Income Tax Severed Letters - 2015-08-26

Technical Interpretation - External

30 July 2015 External T.I. 2013-0494871E5 - Paragraph 128.1(6)(c)

CRA Tags
248(1) "taxable Canadian property", 128.1(4), 128.1(6), 220(4.5), 128.1(1)
Summary Under
Tax Topics - Income Tax Act - Section 128.1 - Subsection 128.1(6) - Paragraph 128.1(6)(c)
s. 128.1(6)(c) election available for shares which were TCP on previous emigration and now are not TCP on immigration

Principal Issues: Is the election in paragraph 128.1(6)(c) available to an individual who is a returning former resident of Canada in respect of shares of a corporation that, at the time of emigration, were taxable Canadian property and that, at the time of immigration, were no longer taxable Canadian property?

Position: Yes

Reasons: To the extent that the shares, owned by the returning former resident of Canada from the time of emigration to the time of immigration, were not taxable Canadian property at the time of immigration and the other conditions of paragraph 128.1(6)(c) were met, the election in paragraph 128.1(6)(c) would be available to the individual.

28 July 2015 External T.I. 2015-0567811E5 - Thin cap rules for members of a partnership

CRA Tags
18(4), 248(1), 12(1)(l.1), 187
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(l.1)
sale by Cancos of their partnership interests part-way through year did not eliminate their proportionate pick-up of partnership debt
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(7)
sale by Cancos of their partnership interests part-way through year did not eliminate their proportionate pick-up of partnership debt

Principal Issues: Whether the income inclusion under paragraph 12(1)(l.1) would apply to former members of a partnership, which are resident in Canada, in a particular taxation year in which the members disposed of their interests to non-resident corporations. In the particular situation, all of the income of the partnership for the fiscal period ending in the particular taxation year of the former members is allocated to the non-resident members

Position: Paragraph 12(1)(l.1) would apply.

Reasons: Subsection 96(1.01) deems the former members of the partnership to be members of the partnership at the end of the fiscal period of the partnership in which the former members ceased to be members. This means that although a person may have ceased to be a partner before the partnership's fiscal period end, a portion of the partnership's net income or loss is allocable to the person pursuant to subsection 96(1). Since subsection 96(1) applies, any interest paid or payable by the partnership pursuant to a legal obligation would be considered "deductible" by the partnership for the purposes of applying paragraph 12(1)(l.1) to the former members of the partnership.

23 July 2015 External T.I. 2014-0546571E5 - Foreign Tax Credit

CRA Tags
126(1)
Summary Under
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1)
no FTC for dividend tax payable by company

Principal Issues: Whether a foreign tax credit can be claimed under subsection 126(1) of the Act by a taxpayer, a Canadian resident individual and a shareholder of a South African company, in respect of the Secondary Tax on Companies paid by such company in connection with the dividends paid to the taxpayer.

Position: No.

Reasons: Any foreign non-business income tax must be paid by the taxpayer in order for the taxpayer to be entitled to a tax credit under subsection 126(1).

24 June 2015 External T.I. 2015-0570251E5 - Remote work location

CRA Tags
6(6)(a)(ii).

Principal Issues: Factors to consider when determining whether a work location that is within 80 kilometres of an established community, is a remote work location for purposes of subparagraph 6(6)(a)(ii) of the Act.

Position: See response.

Reasons: See response.

16 June 2015 External T.I. 2014-0553331E5 - Indian Business Income XXXXXXXXXX

CRA Tags
81(1)(a), Indian Act 87(1)(b)

Principal Issues: Whether business income earned by an Indian XXXXXXXXXX who provides XXXXXXXXXX services to First Nation individuals in XXXXXXXXXX facilities on-reserve and off-reserve is considered to be tax exempt pursuant to paragraph 81(1)(a) of the Income Tax Act and section 87 of the Indian Act?

Position: Whether business income earned by an Indian XXXXXXXXXX is taxable or exempt is a question of fact. However, based on the information submitted, the income earned from the business activities carried out at XXXXXXXXXX (off-reserve) would likely not be exempt from tax.

4 June 2015 External T.I. 2014-0530241E5 - Municipal Corporation

CRA Tags
149(1.3), 149(1)(d.5)

Principal Issues: Does a particular society qualify for the exemption from tax under 149(1)(d.5)

Position: Question of fact

Reasons: In this case it is a factual determination that can only be made retrospectively.

Technical Interpretation - Internal

22 July 2015 Internal T.I. 2014-0528511I7 - First Nation's Land Claim Settlement Trust Income

CRA Tags
81(1)(a), 75(2), 104(13), 149(1)(c), Indian Act - 87

Principal Issues: Whether a First Nation's land claim settlement trust income received by an individual member of the First Nation is taxable?

Position: Question of fact.

Reasons: See details in the reply.

23 April 2015 Internal T.I. 2014-0562271I7 - Amending a partnership return - limitation period

CRA Tags
152(1.4), 152(1.9)
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1.4)
CRA will not accept an amended partnership return beyond statute-barred period

Principal Issues: (1) Can a partnership return be amended after the statute-barred date? (2) If so, what provision of the Act allows the CRA to make a redetermination in respect of the partnership and consequently open the taxation year of the partners?

Position: (1) Generally, no. (2) N/A

Reasons: Subsection 152(1.9) should be read in conjunction with 152(1.2), such that a waiver would have to be produced within the three-year limitation period within which the Minister may make a determination. Subsection 152(1.2) provides, in part, that the provisions in Divisions I and J as they relate to assessments or reassessments and to assessing or reassessing tax, apply to determinations and redeterminations, with such modifications as the circumstances require. The time limitations in subsections 152(3.1) and (4) apply to returns that are determined rather than assessed. Consequently, once the income or loss of a partnership return is determined, it is treated the same as an assessment for the purposes of subsection 152(4). Additionally, a taxpayer can be assessed outside the normal reassessment period if the taxpayer files a waiver within their normal reassessment period in respect of the year, as per subparagraph 152(4)(a)(ii). This same rule applies to waivers regarding determinations, as per subsection 152(1.2), meaning that the waiver would have to be produced within the three year period outlined in 152(1.4).