Income Tax Severed Letters - 2016-12-21

Ruling

2016 Ruling 2015-0582431R3 - Butterfly Reorganization

Unedited CRA Tags
Paragraphs 55(3)(b) and 55(3.1)(a)

Principal Issues: Do the Proposed Transactions qualify for the butterfly exemption under paragraph 55(3)(b)?

Position: Yes

Reasons: Standard butterfly reorganization.

Technical Interpretation - External

9 November 2016 External T.I. 2014-0537121E5 F - Overseas employment tax credit

Unedited CRA Tags
122.3
Summary Under
Tax Topics - Income Tax Act - Section 122.3 - Subsection 122.3(1) - Paragraph 122.3(1)(b) - Subparagraph 122.3(1)(b)(i) - Clause 122.3(1)(b)(i)(B)
marine dredging to maintain or widen channel is construction
Words and Phrases
construction

Principal Issues: Whether dredging work could be considered “construction” for the purposes of clause 122.3(1)(b)(i)(B)?

Position: Yes

Reasons: Based on the broad interpretation the courts have given to the term "construction".

29 September 2016 External T.I. 2016-0632151E5 - Retiring Allowance - 60(j.1)

Unedited CRA Tags
56(1)(a)(ii), 60(j.1)

Principal Issues: Will the amount paid to a taxpayer on retirement be a retiring allowance? Can the amount be transferred under paragraph 60(j.1) to the taxpayer's RRSP?

Position: Question of fact. Depends on whether the amount received by the taxpayer is a retiring allowance.

Reasons: Whether an amount paid to a taxpayer on retirement is a retiring allowance is a question of fact and will depend, amongst other things, on whether the amount was received due to the taxpayer’s employment. We do not have sufficient information and/or documentation to make this determination. Accordingly, general comments are provided.

22 September 2016 External T.I. 2015-0594721E5 F - Inventory of animal meat

Unedited CRA Tags
28(1)(b) 248(1) farming, inventory
Summary Under
Tax Topics - Income Tax Act - Section 28 - Subsection 28(1) - Paragraph 28(1)(b)
processing meat can form part of a farming business
Summary Under
Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a)
meat processing operation included in farming business if incidental

Principales Questions: Is the meat produced by slaughtering and processing raised animals included in the inventory owned for the purpose of paragraph 28(1)(b)?

Position Adoptée: Question of fact.

Raisons: If the combined activities of raising animals and slaughtering and processing animals constitute a farming business of the taxpayer, the meat could be included in the inventory owned by the taxpayer in connection with the farming business. The question of whether the activity of slaughtering and processing is part of the farming business of a taxpayer depends on whether the activity constitutes a separate business or is an integral part of the farming business. To be an integral part of the farming business, the slaughtering and processing activity needs to be incidental to the taxpayer's farming activity.

2 August 2016 External T.I. 2016-0659041E5 F - Déduction habitants Îles de la Madeleine

Unedited CRA Tags
110.7, Règ. 7303, Règ. 7303.1
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.7 - Subsection 110.7(1)
residents of Magdalen Islands in intermediate zone

Principales Questions: Quel est l'historique de la déduction pour les habitants de régions éloignées et quelles conditions doivent être satisfaites pour que les résidents des Îles de la Madeleine aient droit à la pleine déduction? / What is the historic of the Northern residents and what conditions should be met by the residents of Iles de la Madeleine to get the full deduction?

Position Adoptée: Commentaires généraux / General comments

Raisons: La Loi / The Act

Technical Interpretation - Internal

19 September 2016 Internal T.I. 2016-0641841I7 - Employee stock option rules

Unedited CRA Tags
7, 110(1)(d)
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(b)
discretionary share bonus plans have no s. 7 agreement unless there is delayed vesting
Words and Phrases
agreement
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110 - Subsection 110(1) - Paragraph 110(1)(d)
no agreement to issue shares if vesting in employer's discretion
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(2)
no agreement if allocation of shares in trustee's discretion

Principal Issues: Whether an agreement to sell or issue shares for the purposes of section 7 and paragraph 110(1)(d) must be a legally binding agreement?

Position: Yes.

Reasons: Case law supports interpretation.

9 August 2016 Internal T.I. 2016-0632951I7 - Indian Tax Exemption - Investment Income

Unedited CRA Tags
81(1)(a)

Principal Issues: Is the investment income earned by an Indian from mutual funds purchased at a bank branch located on a reserve exempted from tax?

Position: No

Reasons: Bastien and Dube