Income Tax Severed Letters - 2018-04-04

Ruling

2017 Ruling 2016-0674681R3 - Sequential Split-Up Butterfly

Unedited CRA Tags
55(2), 55(3)(b), 55(3.1), 55(3.2), 55(4)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution
sequential split-up butterfly with 1% tolerance, triggering of capital gains to generate CDA and RDTOH, and year end change to accommodate RDTOH division
Summary Under
Tax Topics - Income Tax Act - Section 129 - Subsection 129(1)
capital gain deliberately triggered to generate CDA and RDTOH addition and year end change granted to isolate dividend refund
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(a)
sale of securities for cash proceeds that are reinvested, and tendering shares for shares of offeror
Summary Under
Tax Topics - Income Tax Act - Section 249.1 - Subsection 249.1(7)
CRA accommodates year end change so that dividend refund of full RDTOH balance is generated in Year 1

Principal Issues: Whether the proposed transactions qualify for the butterfly exemption found in paragraph 55(3)(b).

Position: Yes.

Reasons: See below.

2017 Ruling 2017-0693271R3 - Split-Up Butterfly

Unedited CRA Tags
55(2), 55(3)(b)

Principal Issues: Whether the proposed transactions qualify for the butterfly exemption found in paragraph 55(3)(b).

Position: Yes.

Reasons: Wording of the Act and previous positions.

Technical Interpretation - External

20 February 2018 External T.I. 2017-0727811E5 F - Synthetic disposition

Unedited CRA Tags
80.6(1), 248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Synthetic disposition arrangement
an arrangement which eliminates all risk of loss nonetheless “appears” not to be a synthetic disposition arrangement if there is 20% profits participation
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Qualified Small Business Corporation Share
disposition could be deferred to end of 24 month period if deferred-closing agreement was not a synthetic disposition agreement

Principales Questions: Whether subsection 80.6(1) will apply to the scenario presented.

Position Adoptée: Question of fact.

Raisons: Wording of the provision.

10 November 2017 External T.I. 2017-0688831E5 - 110.6(1.1) and AgriInvest

Unedited CRA Tags
110.6(1.1)

Principal Issues: Is the value of an “excess deposit” in a taxpayer’s AgriInvest Account considered a “net income stabilization account” under subsection 110.6(1.1) and therefore deemed nil for purposes of the capital gains deduction?

Position: No.

Reasons: See below.