Income Tax Severed Letters - 2018-03-28

Ruling

2016 Ruling 2015-0616291R3 - Cross-Border Butterfly

Unedited CRA Tags
55(1), 55(2), 55(3)(b), 55(3.1)(b), 85(1), 86(1), 112
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution
2 successive permitted exchanges in cross-border butterfly/deferred revenue not a liability/agreements between DC And TC re certain allocations so as to affect 3 types of property
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Permitted Exchange
two successive permitted exchanges contemplated

Principal Issues: Did the proposed cross-border butterfly qualify for the exemption in paragraph 55(3)(b) from the butterfly denial rule in subsection 55(2)?

Position: Yes.

Reasons: Meets the statutory requirements and our prior positions and rulings on cross-border butterfly reorganizations.

2016 Ruling 2016-0635101R3 - 55(3)(a) Spin-Off to Use Parent Losses

Unedited CRA Tags
13(21.1); 40(3.3); 40(3.4); 40(3.5); 55(3)(a); 85(1); 86
Summary Under
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.1) - Paragraph 13(21.1)(a)
where land transferred under s. 85(1) along with terminal loss building, elect high with a view to s. 13(21.1)(a) applying to reduce the land proceeds to ACB
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a)
55(3)(a) spin-off of property already subject to sale agreement to parent before closing date
Summary Under
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1)
s. 86(1) applied where “dirty” s. 85 exchange mechanic used, but no s. 85 election made
Summary Under
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(a)
elected amount deterines proceeds before s. 13(21.1)(a) grind

Principal Issues: Where 13(21.1) denies a terminal loss on the disposition of a building and deducts the terminal loss from the proceeds of disposition of associated land, are the proceeds of disposition referred to those that are the agreed amount pursuant to an election under 85(1)?

Position: Yes.

Reasons: The agreed amount is, pursuant to 85(1)(a), deemed to be the proceeds of disposition of the property and it is those proceeds of disposition to which 13(21.1) applies (XXXXXXXXXX).

2016 Ruling 2016-0640371R3 - Standard Loss Consolidation

Unedited CRA Tags
245; 20(1)(c); 112(1); 55(2)

Principal Issues: Whether a lossco will be entitled to apply its non-capital losses against the interest income generated as part of the loss consolidation transactions and whether profitcos will be entitled to deduct the corresponding interest expense.

Position: Yes.

Reasons: Conforms to our requirements for such rulings.

Technical Interpretation - External

8 February 2018 External T.I. 2016-0670841E5 - Inter-generational rollover of farm property

Unedited CRA Tags
70(9.01), 70(9.21), 73(3.1), 73(4.1)
Summary Under
Tax Topics - Income Tax Act - Section 70 - Subsection 70(9)
intergenerational transfer of a farming business can occur where one individual worked on more than one farm
Summary Under
Tax Topics - Income Tax Act - Section 70 - Subsection 70(10) - Share of the Capital Stock of a Family Farm or Fishing Corporation
one individual's work can qualify multiple farming corps
Summary Under
Tax Topics - Income Tax Act - Section 73 - Subsection 73(4)
rollover is available where one individual working on properties of multiple corps or partnerships

Principal Issues: 1. Has the position outlined in 2008-0303761E5 changed? 2. Would this position apply to subsections 73(3.1) and 73(4.1)?

Position: 1. No 2. Yes.

Reasons: 1. The relevant provisions have not been amended and no ITRD documents imply that we should conclude differently. 2. The provisions dealing with an inter vivos transfer deal with the same types of property and contain substantively similar conditions as subsections 70(9) and 70(9.2).