Income Tax Severed Letters - 2017-02-08

Ruling

2016 Ruling 2016-0639671R3 - Exploration expenses as CEE

Unedited CRA Tags
Definition of "Canadian exploration expense" in ss. 66.1(6).
Summary Under
Tax Topics - Income Tax Act - Section 66.1 - Subsection 66.1(6) - Canadian exploration expense - Paragraph (f)
drilling from an abandoned mine qualified

Principal Issues: Whether proposed exploration expenses qualify as Canadian exploration expense under paragraph (f) of the definition of CEE in ss. 66.1(6).

Position: Yes.

Reasons: The proposed exploration expenses will qualify as CEE based on the presented facts, the certification issued by Natural Resources Canada, and current law.

Technical Interpretation - External

19 January 2017 External T.I. 2015-0576751E5 F - Trust, Disposition of depreciable property, Assumption

Unedited CRA Tags
104(5); 13(7)(e); 107(2.1); 107(2); 251(1)(b)
Summary Under
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e)
s. 13(7)(e) applicable to s. 107(2.1) distribution but not s. 104(5) deemed disposition
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2)
s. 107(2) generally available where beneficiary assumes trust debt
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Personal Trust
non-commital as to whether assumption of debt could constitute tainting consideration
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(2.1)
s. 13(7)(e) applicable to depreciable property distribution
Summary Under
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c)
trust cannot have a NAL relationship with itself

Principales Questions: 1) Does paragraph 13(7)(e) apply when a trust is deemed to have disposed of depreciable property pursuant to subsection 104(5)?
2) Does paragraph 13(7)(e) apply when a taxpayer acquires a depreciable property subject to subsection 107(2.1)?
3) Does subsection 107(2) apply to a distribution of property when the distribution is conditional on the assumption of a trust's debt by the beneficiary?

Position Adoptée: 1) No 2) Possibly yes. 3) Question of facts.

Raisons: 1) A trust is not related to itself and is not deemed not to deal at arm’s length with itself. Therefore, the trust didn’t acquire the property from a non-arm's length person as required by paragraph 13(7)(e). 2) The beneficiary has acquired the property from the trust. Pursuant to paragraph 251(1)(b), the beneficiary and the trust are deemed not to deal with each other at arm's length. Therefore, paragraph 13(7)(e) can apply if all the other conditions are meet. 3) Likely yes if the assumption of debt by the beneficiary does not have an impact on the status of the personal trust.

17 December 2016 External T.I. 2016-0669001E5 - Mineral Resource Certification

Unedited CRA Tags
248(1)(d)(i)

Principal Issues: Whether a graphite deposit is an industrial mineral contained in a non-bedded deposit (Certification by Minister of Natural Resources)

Position: Mineral deposit meets the requirements of definition of "mineral resource" in subpara. 248(1)(d)(i).

Reasons: See Certification by Minister of Natural Resources.

29 November 2016 External T.I. 2016-0663811E5 - Métis employment income - Implication of Daniels

Unedited CRA Tags
81(1)(a) of the Income Tax Act and 87(1)(b) of the Indian Act

Principal Issues: 1. Is a member of a Métis Nation (“Métis member”) considered an “Indian” for purposes of the Indian Act?
2. Is the employment income earned by a Métis member on a reserve considered to be exempt from tax under the Indian Act, given the Supreme Court of Canada’s decision in Daniels v. Canada (Indian Affairs and Northern Development) (“Daniels”), 2016 SCC 12.

Position: 1. No; 2. No

Reasons: 1. Definition of “Indian” in the Indian Act. 2. The tax exemption available under the Indian Act only applies to an individual who is an “Indian” as defined in the Indian Act.

25 November 2016 External T.I. 2016-0665081E5 - Social assistance and the WITB of an Indian

Unedited CRA Tags
81(1)(a); 122.7; Reg. 233(1)

Principal Issues: Whether social assistance received from a First Nation by an Indian living on reserve is included in the calculation of the Working Income Tax Benefit?

Position: Yes.

Reasons: Definition of adjusted net income pursuant to subsection 122.7 of the Act.

Technical Interpretation - Internal

4 August 2016 Internal T.I. 2015-0622871I7 - Indian Exempt Income and Eligibility for Benefits

Unedited CRA Tags
81(1)(a) of the Act and 87(1)(b) of the Indian Act, and 56(1)(u) of the Act

Principal Issues: 1. Is income that is exempt from tax pursuant to paragraph 81(1)(a) of the Income Tax Act (the “Act”) and paragraph 87(1)(b) of the Indian Act, required to be included in the calculation of income for the purpose of determining the eligibility for income-tested benefits under Part I of the Act?
2. Is the social assistance payments received by an Indian required to be included in calculating his or her income for the purpose of determining the eligibility for income-tested benefits under Part I of the Act?

Position: 1. Whether or not the exempt income should be included in a particular income calculation depends on how the income is defined for the purpose of the income calculation.
2. The determination depends on the facts of the particular situation.

Reasons: 1. See below.
2. See below.