Income Tax Severed Letters - 2017-10-25

Ruling

2016 Ruling 2016-0649191R3 F - Canadian Exploration Expenses - New Mine

Unedited CRA Tags
66.1(6)

Principal Issues: 1. Whether the former mine will be a mine in a mineral resource that exists on the Concession for the purposes of subparagraph 66.1(6)(f)(vi) of the definition of Canadian Exploration Expenses under subsection 66.1(6) of the Act.
2. Whether expenditures relating to a proposed new mine will qualify for inclusion for the purposes of paragraph (f) of the definition for Canadian exploration expense under subsection 66.1(6) of the Act.

Position: 1. No. 2. It depends on whether they meet the purpose test and are not excluded expenses.

Reasons: 1. Based upon the written opinion for Natural Resources Canada. 2. Wording of the Act.

Technical Interpretation - External

3 October 2017 External T.I. 2017-0682401E5 - Certification of Mineral Resource

Unedited CRA Tags
Subparagraph (d)(i) of definition of mineral resource in subsection 248(1)

Principal Issues: (1) Whether the graphite deposit on the property meets the definition of a "mineral resource" under subparagraph (d)(i) of that term in subsection 248(1), (2) whether the marble deposit on the property meets the definition of a "mineral resource" under subparagraph (d)(i) of that term in subsection 248(1)?

Position: (1) Yes, (2) No.

15 September 2017 External T.I. 2017-0709331E5 - Vertical absorptive foreign merger

Unedited CRA Tags
248(1) “disposition” (n), 87(8.1), 87(8.2)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (n)
a simultaneous absorptive merger of FA3 (held by FA2) and FA2 (held by FA1) into FA1 would result in a disposition of the FA2 shares
Summary Under
Tax Topics - Income Tax Act - Section 87 - Subsection 87(8)
disposition at FA1 level where simultaneous aborptive merger into it of FA2 and FA3 (held by FA2)

Principal Issues: Whether paragraph (n) of the definition “disposition” in subsection 248(1) applies to a cancellation of the shares of a foreign affiliate held directly by the survivor corporation in a vertical absorptive foreign merger involving three affiliates.

Position: No.

Reasons: Wording of subparagraph (n)(iii) of the definition “disposition” in subsection 248(1) of the Act.

25 August 2017 External T.I. 2017-0703351E5 - Paragraph 116(5)(a) - reasonable inquiry

Unedited CRA Tags
116(5)
Summary Under
Tax Topics - Income Tax Act - Section 116 - Subsection 116(5) - Paragraph 116(5)(a)
in the absence of counter indicators, a statutory declaration of residence is sufficient
Summary Under
Tax Topics - Income Tax Act - Section 116 - Subsection 116(5.3)
statutory declaration sufficient if no negative markers

Principal Issues: In the context of a real estate transaction, will the reasonable inquiry standard in paragraph 116(5)(a) be satisfied if the purchaser obtains a statutory declaration from the vendor that the vendor is not and will not at the time of closing be a non-resident of Canada?

Position: Yes, provided there are no facts and circumstances present that would suggest that the vendor might be or become a non-resident person.

Reasons: Request to sign the declaration would in such circumstances represent a reasonable inquiry.

26 May 2017 External T.I. 2017-0685071E5 - Purchase of investment by a TFSA

Principal Issues: Whether a self-directed TFSA is able to acquire an investment (other than a prohibited investment or non-qualified investment) using its existing property constitutes a contribution by the non-resident holder of the TFSA.

Position: No.

Reasons: The acquisition of an investment by a TFSA using its existing property does not constitute a contribution by the holder of the TFSA.