Income Tax Severed Letters - 2015-07-22

Technical Interpretation - External

13 July 2015 External T.I. 2015-0596321E5 - Follow-up to letter 2015-058735

CRA Tags
60.022, 60(1), 146.3(1.3), 146.3(2)

Principal Issues: Clarification was requested on the answers to questions 1 and 9 posed in document 2015-0587351E5.

Position: Clarification provided.

Reasons: See below.

24 June 2015 External T.I. 2015-0575911E5 F - Benefit to shareholder or conferred on a person

CRA Tags
15(1), 15(1.4)(c), 56(2), 246(1)
benefit only conferred on one shareholder (the husband) if wife of one of four sibling shareholders receives benefit
benefit conferred on spouse of individual shareholder of parent
benefit conferred on spouse of individual shareholder of parent

Principales Questions: 1- Corporation (Opco) with 4 shareholders disposes of an asset to the spouse of one the shareholders for consideration less than FMV. 2- What if the 4 shareholders are shareholders of Holdco and all the shares of the capital stock of Opco are held by Holdco. 3- What if the 4 shareholders are brothers.

Position Adoptée: 1- 15(1) and 15(1.4)(c), 2- Potential application of 15(1), (1.4)(c), 56(2), 6(1)(a) and 246(1). 3- 15(1) and 15(1.4)(c).

Raisons: See below.

19 June 2015 External T.I. 2013-0475751E5 - Withholding Tax on Royalty Payments

CRA Tags
212(1)(d)(ii)(vi), 115(1), 212(1)(d)(ii), Treaties Article XII, Treaties Article VII

Principal Issues: Whether Part XIII withholding tax applies to a royalty payment made from Canada to a non-resident taxpayer and whether Article XII of the Canada-US Tax Convention would apply to exempt the payment from withholding.

Position: The answer would depend upon the facts surrounding the payments received from Canada.

Reasons: Questions of fact.

15 June 2015 External T.I. 2015-0577801E5 - Deferred Salary Leave Plan and Maternity Leave

CRA Tags
6801(a)

Principal Issues: Clarification of how a maternity leave could affect a prescribed plan or arrangement under paragraph 6801(a) of the Regulations.

Position: Paragraph 6801(a) of the Regulations ceases to apply at the time an employee knows he/she no longer intends to return to work immediately following the leave of absence provided for under the Regulation.

Reasons: Paragraph 6801(a) of the Regulations.

10 June 2015 External T.I. 2015-0580531E5 - joint account & estate returns

CRA Tags
104(13), 70(5)

Principal Issues: TREATMENT OF PROPERTY HELD IN JOINT OWNERSHIP AT DEATH

Position: LEGAL DETERMINATION REQUIRED

Reasons: TAX TREATMENT DEPENDS ON LEGAL & BENEFICIAL OWNERSHIP OF THE PROPERTY. IF SECONDARY PERSON IS ONLY A NOMINEE ON THE PROPERTY WITH NO OWNERSHIP RIGHTS, THE DISPOSITION OF THE ENTIRE PROPERTY WOULD BE DEEMED UPON THE DEATH OF THE PRIMARY TAXPAYER. IF THE PROPERTY WAS A TRUE JOINT OWNERSHIP, THE TREATMENT IS DIFFERENT.

29 May 2015 External T.I. 2014-0565251E5 - Taxation of an arbitration award

CRA Tags
5(1), 6(1)(a), 56(1)(a)

Principal Issues: Whether damages awarded through arbitration are taxable?

Position: Question of fact, but damages received as compensation for a loss of employment are included in income under 56(1)(a)(ii).

Reasons: See response.

28 May 2015 External T.I. 2015-0580301E5 - Conversion of IRA to Roth IRA while non-resident

CRA Tags
Treaties Article VII, Treaties Article XVIII 3(b)

Principal Issues: 1) Are distributions from a Roth IRA to a resident in Canada subject to tax? 2) Will the conversion of a traditional IRA to a Roth IRA while non-resident in Canada jeopardize the election under ITTN-43?

Position: 1) Yes. 2) No.

Reasons: 1) According to Art. XVIII 3(b) of the Canada-US Tax Convention, a distribution from a Roth IRA is subject to tax to the extent it is included in taxable income if the individual was resident in the US. 2) The deferral outlined in ITTN-43 is only relevant to individuals resident in Canada and does not impact non-resident individuals.

22 May 2015 External T.I. 2015-0580471E5 - Resident in a province

CRA Tags
Interpretation Act 35(1), 2(1), 255

Principal Issues: 1. What is the meaning of the word "Canada" as used in the Act? 2. Can a taxpayer be resident in Canada and in a province at the same time? 3. Is a person working in the private sector liable to tax in the province and in Canada?

Position: 1. "Canada" is defined in the Act. 2. A taxpayer is generally factually resident in Canada and in a province concurrently. 3. Every person resident in Canada at any time in a taxation year shall pay an income tax on their taxable income for each taxation year,.

Reasons: 1. N/A 2. The Act and provincial legislation 3. S. 2(1) of the Act.