Income Tax Severed Letters - 2016-05-04

Ruling

2016 Ruling 2015-0605851R3 F - Partners creating professional corporation

CRA Tags
125(7), 103(1), 245

Principales Questions: Will the fees earned by a professional corporation created by a partner in order to provide professional services to a partnership, as an independent contractor, be considered to be specified partnership income?

Position Adoptée: Question of fact. Generally no, if certain conditions are met.

Raisons: Consistent with prior Rulings.

2015 Ruling 2014-0542411R3 - Carrying on business in Canada and PE

CRA Tags
2(3), 253, ITR 105, Treaties Article V
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 5
PE in Canada of ForCo avoided through seconding employees to its Cdn sister and meeting in Canada up to 90 days annually only offsite
Summary Under
Tax Topics - Income Tax Regulations - Regulation 102
payroll reimbursement payments under employee secondment arrangement not subject to Reg. 105
Summary Under
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1)
seconded employees respected as employees notwithstanding their payroll is paid by (and reimbursed to) ForCo
Summary Under
Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2)
no mark-up on cross-border payroll reimbursement represented to accord with s. 247

Principal Issues: (1) Whether the secondment arrangement between a non-resident corporation and a related Canadian corporation causes the non-resident corporation to be considered to render services in Canada for purposes of Regulation 105; (2) Whether the non-resident corporation is carrying on business through a permanent establishment, as defined in Article 5 of the Canada-XXXXXXXXXX Treaty, situated in Canada.

Position: (1) No; (2) No.

Reasons: (1) The conclusion is consistent with our prior positions that the provision of employees by a non-resident corporation under a secondment arrangement, where the non-resident is reimbursed at cost and no mark-up is charged, does not cause the non-resident corporation to be rendering services in Canada for purposes of Regulation 105; (2) The conclusion in respect of the secondment arrangement is consistent with our prior positions that the provision of employees under a secondment arrangement does not cause a non-resident corporation to be carrying on a business in Canada. The subcontracted activities of the non-resident will not meet the permanent establishment threshold in Article 5 of the Canada-XXXXXXXXXX Treaty.

2015 Ruling 2014-0550611R3 - Permanent Establishment

CRA Tags
Treaties Article V
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 5
home of a Canadian employee doing marketing (but no contracting) for a U.S. employer is not a PE of the U.S. employer

Principal Issues: Whether a particular non-resident corporation will be considered to be carrying on business in Canada through a permanent establishment in Canada as a result of the corporation having hired a Canadian resident employee to provide services from his home in Canada.

Position: No.

Reasons: Determinations as to whether a non-resident person carries on business in Canada through a permanent establishment in Canada is a question of fact; however, based on the facts as submitted, we are of the view that the hiring of a Canadian resident employee, in and of itself, will not cause the non-resident person in question to be considered to be carrying on business in Canada through a permanent establishment.

2015 Ruling 2014-0554411R3 - Loss consolidation

CRA Tags
20(1)(c), 112, 245

Principal Issues: Is the loss consolidation acceptable?

Position: Yes.

Reasons: The proposed transactions conform to our requirements for loss consolidation structures.

2015 Ruling 2014-0563171R3 F - Reorganization - subsection 55(2)

CRA Tags
55(2), 55(3)(b)

Principales Questions: Whether the proposed transaction qualifies for the butterfly exemption found in paragraph 55(3)(b).

Position Adoptée: Yes.

Raisons: The proposed transaction meets the statutory requirements.

2015 Ruling 2015-0584151R3 - Conversion of Contributed Surplus to PUC

CRA Tags
84(1), 89(1), 261
Summary Under
Tax Topics - Income Tax Act - Section 84 - Subsection 84(1)
cross-border inbound continuance of corporation with different labels for capital and surplus followed by conversion of capital surplus to stated capital
Summary Under
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Paid-Up Capital
corporate PUC and capital surplus flowed through on a cross-border continuance

Principal Issues: Whether share premium arising from share issuances governed by foreign corporate law is contributed surplus for purposes of paragraph 84(1)(c.3) that can be added to PUC without giving rise to a deemed dividend under subsection 84(1).

Position: Yes.

Reasons: Consistent with previous published positions.

2014 Ruling 2013-0494711R3 - Public Body Ruling

CRA Tags
149(1)(c)

Principal Issues: Is the Tribal Council a public body performing a function of government within the meaning of paragraph 149(1)(c)

Position: yes

Reasons: The Tribal Council is considered a public body and is performing a function of government.