Income Tax Severed Letters - 2015-11-04

Ruling

2015 Ruling 2014-0563221R3 - Supplemental ruling - 212(1)(b)

CRA Tags
212(3), 212(1)(b), 251(1)

Principal Issues: Amendment to the ruling to account for an additional fact.

Position: Accepted.

Reasons: No impact on rulings given.

2015 Ruling 2015-0589861R3 - Supplemental Ruling - extension of time

Principal Issues: Whether the time to complete the proposed transaction can be extended to XXXXXXXXXX.

Position: Yes.

Reasons: The extended time will allow the taxpayer to receive a notice of assessment for the XXXXXXXXXX taxation year and a clearance certificate, which are required to complete the proposed transactions.

2015 Ruling 2015-0576961R3 - Inter vivos transfer of farm land to adult children

CRA Tags
73(3.1), 73(1), 69(11)

Principal Issues: Whether the family farm rollover rules in 73(3) and (3.1) will apply on a parent's inter vivos gift of the certain farm lands to her adult children.

Position: Favourable ruling given.

Reasons: Based on the facts provided, the proposed transfer appears to meet the conditions for subsection 73(3) and 73(3.1) to apply.

2015 Ruling 2013-0513411R3 F - Société de professionnels

CRA Tags
18(1)(a), 9(1)
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose
fees paid by professional practice to family management company
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Related Companies
fees paid by professional practice to family management company

Principales Questions: 1) Est-ce qu'un XXXXXXXXXX propriétaire peut déduire les honoraires qu'il paie à sa société de gestion en vertu d'un contrat qui stipule qu'elle lui fournira les services de XXXXXXXXXX pour l'opération de ses XXXXXXXXXX ? Does a XXXXXXXXXX owner may deduct the fees he pays to his management corporation under a contract that states that the management corporation will provide the services of XXXXXXXXXX to operate his XXXXXXXXXX ?2) Est-ce que la société de gestion pourra déduire les salaires qu'elle paie aux XXXXXXXXXX à son emploi dans le calcul de son revenu ? May the management corporation deduct the salaries paid to XXXXXXXXXX it employs in computing its income?

Position Adoptée: 1. Oui / Yes 2. Oui/ Yes

Raisons: 1. Puisque la structure proposée ne contrevient pas aux Lois et Règlements régissant la pratique de XXXXXXXXXX au Québec, la déduction des honoraires n'est pas refusée comme dépenses courantes dans le calcul du revenu d'entreprise du XXXXXXXXXX/ Since the proposed structure does not contravene the laws and regulations governing the practice of XXXXXXXXXX in Quebec, the deduction of fees will not be denied as a current expense in computing the XXXXXXXXXX business income. 2) Les salaires des XXXXXXXXXX sont une dépense déductible de la société de gestion/ The salaries of the XXXXXXXXXX are a deductible expense for the management corporation.

Technical Interpretation - External

25 September 2015 External T.I. 2015-0596921E5 - Conversion from inventory to capital

CRA Tags
45(1)
Summary Under
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a)
no 45(1) on conversion of house inventory to personal use
Summary Under
Tax Topics - Income Tax Act - Section 9 - Computation of Profit
no s. 9 income when house converted to personal use is sold

Principal Issues: Whether there is a deemed disposition where real estate that is held by an individual is converted from inventory to capital property which is a principal residence?

Position: No

Reasons: The law

24 August 2015 External T.I. 2015-0588751E5 - Medical marihuana - METC

CRA Tags
118.2(2)(u)

Principal Issues: Does the cost of marihuana purchased by an individual from a Licensed Producer under the Marihuana for Medical Purposes Regulations qualify as an allowable medical expense under the Income Tax Act.

Position: See response.

Reasons: See response.

20 August 2015 External T.I. 2015-0588871E5 - Taxation of insurance contract commission income

CRA Tags
12(1)(a), 20(1)(m), 32(1)
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m)
reserve not available based on potential claims processing
Summary Under
Tax Topics - Income Tax Act - Section 32 - Subsection 32(1) - Paragraph 32(1)(b)
reserve not available based on potential claims processing

Principal Issues: Whether commission income from insurance contracts can be deferred

Position: Provided general comments

Reasons: Not enough information to provide specific comments

19 August 2015 External T.I. 2015-0589611E5 - loss consolidation arrangements

CRA Tags
245, 20(1)(c)
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a)
related but not affiliated OK/Lossco generally must have other assets/no 3rd party commitment letter required

Principal Issues: Whether loss consolidation arrangements can be undertaken among related but not affiliated parties; whether a lossco needs a source of income to cover dividend payments other than interest paid by a profitco; whether a commitment letter is required.

Position: Yes; yes in some situations; often representations are sufficient.

Reasons: Previously published positions.

Technical Interpretation - Internal

29 July 2015 Internal T.I. 2015-0575921I7 - Recapture arising in statute-barred years

CRA Tags
13(21) "depreciable property", 13(21) "undepreciated capital cost", 13(21) "total depreciation", 13(1)
Summary Under
Tax Topics - Income Tax Act - Section 13 - Subsection 13(1)
negative UCC balance arising in statute-barred year becomes recapture in 1st open year
Summary Under
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - E
negative UCC balance arising in statute-barred year becomes recapture in 1st open year
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4)
negative UCC balance arising in statute-barred year becomes recapture in 1st open year

Principal Issues: Whether recapture resulting from the adjustment of the capital cost of property previously included in element "A" of the definition of "undepreciated capital cost" in subsection 13(21) of the Act and acquired in a statute-barred taxation year can be included into the taxpayer's income in the first non-statute-barred taxation year. Clarification of paragraph 14 in IT-478R2.

Position: Yes; Revised position will be reflected in new Folio that replaces IT-478R2 when released.

Reasons: Where, at a point in time, the total of the amounts determined for E to K in the definition of UCC exceeds the total of the amounts determined for A to D.1 in that definition, such excess "shall be included in computing the taxpayer's income of the year" in order to resolve the negative UCC balance pursuant to subsection 13(1) of the Act.