Income Tax Severed Letters - 2017-03-01

Ruling

2015 Ruling 2015-0574901R3 - Qualifying environmental trust

Unedited CRA Tags
20(1)(ss), 107.3(1), 127.41, 211.6

Principal Issues: 1. Whether the proposed Trust meets the definition of a “qualifying environmental trust” as defined in subsection 211.6(1) of the Act.
2. Whether contributions made by the ACo on behalf of ACo L.P. to the Trust will be deductible in computing ACo L.P.'s income pursuant to paragraph 20(1)(ss) of the Act. 3. Whether a debt obligation that meets the definition of a "qualified investment" in paragraph (b) of the definition of that term in section 204 of the Act will be a "prohibited investment" of the Trust for the purpose of the definition of that term in subsection 211.6(1). 4. For the purposes of subsection 107.3(1) of the Act, whether the entire amount of any income or loss of the Trust can reasonably be considered to be ACo L.P.'s share of such income or loss. 5. Whether ACo will be entitled to deduct from its tax otherwise payable under Part I of the Act for a taxation year the amount that can reasonably be considered to be its share of the Part XII.4 tax credit in respect of ACo L.P. in accordance with section 127.41 of the Act.

Position: 1. Yes 2. Yes provided that the Trust continues to qualify as a qualifying environmental trust at the time of the contribution. 3. No 4. Yes 5. Yes

Reasons: Based on the facts presented.

2015 Ruling 2015-0619261R3 - Qualifying Environmental Trusts for Pipelines

Unedited CRA Tags
211.6, 20(1)(ss)

Principal Issues: 1. Whether the proposed Trust meets the definition of a “qualifying environmental trust” in subsection 211.6(1) of the Act.
2. Whether contributions made by the taxpayers to the Trust will be deductible in computing taxpayers' income pursuant to paragraph 20(1)(ss) of the Act. 3. Whether ETFs (Exchange Traded Funds) organized as trusts and traded on a designated stock exchange will be a “prohibited investment” of the QET as that term is defined in subsection 211.6(1). 4. Whether Government of Canada bonds and Treasury Bills will be a “prohibited investment” of the Trust as that term is defined in subsection 211.6(1).

Position: 1. Yes; 2. Yes, provided that the Trust is a QET at the time of the contribution; 3. No.

Reasons: Legislative text.

Ministerial Correspondence

3 November 2016 Ministerial Correspondence 2016-0664861M4 - Prescribed Prizes - Olympic Athletes

Unedited CRA Tags
56(1)(n); Reg. 7700

Principal Issues: Taxation of cash prizes awarded to Olympic athletes.

Position: Cash prizes do not qualify as a prescribed prize.

Reasons: The definition of prescribed prize would not include these amounts.

Technical Interpretation - External

20 October 2015 External T.I. 2015-0574241E5 - Payments to First Nation (XXXXXXXXXX) Elders

Unedited CRA Tags
56(1)(a), 56(1)(d), 56(1)(u), 104(3), 81(1)(a)

Principal Issues: Whether monthly payments made by XXXXXXXXXX to its citizens who are over the age of 65 years are taxable or non-taxable under the Act?

Position: The payments are taxable as pension benefit under paragraph 56(1)(a) of the Act.

Reasons: According to the ordinary meaning, where a payment is a regular payment and is made by a government to people above a specified age, the payment is considered to be a pension payment. The payment in the present situation is more likely an old age pension benefit and therefore be included in the elders’ income under 56(1)(a)(i) of the Act.

Technical Interpretation - Internal

27 September 2016 Internal T.I. 2015-0572901I7 - Deferral of employment benefit under ss. 7(8)

Unedited CRA Tags
7(1); 7(8); 69(1); 73(1)
Summary Under
Tax Topics - Income Tax Act - Section 73 - Subsection 73(1.01) - Paragraph 73(1.01)(b)
s. 7(10) deferred gain is triggered on a s. 73 rollover
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(8)
deferred amount triggered on rollover

Principal Issues: Does the deferral of the employment benefit provided by ss. 7(8) continue once the shares are transferred to a former spouse pursuant to a divorce settlement?

Position: No.

Reasons: Once the shares are disposed of, the employee dies, or the employee becomes non-resident the deferral under ss. 7(8) no longer applies.