Income Tax Severed Letters - 2016-03-23

Technical Interpretation - External

9 March 2016 External T.I. 2016-0630281E5 F - Redemption of shares and changes to 55(2)

CRA Tags
54, 55(2), 55(5)(f)
exemption of s. 84(3) deemed dividend not exceeding safe income
s. 55(2) application to separate dividend
demarcation between ss. 55(2)(b) and (c)

Principales Questions: 1. Whether subsection 55(2) (as provided for in the Legislative Proposal of July 31, 2015) will apply with respect to the redemption of shares when the amount of the deemed dividend does not exceed the income earned or realized as described in new paragraph 55(2.1)(c).
2. When shares are redeemed and there is a deemed dividend pursuant to subsection 84(3), whether the amount equal to the income earned or realized as described in new paragraph 55(2.1)(c) can be considered as a separate taxable dividend pursuant to paragraph 55(5)(f).
3. When shares are redeemed and there is a deemed dividend pursuant to subsection 84(3), whether a separate taxable dividend that exceeds the amount described in new paragraph 55(2.1)(c) would result in a capital gain.

Position Adoptée: 1. No.
2. Yes, if the corporation designates that amount in its return of income under Part I for the taxation year during which the dividend was deemed to be received.
3. Paragraph 55(2)(b) would deem that amount to be included in the proceeds of disposition of the shares redeemed.

Raisons: 1. Wording of the Legislative Proposals.
2. Wording of the Act.
3. Wording of the Legislative Proposals.

10 February 2016 External T.I. 2015-0603891E5 - Indian Employment Income and Dividend Income

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

Principal Issues: Whether the corporation is resident on a reserve.

Position: General comments provided.

Reasons: Very limited information provided.

Technical Interpretation - Internal

22 March 2016 Internal T.I. 2016-0632941I7 - BEPS exchange of tax rulings

types of rulings exchanged under BEPS

Principal Issues: What will the Rulings Directorate be doing to help meet Canada's commitment to exchange information in respect of certain tax rulings, in accordance with Action 5 of the BEPS Project?

Position: The Rulings Directorate will be updating its information circular (IC 70-6) to outline the types of rulings potentially subject to this exchange, the process it will follow in performing the exchange and the additional information it will require in respect of requests for rulings within the scope of the exchange initiative.

Reasons: IC 70-6 is the Directorate's main means of communicating its administrative procedures to the public.

22 March 2016 Internal T.I. 2016-0632942I7 F - BEPS exchange of tax rulings

Principales Questions: What will the Rulings Directorate be doing to help meet Canada's commitment to exchange information in respect of certain tax rulings, in accordance with Action 5 of the BEPS Project?

Position Adoptée: The Rulings Directorate will be updating its information circular (IC 70-6) to outline the types of rulings potentially subject to this exchange, the process it will follow in performing the exchange and the additional information it will require in respect of requests for rulings within the scope of the exchange initiative.

Raisons: IC 70-6 is the Directorate's main means of communicating its administrative procedures to the public.