Income Tax Severed Letters - 2016-11-02

Ruling

2016 Ruling 2015-0606771R3 - Disclaimer of trust interest

Unedited CRA Tags
106 (1) 107(2), 69
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2)
disclaimer resulting in a rollout of estate assets under an intestacy
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(1)
no disposition from disclaimer
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition
disclaimer of interest in estate

Principal Issues: Would a disclaimer of a grandchild beneficiary's contingent interest in a testamentary trust (1) result in any proceeds of disposition being received on the disposition of the grandchild’s interest in the trust, (2) allow the application of subsection 107(2) on the distribution to the parent beneficiaries

Position: (1) no (2) yes

Reasons: Previous rulings on this similar issue. Technical provisions of the Act are satisfied.

2016 Ruling 2015-0593841R3 - Sale of XXXXXXXXXX Club

Unedited CRA Tags
149(1)(l); 149(2); 149(5); 89(2)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(l)
CRA rules on the payment of a substantial capital dividend by a s. 149(1)(l) incorporated golf club
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(5)
no effect of s. 149(5)(e)(ii) on CDA amount

Principal Issues: Whether payment of a capital dividend to members jeopardizes the Club's status under 149(1)(l).

Position: Not in this situation.

Reasons: See below.

Technical Interpretation - External

30 August 2016 External T.I. 2016-0656851E5 - Indian Tax Exemption and the Daniels Decision

Unedited CRA Tags
81(1)(a)
Summary Under
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87
Daniels did not extend the Indian Act exemption to Métis and non-status Indians
Words and Phrases
Indian

Principal Issues: Are Metis and non-status Indians exempt from tax as a result of the SCC decision in Daniels?

Position: No.

Reasons: The SCC decision in Daniels declared that Metis and non-status Indians are considered Indians for the purpose of s. 91(24) of the Constitution Act, 1867. The tax exemption applies to individuals who are defined as Indians in the Indian Act.

8 August 2016 External T.I. 2016-0651841E5 - Designated Airport Authorities

Unedited CRA Tags
81(1)(a)

Principal Issues: Are Designated Airport Authorities exempt from tax under paragraph 81(1)(a)?

Position: Yes.

Reasons: A designated airport authority is exempt on its income earned from an "airport business" by virtue of paragraph 81(1)(a) of the Income Tax Act and section 8 of the Airport Transfer (Miscellaneous Matters) Act.

24 June 2016 External T.I. 2016-0632811E5 - NPO - Filing Requirements - T2 and T1044

Unedited CRA Tags
149(1)(l), 149(12), and 162(7)

Principal Issues: 1. If an NPO did not file any T1044 information returns since incorporated and the total assets of the NPO exceeds $200,000, how many years of outstanding T1044 forms must be included in a voluntary disclosure?
2. CRA document # E2007-0243291C6 indicates that “the CRA’s administrative policy is not to apply the penalty when form T1044 is late-filed for the first time.” Will this include 10 years of T1044 information returns filed at the same time?

Position: 1 & 2. See below.

Reasons: See below.

12 May 2016 External T.I. 2014-0552341E5 - Subsection 107(4.1)

Unedited CRA Tags
75(2), 107(2), 107(2.1), 107(4.1), 248(5)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(4.1)
application of s. 75(2) to only one property in a trust can taint all the other trust property
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2)
tainting effect of one 75(2) property

Principal Issues: Is subsection 107(4.1) applicable to a distribution of certain property to beneficiaries, when a beneficiary who contributed the property to the trust to which subsection 75(2) applied, ceases to exist?

Position: In this case, no.

Reasons: On the death of the contributor and provided there is no other person who has contributed property to the trust to which subsection 75(2) applied, subsection 107(4.1) will not apply and a tax deferred roll out under subsection 107(2) may be available.

Technical Interpretation - Internal

3 March 2015 Internal T.I. 2014-0527842I7 - Taxable benefit for an aircraft

Unedited CRA Tags
6(1)a), 15(1), 15(1.4)c), 246(1), 18(1)a), 13(7)c), 13(7)d)

Principal Issues: 1. Does IT-160R3 applied for years under review? 2. Should the taxable benefit be evaluated with first class airfare or the operating costs related to personal use? 3.What is the impact in calculating the income for the corporation for operating costs related to personal use of the aircraft?

Position: 1. Yes. 2. The value placed on a benefit should approximate its fair market value. 3. The deduction of expenses related to personal use of the aircraft would be precluded by paragraphs 18(1)a) and 13(7)c) and d).

Reasons: 1.The bulletin IT-160R3 continues to reflect the position of the CRA until it was cancelled 2. Position taken by the jurisprudence. 3. Limitation by paragraphs 18(1)a) and 13(7)c).