Income Tax Severed Letters - 2015-09-16


2015 Ruling 2013-0490651R3 - Single-wing Split-up Farm Butterfly

CRA Tags
55(3)(b), 55(3.1)

Principal Issues: Whether the butterfly transactions meet statutory requirements?

Position: Yes.

Reasons: Meets the requirements of the law.

Technical Interpretation - External

25 August 2015 External T.I. 2015-0571271E5 F - Affiliated Trusts under Paragraph 251.1(1)(h)

CRA Tags
251.1(1)(h)(i), 251.1(3), 69(11), 69(13)
deceased settlor of Trust B was an affiliated contributor to her brother, who contributed to Trust A

Principales Questions: Whether two trusts are affiliated with each other pursuant to subparagraph 251.1(1)(h)(i) when the contributor to one of the trusts dies after the trust was settled.

Position Adoptée: In the context of this file, we concluded that the two trusts are affiliated under subparagraph 251.1(1)(h)(i).

Raisons: Based on CRA response in document 2014-0534851C6 which indicated that for the purposes of the definition of "contributor" in subsection 251.1(3), CRA is of the view that, depending on the context, a deceased person may be considered to have, at a given time, made a loan or a transfer of property, either directly or indirectly, in any manner whatever, to or for the benefit of a trust. This position applies to any transfer of property made as a consequence of death of a taxpayer as well as to any loan or transfer of property made by a taxpayer, before his or her death.

23 July 2015 External T.I. 2014-0553991E5 - General Info re IPPs

CRA Tags
ITR 8300(1), 147.1, ITR 8504(1), 147.2, 56(1)(a), ITR 8515, 251(2), ITR 8500(3)

Principal Issues: General overview of IPPs.

Position: Provided general information, in particular on contributions by employer and employee.

Reasons: See below.

7 July 2015 External T.I. 2014-0552711E5 - Application of paragraph 251(5)(b)

CRA Tags
LOI must be a contract to engage s. 251(5)(b)

Principal Issues: Does a letter of intent engage the application of paragraph 251(5)(b) of the ITA?

Position: General comments. No position taken.

Reasons: Question of fact and law.

25 June 2015 External T.I. 2014-0553181E5 F - Graduated rate estate

CRA Tags
248(1) "graduated rate estate"
only an estate, not a testamentary trust, can qualify

Principales Questions: In a situation where an individual dies, the will creates a spousal testamentary trust which receives a part or the total of the patrimony of the deceased, can the spousal trust choses to be graduated rate estate?

Position Adoptée: No

Raisons: Wording of the definition of graduated rate estate.

Technical Interpretation - Internal

5 June 2015 Internal T.I. 2015-0569061I7 F - Non-interest-bearing loan to a controlled foreign affiliate

CRA Tags
17(8), 17(8.2), 17(1), 17(8.1)
debt owing to CFA parent, which had funded active business assets and was assumed on absorptive merger, qualified under s. 17(8.1)(b)

Principales Questions: Whether a non-interest-bearing loan made by a Canadian corporation to a controlled foreign affiliate can qualify for the exception under paragraph 17(8)(a) where the proceeds of the loan are used to repay a debt that was assumed following a downstream absorptive merger.

Position Adoptée: Yes

Raisons: 17(8)(a)(i) can apply, by virtue of 17(8.1)(b) and 17(8.2), provided that the amount owing that was repaid with the proceeds of the non-interest-bearing loan was in respect of assets previously acquired by the surviving company which were used to earn active business income throughout the time that the amount was owed by the surviving company.