Income Tax Severed Letters - 2017-12-06

Ruling

2016 Ruling 2016-0652041R3 - Loss consolidation arrangement

Unedited CRA Tags
20(1)(c), 55(2)
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a)
standard triangular loss shift with annual funding of dividends and interest, cashless unwind with set-off and provincial GAAR and s. 55(2) rulings
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b)
s. 55(2) ruling re dividends on preferred shares used in loss shift

Principal Issues: Whether the LCA is acceptable.

Position: Yes.

Reasons: The proposed transactions fall within CRA's policy position for LCA.

2015 Ruling 2015-0578671R3 - Limited Partnership operating a XXXXXXXXXX

Unedited CRA Tags
149(1)(d.5), 149(1.2)

Principal Issues: Whether the limited partnership’s income that is allocated to a corporation owned by two First Nations and that is earned outside the geographic boundaries of the First Nations, will be taken into account in determining if the corporation is exempt from tax under 149(1)(d.5).

Position: Yes.

Reasons: The two First Nations have received determination letters from the CRA that they are exempt from tax under 149(1)(c) as a public body performing a function of government in Canada. The income allocated to the corporation from the Limited Partnership will be earned as a XXXXXXXXXX in the province of XXXXXXXXXX and therefore will not be included in the geographical boundaries restriction by virtue of paragraph 149(1.2)(b).

Technical Interpretation - External

3 November 2017 External T.I. 2017-0712141E5 F - Borrowing to make interest-free loans

Unedited CRA Tags
20(1)(c)
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i)
interest on shareholders’ borrowings to fund an interest-free corporate loan may be deductible even if the proportionate-to-shares test is not met

Principales Questions: Whether interest is deductible in various fact situations where shareholders borrow money (at interest) and loan money interest-free to a corporation in which the shareholders own shares.

Position Adoptée: General comments. Reference to paragraph 1.54 of Folio S3-F6-C1 Interest Deductibility.

Raisons: Question of fact.

23 October 2017 External T.I. 2017-0685001E5 F - Withdrawal of RRSP over-contributions after death

Unedited CRA Tags
146(8.2), (8), (8.8), 56(1)h)
Summary Under
Tax Topics - Income Tax Act - Section 146 - Subsection 146(8.2)
the deemed s. 146(8.8) RRSP benefit on death can be treated as a withdrawal of an excess RRSP contribution

Principales Questions: Where the annuitant of an unmatured RRSP dies without having withdrawn over-contributions he made to the RRSP in the preceding year, whether the deceased annuitant's legal representative may claim a subsection 146(8.2) deduction against the amount included in the deceased annuitant's income pursuant to subsections 146(8) and (8.8)?

Position Adoptée: Generally, yes, provided that all the other conditions are satisfied.

Raisons: Although subsection 146(8.2) requires, inter alia, that the annuitant receives a payment from an RRSP, the CRA generally accepts that an amount deemed received as a benefit out of or under an RRSP pursuant to subsection 146(8.8) be considered as a payment received from an RRSP for the purposes of subsection 146(8.2).

28 June 2017 External T.I. 2017-0705431E5 - funds held in settlement account

Unedited CRA Tags
149(1)(w); 150(1.1); 150(1); 204
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(w)
court-supervised settlement fund for class action was not required by a law
Summary Under
Tax Topics - Income Tax Act - Section 150 - Subsection 150(1.1) - Paragraph 150(1.1)(b) - Subparagraph 150(1.1)(b)(i)
class-action settlement fund was required to file T3 returns
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c)
litigation settlement trust with class action beneficiaries required to pay tax and file T3 returns

Principal Issues: 1. Do funds held in trust as a result of a judgment in a class action suit qualify as a tax exempt trust under paragraph 149(1)(w) of the Act?

Position: 1. Requirements of 149(1)(w) do not appear to have been met.

Reasons: 1. General comments provided as it is not a ruling.

31 May 2017 External T.I. 2016-0658641E5 - Policy loan interest

Unedited CRA Tags
148(1), 148(9)

Principal Issues: What are the tax implications of capitalized policy loan interest?

Position: General comments provided.

Reasons: Based on legislation and previous positions.

Technical Interpretation - Internal

24 July 2017 Internal T.I. 2017-0705801I7 - non-TCP net capital loss

Unedited CRA Tags
115(1); 111
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(9)
capital loss realized on emigration on non-TCP available for carryforward against TCP gain
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(b)
emigration loss from non-TCP offsettable against post-emigration TCP gain

Principal Issues: Can a non-resident corporation which incurs a capital gain on the disposition of taxable Canadian property (“TCP”) which is not treaty-protected property offset the taxable capital gain with net capital losses that arose as a result of a deemed disposition of non-TCP upon emigration from Canada?

Position: Yes.

Reasons: Net capital loss pursuant to 111(8) computed for a year for which taxpayer was a resident is not subject to the restriction in 111(9).