Income Tax Severed Letters - 2017-07-05

Technical Interpretation - External

21 June 2017 External T.I. 2017-0687961E5 - Principal residence exemption and farm property

Unedited CRA Tags
40(2)(b); 54
Summary Under
Tax Topics - Income Tax Act - Section 54 - Principal Residence
a non-severable parcel of farming land could not have two beneficial owners of the principal residence and farming portions thereof
Summary Under
Tax Topics - General Concepts - Ownership
purported retention of beneficial ownership of portion of non-severable parcel of land was ineffective

Principal Issues: Can beneficial interest in a farmhouse used as a taxpayer's principal residence be severed from ownership of the balance of the farm property where ownership of the farmhouse cannot be legally severed from the balance of the farm property?

Position: No.

Reasons: The law.

21 June 2017 External T.I. 2017-0688901E5 - Farm Property

Unedited CRA Tags
110.6(1.3), (2)

Principal Issues: Whether capital gains deduction available in situation described.

Position: Question of fact. In the situation described, likely yes.

Reasons: See below.

7 June 2017 External T.I. 2016-0671731E5 F - Transfer of life insurance policy by dividend in kind

Unedited CRA Tags
148(7), 82(1), 121
Summary Under
Tax Topics - Income Tax Act - Section 148 - Subsection 148(7) - Paragraph 148(7)(a)
dividend-in-kind of a life insurance policy avoids the policy’s disposition at FMV
Summary Under
Tax Topics - Income Tax Act - Section 52 - Subsection 52(2)
proceeds and cost of distributed life insurance policy determined under s. 148(7) rather than s. 52(2)

Principales Questions: On a transfer of an interest in a life insurance policy by way of a dividend in kind after March 21, 2016, what will be the proceeds of the disposition that the transferor will be deemed to become entitled to receive?

Position Adoptée: The transferor will be deemed to become entitled to receive proceeds of the disposition generally equal to the greatest of the cash surrender value of the interest at the time of the transfer and the ACB of the interest to the transferor immediately before the transfer.

Raisons: The recipient of the dividend in kind will not be considered to have given consideration for the interest.

16 May 2017 External T.I. 2016-0670661E5 - Capital Cost of De-icing Equipment

Unedited CRA Tags
Class 43.2; s. 1100(24) to (26)
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 43.1
ice-melting shingles beneath solar equipment likely “related” to such equipment and not an accession to the building
Words and Phrases
related fixture

Principal Issues: Is de-icing equipment eligible for inclusion in Class 43.2 as equipment related to fixed location photovoltaic equipment?

Position: Possibly yes but question of mixed fact and law.

Reasons: Wording of the Act and Regulations.

Technical Interpretation - Internal

26 May 2017 Internal T.I. 2017-0690811I7 - Social assistance to refugees by individuals

Unedited CRA Tags
56(1)(u), 110(1)(f), 248(1) definition of “person”, regulation 233(1), regulation 233(2), 248

Principal Issues: Is an individual who provides social assistance as described in paragraph 56(1)(u) of the Act (and where none of the exceptions listed in subsection 233(2) of the Regulations apply) required to report the assistance amounts on a T5007 slip.

Position: A person includes an individual and therefore is included in the filing requirements, however, the amount is likely not social assistance.

Reasons: Definition of social assistance.