Income Tax Severed Letters - 2017-11-08


2017 Ruling 2016-0670871R3 - Post-mortem pipeline

Unedited CRA Tags
84.1, 84(2), 245(2)
pipeline timing: Newco holds acquired shares of portfolio company for 30 months before amalgamation; and Amalco repays notes of estate at 15% per quarter

Principal Issues: 1. Does subsection 84(2) apply to the Proposed Transactions? 2. Does the GAAR apply to the Proposed Transactions?

Position: 1. No. Favourable ruling provided. 2. No. Favourable ruling provided.

Reasons: In accordance with the Act and consistent with our previous positions.

Technical Interpretation - External

22 September 2017 External T.I. 2016-0632881E5 - Regulation 808

Unedited CRA Tags
219(1)(j); Regulation 808
member of upper-tier partnership is a member of a lower-tier partnership for investment allowance purposes
partner in upper-tier LP was member of lower-tier LP

Principal Issues: Whether a non-resident corporate partner can look through an upper-tier partnership to pick up properties owned by a lower-tier partnership, of which the first partnership is a member, when calculating its allowance in respect of investment in property in Canada.

Position: Yes.

Reasons: Having given consideration to the purpose of the Branch Tax and noting that a non-resident corporation that is a member of a top-tier partnership would be subject to Branch Tax in respect of its share of taxable income earned through a lower-tier partnership, it is reasonable to consider that the corporation will also be considered to be a member of a lower-tier partnership for the purpose of subsection 808(4) of the Regulations.

27 March 2017 External T.I. 2017-0685411E5 - Reporting a supplementary pension benefit

Unedited CRA Tags
Section 60.03; Paragraph 56(1)(a), 118(8)(f); Subsection 118(3), 118(7); Definition of “superannuation or pension benefit”, “retirement compensation arrangement”, “employee benefit plan” under subsection 248(1).

Principal Issues: What is the correct reporting of a pension benefit paid from an unfunded supplemental plan on a T4A Statement of Pension, Retirement, Annuity, and Other Income (T4A)?

Position: A periodic or lump sum payment from an unregistered pension plan is reported in Box 109/190 of the T4A, respectively.

Reasons: Amounts paid under an unfunded supplemental plan would generally constitute a superannuation or pension benefit as defined in subsection 248(1) of the Income Tax Act (the Act). Such amounts are excluded from an individual’s eligible pension income for a taxation year by reason of paragraph 118(8)(f) of the Act and should not be reported on Box 16 of the T4A.

21 February 2017 External T.I. 2016-0669361E5 - T4RIFs and theoretical value for min amount

Unedited CRA Tags
146.3(1) "retirement income fund", 146.3(1) "minimum amount", 56(1)(t), 146.3(5)

Principal Issues: Did the carrier of a registered retirement income fund (“RRIF”) correctly issue T4RIF slips to the annuitant of the RRIF based on the facts provided?

Position: yes

Reasons: The definition of “retirement income fund” under subsection 146.3(1) requires the RRIF carrier to withdraw the minimum amount annually beginning the year after it is established.

Technical Interpretation - Internal

27 March 2017 Internal T.I. 2016-0675631I7 - Interest earned on Common Experience Payments

Unedited CRA Tags
81(1)(a) Income Tax Act; 87 Indian Act

Principal Issues: Whether interest income earned on Common Experience Payments is exempt from tax.

Position: Question of fact.

Reasons: The income is not exempt on the basis that the investment is funded with CEP, but may be exempt if the income is otherwise sufficiently connected to a reserve.