Income Tax Severed Letters - 2016-04-20

Technical Interpretation - External

7 March 2016 External T.I. 2015-0608211E5 - Assignment of right to purchase

CRA Tags
248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxable Canadian Property - Paragraph (f)
assigning right to purchase Canadian real estate is disposing of tcp
Words and Phrases
option transfer

Principal Issues: Whether an assignment to a trust by a non-resident person of the right to purchase an apartment would be considered a disposition of taxable Canadian property.

Position: Yes, unless the specific exceptions to the definition of "disposition" apply.

Reasons: The definition of "taxable Canadian property" and "disposition" under subsection 248(1).

4 March 2016 External T.I. 2016-0626841E5 - 18(5) and 20(1)(d)

CRA Tags
18(5)
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(5)
simple interest is not included if compound thereon has accrued but is unpaid

Principal Issues: Whether for purposes of subsection 18(4) of the Act, the amount of outstanding debts to specified non-residents for a particular taxation year includes accrued simple interest upon which compound interest is computed but not paid in the year.

Position: No.

Reasons: The amount of outstanding debts to specified non-residents of a corporation only includes amounts on which interest is deductible in computing the income of the corporation.

22 February 2016 External T.I. 2014-0525681E5 - Taxation of inherited pension plan payment

CRA Tags
56(1)(a), 110(1)(f)(i), 248(1) "superannuation or pension benefit"
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Superannuation or Pension Benefit
pension paid to beneficiary of deceased employee was pension rather than death benefit
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Death Benefit
payment out of a pension plan to a beneficiary of deceased employee was a pension rather than death benefit payment
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 18
exclusion re US estate tax

Principal Issues: Is a pension payment received by a resident of Canada from XXXXXXXXXX taxable in Canada and, if so, does it qualify for the $10,000 “death benefit” exemption?

Position: A pension benefit does not qualify for the $10,000 death benefit exemption. It is included in income under subparagraph 56(1)(a)(i) and is taxable in Canada subject to tax treaty relief.

Reasons: A pension benefit is not a “death benefit”.

4 January 2016 External T.I. 2015-0608281E5 - reasonable allowance for travel

CRA Tags
6(1)(b)(vii)

Principal Issues: Whether an allowance in excess of $51/day is reasonable?

Position: Question of fact

Reasons: See response

Technical Interpretation - Internal

10 March 2016 Internal T.I. 2015-0614161I7 - Extended reassessment period 152(4)(b)

Summary Under
Tax Topics - Statutory Interpretation - Interpretation Act - Section 27 - Subsection 27(3)
normal or extended reassessment period ends on the anniversary date
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(b)
extended reassessment period ends on the assessment anniversary date
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(3.1)
normal reassessment period ends on the assessment anniversary date

Principal Issues: What is the last day to issue a reassessment under paragraph 152 (4)(b) of the Income Tax Act for a taxpayer who is a Canadian controlled private corporation.

Position: The reassessment must be issued before the day that is 3 years after the end of the normal reassessment period. In the example provided, where the original notice of assessment is issued December 31, 2013, the last day to issue a notice of reassessment under paragraph 152(4)(b) is December 31, 2019.

Reasons: Section 27 of the Interpretation Act.

8 January 2016 Internal T.I. 2015-0604491I7 - mandatory redeemable preferred shares

CRA Tags
248(1) "share"
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share
MRPS (Luxembourg hybrid instruments which were “very similar to traditional shares under Canadian business corporations statutes”) were equity
Words and Phrases
share
Summary Under
Tax Topics - Income Tax Act - Section 90 - Subsection 90(2)
distributions on MRPS were equity distributions
Words and Phrases
equity

Principal Issues: Whether mandatory redeemable preferred shares ("MRPS") are equity or debt.

Position: Equity.

Reasons: Application of foreign entity classification approach.