Income Tax Severed Letters - 2018-08-22

Ruling

2018 Ruling 2017-0714411R3 - Butterfly Reorganization

Unedited CRA Tags
Subsection 55(2), Paragraph 55(3)(b), Subsections 84(3), 85(1), 112(1), 148(7), 186(4), 187.1(1), 191(2)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution
transfer of life insurance policies under a split-up butterfly with CSV: near cash; and excess: investment property

Principal Issues: Can the proposed butterfly reorganization to divide the assets of the corporate taxpayer be completed tax free?

Position: Yes.

Reasons: Meets the legislative and administrative requirements.

Technical Interpretation - External

19 July 2018 External T.I. 2017-0727041E5 - Legal and accounting fees - aborted share purchase

Unedited CRA Tags
Class 14.1, 13(34), 13(35), 13(36), 20(1)(a), 18(1)(y), 18(1)(a), 18(1)(b), 9(1)
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14.1
aborted target acquisition expenses may qualify as Class 14.1 additions

Principal Issues: Will the position in paragraph 23 of IT-143R3 continue to apply in light of the legislative changes and repeal of the eligible capital property system?

Position: Yes.

Reasons: 18(1)(a), 13(35), 13(36)

17 July 2018 External T.I. 2018-0752991E5 - Treatment of losses and investment income

Unedited CRA Tags
9, 12(1)(i), 20(1)(p), 38(c), 39(1)(b), 39(1)(c), 40(2)(g)(ii), 50(1), 111(1)(a), 111(1)(b), 54 capital property, 111(8) non-capital loss, 125(7) Canadian-controlled private corporation.

Principal Issues: Tax implications of losses incurred as a result of a fraudulent investment scheme.

Position: Various implications discussed.

Reasons: See below.