Income Tax Severed Letters - 2015-12-23


2015 Ruling 2014-0536651R3 - Loss Consolidation Arrangement

CRA Tags
20(1)(c), 55(2)

Principal Issues: Whether the loss consolidation within the related and affiliated group is acceptable.

Position: Yes.

Reasons: It falls within the CRA's policy for loss consolidations.

Technical Interpretation - External

10 September 2015 External T.I. 2015-0590061E5 - Money Services Business

payment processing business

Principal Issues: (1) Whether an entity which carries on a money services business (MSB) is a Canadian Financial Institution ("CFI") for purposes of Part XVIII of the Act and the Canada-US Intergovernmental Agreement. (2) Will the Part XVIII Guidance provided by the Canada Revenue Agency be updated to further clarify the treatment of entities carrying on a MSB in the context of the IGA and Part XVIII?

Position: (1) Depends, question of fact; (2) No intention at this time

Reasons: (1) Wording in the Act; (2) N/A

26 August 2015 External T.I. 2015-0564171E5 F - Paiements d'un RPAC à un Indien

CRA Tags
81(1)(a), ITR 100, 153(1), 153(1.1)
pension distribution to Indian included in income under s. 56(1)(z.3) before excluded under s. 81(1)(a)
procedure for reduced withholding on pension distributions to status Indian

Principales Questions: 1) Est-ce que les paiements faits à un participant d'un RPAC, qui est un Indien, qui ne sont pas imposables en vertu de l'alinéa 81(1)a) sont soumis aux retenues d'impôt? 2) Si oui, quels documents l'administrateur du plan doit-il obtenir du participant pour justifier de ne pas procéder à des retenues d'impôt sur les paiements d'un RPAC? / 1) Should there be tax withholding on payments, that are not taxable per paragraph 81(1)(a), made to a participant of a PRPP who is an Indian? 2) If so, what documents should the plan administrator request from the participant to justify not withholding tax on such payments?

Position Adoptée: 1) Oui, sauf si une lettre d'autorisation est émise au participant en vertu du paragraphe 153(1.1). 2) Une copie de la lettre d'autorisation émise par l'ARC au participant en vertu du pouvoir discrétionnaire du ministre. / 1) Yes, exception if a letter of authority is issued to the participant under subsection 153(1.1). 2) A copy of the letter of authority issued by the CRA to the participant per the discretionary power of the Minister.

6 August 2015 External T.I. 2015-0565651E5 F - Reliquat dévolu à une administration municipale

personal benefit rule applies to liquidation right of municipal member

Principales Questions: Est-ce qu’une entité visée à l’alinéa 149(1)l) peut perdre son statut d’organisation exemptée en raison d’une clause dans ses actes constitutifs qui prévoit qu’en cas de liquidation, dissolution ou fusion, tous ses biens doivent être transférés à une administration municipale au sens de l’alinéa 149(1)c)? / Would an entity, who is a non-profit organization per paragraph 149(1)(l), lose its tax-exempt status due to a clause in its constitution which provides that in the event of winding-up, amalgamation or dissolution, all of its assets are to be transferred to a municipal authority within the meaning of section 149(1)(c)?

Position Adoptée: Dans un premier temps, il faut déterminer si l’administration municipale est membre de l’OBNL. L’interprétation du terme « membre » ne relève pas de la Loi. a) Si l’administration municipale est membre d’une OBNL, nous sommes d’avis que cette OBNL cesse d’être exemptée d’impôt en vertu de l’alinéa 149(1)l). b) Si l’administration municipale n’est pas membre d’une OBNL, il n’y aurait pas perte du droit à l’exemption prévue à l’alinéa 149(1)l) / First, the question is to determine if the municipal authority is a member of the NPO. The interpretation of the term "member" does not fall under the Act. a) If the municipal authority is a member of the NPO, it is our view that this NPO would lose its status as a tax-exempt organization under paragraph 149(1)(l). b) If the municipal authority is not a member of the NPO, there would be no loss of status as a tax-exempt organization under paragraph 149(1)(l).

30 July 2015 External T.I. 2014-0552041E5 F - Permis XXXXXXXXXX

CRA Tags
14(5), ITR 1100, 152(4)
renewable government licences were ECP, not Class 14
renewable government licences were ECP, not Class 14

Principales Questions: 1 - Un permis XXXXXXXXXX est-il un bien amortissable devant être inclus dans la catégorie 14 ou s’agit-il plutôt d’une immobilisation admissible? / Is a XXXXXXXXXX license depreciable property to be included in class 14 or is it instead eligible capital property?; 2 - Dans l’éventualité où le permis XXXXXXXXXX est un bien amortissable, peut-on amender les années précédentes pour réclamer la DPA? / In the event the XXXXXXXXXX license is depreciable property, can prior years be reopened to claim CCA?

Position Adoptée: 1 - Question de fait. Dans ce cas, plutôt une dépense en capital admissible / Question of fact. In this case, an eligible capital expenditure instead; 2 - Oui, mais seulement dans certaines conditions / Yes, but only in certain conditions.

Technical Interpretation - Internal

11 September 2015 Internal T.I. 2015-0599161I7 - Subsection 18(4) and section 216

CRA Tags
18(4), 216
s. 18(4) rules have always applied to s. 216 returns

Principal Issues: Does subsection 18(4) apply to the non-resident corporations filing a section 216 return for their taxation years starting before 2014?

Position: Yes.

Reasons: Pursuant to subsection 216(1), such corporations calculate Part I tax as though the non-resident person were a person resident in Canada.

11 September 2015 Internal T.I. 2015-0599851I7 - TFSA arbitrary assessment

CRA Tags
150, 152(7)
TFSA holder can be assessed without being contacted
CRA to assess taxpayers who have overcontributed to TFSAs after only one warning letter

Principal Issues: Does the Income Tax Act allow the Minister to assess a taxpayer under s.152(7) on its excess TFSA contributions without first sending a demand to file?

Position: Yes

Reasons: Subsection 207.07(3) states that section 152 applies to Part XI.01. Subsection 152(7) allows the Minister to assess a taxpayer notwithstanding that a return has not been filed.

21 January 2015 Internal T.I. 2014-0547431I7 - "Excluded amount" under clause 20(1)(e)(iv.1)(C)

CRA Tags
212(3), 212(1)(b)
payment to creditor excluded as based on negotiated estimate of formula approximating share value
payment to creditor excluded under s. 20(1)(e)(iv.1) as based on negotiated estimate of formula approximating share value

Principal Issues: Whether a payment is an "excluded amount" for purposes of paragraph 20(1)(e)

Position: Yes

Reasons: Clause 20(1)(e)(iv.1)(C) defines an “excluded amount” as an amount that is computed by reference to revenue, profit, cash flow, commodity price or any similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation. In this situation, the payment in question is calculated by reference to a "similar criterion".