Generally yes, if a debt is a "commercial obligation".

Reasons: A release under a consumer proposal would generally result in settlement.

11 May 2015 External T.I. 2014-0548841E5 - Retention of Books and Records

CRA Tags
ITR 5800, 230(4)
Summary Under
Tax Topics - Income Tax Act - Section 230 - Subsection 230(4)
non-permanent records may be destroyed after 6-year period

Principal Issues: (1) What is the required retention period for the books and records of a corporation? (2) What is the required retention period for the books and records of a corporation that is dissolved? (3) What is the required retention period for an unincorporated business that ceases to exist?

Position: (1) A corporation is required to retain the permanent documents specified for two years following the day of dissolution. All other non-permanent documents are to be retained for six years from the end of the last taxation year to which the records and books relate. (2) The non-permanent books and records of a corporation must be retained for a period of two years from the date of dissolution. (3) An unincorporated business must retain the permanent records for six years from the last day of the taxation year in which the business ceased. All other non-permanent records must be retained for the six-year period.

Reasons: Wording of: (1) Regulation 5800(1)(a) and paragraph 230(4)(b); (2) Regulation 5800(1)(b); and (3) Regulation 5800(1)(c) and paragraph 230(4)(b)

23 April 2015 External T.I. 2014-0556211E5 - Subsection 222(4) Collection limitation period

CRA Tags
222(3), 220(3.1), 222(4), 152(4), 152(3.1)

Principal Issues: In the case of a voluntary disclosure made more than ten years after the taxation year to which the disclosure relates, whether the limitation period under subsection 222(4) begins at the time income is earned, where no assessment has been issued for the particular taxation year.

Position: No.

Reasons: The collection limitation period provided by subsection 222(4) is with respect to a "tax debt" payable by the taxpayer. Although without an assessment a taxpayer may be liable for tax according to subsection 152(3) of the Act, a tax liability only becomes payable when the tax payable is fixed with a notice of assessment according to the definition of tax payable provided by subsection 248(2). Where no assessment has been made, the tax is not yet tax payable and is not a "tax debt" subject to the limitation period provided by subsection 222(4). Therefore, the collection limitation period cannot begin to run without a notice of assessment.

17 March 2015 External T.I. 2014-0529371E5 - T1135 reporting for emigrant

CRA Tags
233.3
Summary Under
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(3)
post-emigration property ignored

Principal Issues: Do individuals who emigrate during the year have to complete the T1135 based on the calendar year or on the period up to the date of emigration?

Position: Individuals emigrating report on specified foreign property up to the date of emigration.

Reasons: Administrative position by Compliance Programs Branch

13 March 2015 External T.I. 2014-0547721E5 - T1135 reporting for a trust

CRA Tags
233.3, 149(1)(c)
Summary Under
Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Canadian Entity
no T1135 for Trust with exempt beneficiaries

Principal Issues: Does a trust whose sole beneficiaries are tax exempt under 149(1)(c) of the Act have to file a T1135?

Position: No.

Reasons: The Act.

27 February 2015 External T.I. 2015-0566531E5 - Collection of amounts in dispute

Principal Issues: (1) Whether section 286.2 of the Criminal Code applies to the collection of tax by the CRA. (2) Whether the amounts described are "in dispute" and therefore do not have to be paid.

Position: (1) No position taken. (2) General comments provided.

Reasons: The primary question is beyond the scope of the Income Rulings Tax Directorate's mandate since it requires interpretation of the Criminal Code. General comments were provided as to the formal mechanism for disputing assessments under the Income Tax Act.