Income Tax Severed Letters - 2018-06-06

Ruling

2017 Ruling 2017-0703821R3 - Supplementary ruling- XXXXXXXXXX continuance

Unedited CRA Tags
112(1), 112(2.1), 15(1), 248(1) "term preferred share"

Principal Issues: 1. Does subsection 15(1) apply to deem a shareholder benefit to the shareholder that acquired a "control block" of shares on the XXXXXXXXXX continuance transaction that occurred on XXXXXXXXXX? 2. Can certain shareholders of the XXXXXXXXXX, that are XXXXXXXXXX (and TCCs) avail themselves of the 112(1) deduction on dividends received from the XXXXXXXXXX?

Position: 1. No; 2. Yes, with caveats.

Reasons: 1. Subsection 15(1) does not apply because the benefit was realized on a share for share exchange, whereby the corporation that continued as a XXXXXXXXXX acquired and cancelled the shares of the shareholder that acquired the controlling block of shares, simultaneously with the shareholder acquiring the control block (See exception 15(1)(a)(ii)). 2. Yes, it is available, provided that the shares are not term preferred shares acquired in the ordinary course of business XXXXXXXXXX.

2016 Ruling 2016-0643751R3 - Continuance of a XXXXXXXXXX to a XXXXXXXXXX

Unedited CRA Tags
51(1), 248(1) "Disposition", 86(1)

Principal Issues: 1. Will a continuance from one federal act to another federal act result in a disposition of the assets of the continuing corporation? 2. Will the share for share exchanges that occur simultaneously upon continuance result in a deemed disposition to XXXXXXXXXX and shareholders of the continuing corporation? Does subsection 86(1) apply to said share exchanges occurring upon continuance?

Position: 1. No. 2. Yes, for XXXXXXXXXX and Class XXXXXXXXXX shares and No for the Class XXXXXXXXXX shares 3. Yes, for XXXXXXXXXX and Class XXXXXXXXXX shares.

Reasons: 1. Prior positions 2. Prior positions and wording of the legislation 3. Requirements of the provision have been met.

Ministerial Correspondence

12 April 2018 Ministerial Correspondence 2018-0743891M4 - Non-resident withholding tax

Unedited CRA Tags
212, 217

Principal Issues: Are Canadian payers required to withhold tax on payments to non-residents?

Position: Canadian payers have to withhold non-resident tax on certain types of income they pay or credit to non-residents of Canada.

Reasons: Legislation

26 January 2018 Ministerial Correspondence 2017-0728281M4 - Medical expenses - cost of doulas & birth centres

Unedited CRA Tags
118.2(2)(a); 118.4(2)

Principal Issues: Whether amounts paid for doulas and birth centres in Alberta are eligible expenses for the purpose of the medical expense tax credit.

Position: Amounts paid for doulas are not eligible medical expenses; however, amounts paid for a birth centre would be considered eligible medical expenses if the service is provided by a medical practitioner (e.g., a registered midwife).

Reasons: Paragraph 118.4(2)(a) of the Act provides that, where the reference to a medical practitioner is used in respect of a service rendered to an individual, the reference is to a person authorized to practice as such pursuant to the laws of the jurisdiction in which the service is rendered.

Technical Interpretation - External

26 April 2018 External T.I. 2018-0754581E5 - Specified investment business

Unedited CRA Tags
9(1); 123(1); 123.3; 123.4(2); 125(1); 125(7)

Principal Issues: The taxpayer's questions relate to the incorporation of a private corporation the purpose of which is to provide commercial loans to small businesses, and to the possible impact, if any, of the proposed rules relating to the taxation of “passive income”.

Position: The taxpayer essentially requests tax advice in respect of the taxpayer's proposed business. As a result, we have determined that our response must be limited to general comments only.

Reasons: Based on the provisions of the Act and CRA publications.

19 April 2018 External T.I. 2016-0668361E5 - Common-law partners

Unedited CRA Tags
248(1); 251(2); 251(6); XXXXXXXXXX

Principal Issues: Is an adult XXXXXXXXXX partner also a common law partner for the ITA?

Position: In some circumstances. Common-law partner has the meaning as defined under the Income Tax Act.

Reasons: It is a question of fact in each scenario as to whether a conjugal relationship exists for the definition of common-law partner in subsection 248(1) of the Act.

28 March 2018 External T.I. 2016-0672941E5 - Par. 2 of Norway Other Income treaty Article

Unedited CRA Tags
Paragraph 2, Article 22 of Canada- Norway Income Tax Convention
a tax-exempt Norwegian fund received a Canadian REIT distribution that was “taxable” in Norway, so that Treaty-reduced withholding applied

Principal Issues: Whether withholding tax on distributions from Canadian-resident trust to Norwegian XXXXXXXXXX entity will be reduced to 15% by operation of paragraph 2 of Article 22 of the Canada-Norway Income Tax Convention.

Position: Yes.

Reasons: The trust distribution is included in the income of the Norwegian XXXXXXXXXX entity, notwithstanding that the entity is exempt from tax on all of its income. Therefore paragraph 2 of Article 22 is satisfied.

28 March 2018 External T.I. 2016-0677071E5 - Amount paid to adults w/developmental disabilities

Unedited CRA Tags
81(1)(h)

Principal Issues: Will paragraph 81(1)(h) apply to payments made by XXXXXXXXXX directly or indirectly through third party agencies to individuals to provide services under the XXXXXXXXXX to adults with developmental disabilities?

Position: If the amounts that the caregiver receives are for the benefit of the care recipient, and provided that all the other required conditions in paragraph 81(1)(h) are met, then these amounts will likely qualify for the exemption under paragraph 81(1)(h) of the Act.

Reasons: All the conditions of paragraph 81(1)(h) must be met.