Income Tax Severed Letters - 2017-03-22

Ruling

2016 Ruling 2016-0634031R3 - Donation to a municipality

Unedited CRA Tags
ITA 118.1(1), 149.1
Summary Under
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts
contributions to a legal defence fund of public interest could qualify as charitable contributions by routing them through a municipal-controlled fund

Principal Issues: Whether a donation to a fund maintained and controlled by a municipality for the purposes of XXXXXXXXXX constitutes a gift for income tax purposes?

Position: Yes, based on the facts provided.

Reasons: The fund is deemed a project of community interest by the municipality and the municipality will have full control and ownership of the fund.

Technical Interpretation - External

2 March 2017 External T.I. 2017-0682291E5 - Swedish/Finnish Profit Transfer Agreements

Unedited CRA Tags
90(2), 95(2)(a)(ii)
Summary Under
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(B)
s. 95(2)(a)(ii) can recharacterize a profit transfer payment that is not deemed a dividend under s 90(2)

Principal Issues: Whether a payment made by a subsidiary foreign affiliate to its grand-parent foreign affiliate under a "profit transfer agreement" in accordance with Finnish or Swedish tax law can potentially be recharacterized as income from an active business under subparagraph 95(2)(a)(ii) of the Act?

Position: Provided the payment is “income from property” to the recipient, and to the extent only of the portion of that amount paid that is deductible by the subsidiary affiliate in computing its “earnings from an active business”, the payment should generally be eligible for recharacterization under that subparagraph, provided its other conditions are met.

Reasons: This approach will continue to apply except where the payment is deemed under subsection 90(2) to be a dividend.

24 February 2017 External T.I. 2017-0685601E5 - Taxation of earnings by Canadian resident

Principal Issues: How would earnings from proposed business be taxed?

Position: General comments provided.

Reasons: Multiple general scenarios presented.

21 February 2017 External T.I. 2016-0676961E5 - T5008

Unedited CRA Tags
Section 230 of the Income Tax Regulations
Summary Under
Tax Topics - Income Tax Regulations - Regulation 230 - Subsection 230(3)
exception for units trading at a fixed price does not apply to USD money market funds

Principal Issues: Whether T5008 needs to be filed for transactions in units with constant fixed price in foreign currency

Position: Yes

Reasons: Administrative position applies only to units denominated in Canadian currency

13 February 2017 External T.I. 2015-0570011E5 - Compensation by non-resident-loss of rental income

Unedited CRA Tags
212(1)(d), 216
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d)
compensation paid for lost rent subject to Pt. XIII tax
Summary Under
Tax Topics - Income Tax Act - Section 216 - Subsection 216(1)
damages can be eligible for a s. 216 election

Principal Issues: What should be the tax treatment of an annual amount paid to a non-resident taxpayer as compensation for the loss of rental income?

Position: The compensation received should generally be given the same treatment as what it is intended to replace.

Reasons: Surrogatum principle

9 February 2017 External T.I. 2016-0657531E5 - Deemed resident trust and "designated beneficiary"

Unedited CRA Tags
94(3)(a), 210(1)
Summary Under
Tax Topics - Income Tax Act - Section 210 - Designated Beneficiary - Paragraph (a)
s.94(3) trust can cause a trust of which it is beneficiary to be subject to Part XII.2 tax
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(3) - Paragraph 94(3)(a)
no application to Pt. XII.2

Principal Issues: Whether a non-resident trust deemed to be resident in Canada under paragraph 94(3)(a) would be a "designated beneficiary" for purposes of Part XII.2 of the Act.

Position: Yes

Reasons: Paragraph 94(3)(a) does not refer to the provisions contained in Part XII.2.

8 February 2017 External T.I. 2017-0684481E5 - Status as a graduated rate estate

Unedited CRA Tags
248(1) definition of "graduated rate estate"
Summary Under
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(5.1)
estate can make a gift qua GRE before it has filed its first return
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Graduated Rate Estate
gift can be made qua GRE before paras. (c) and (d) satisfied

Principal Issues: For purposes of applying the charitable gifting rules in the ITA, can an estate be a graduated rate estate before the actual designation as such is made on filing its tax return?

Position: Yes.

Reasons: Wording of the Act.

29 December 2016 External T.I. 2016-0675991E5 - Canada Child Benefit - Criteria for Status Indian

Unedited CRA Tags
122.6

Principal Issues: Can an individual who is an Indian under the Indian Act qualify for the Canada Chid Benefit if they are not a Canadian citizen?

Position: yes

Reasons: Recent changes to definition of eligible individual in section 122.6 of the Income Tax Act effective July 2016.

26 December 2016 External T.I. 2016-0659941E5 - Coaching costs as tuition fees

Unedited CRA Tags
118.5(1); 118.5(3)

Principal Issues: Does the expense paid to a coach for a University music course qualify as tuition expense under 118.5(1)?

Position: Question of fact-not likely in this case.

Reasons: legislation