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
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
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"
pension paid to beneficiary of deceased employee was pension rather than death benefit
payment out of a pension plan to a beneficiary of deceased employee was a pension rather than death benefit payment
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

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)

normal or extended reassessment period ends on the anniversary date
extended reassessment period ends on the assessment anniversary date
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"
MRPS (Luxembourg hybrid instruments which were “very similar to traditional shares under Canadian business corporations statutes”) were equity
Words and Phrases
distributions on MRPS were equity distributions
Words and Phrases

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

Position: Equity.

Reasons: Application of foreign entity classification approach.