Income Tax Severed Letters - 2018-09-26

Ruling

2018 Ruling 2018-0745061R3 - Single-wing XXXXXXXXXX split-up butterfly

Unedited CRA Tags
55(1), 55(2), 55(3)(b), 55(3.1), 85(1), 86(1), 84.1(1), 245

Principal Issues: Will the exception to subsection 55(2), in paragraph 55(3)(b) apply to the Proposed Transactions?

Position: Yes.

Reasons: Conditions have been met and the butterfly denial rules in subsection 55(3.1) do not apply.

Technical Interpretation - Internal

17 April 2018 Internal T.I. 2017-0734751I7 - 152(1.4) - Statute barred partnership return

Unedited CRA Tags
152(1.2), 152(1.4), 152(3.1), 152(4)
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1.4)
a non-statute-barred partner can be assessed directly where the s. 152(1.4) partnership loss determination period is exceeded

Principal Issues: Whether the Minister may make a determination in respect of a partnership information return for a taxation year that is beyond the limitation period provided by subsection 152(1.4) of the Income Tax Act (the “Act”), where no determination has been made prior to this period.

Position: No, unless one of the exceptions in subsection 152(4) applies.

Reasons: Subsection 152(1.4) provides the timeframe the Minister has the authority to make a determination of a partnership return of income. In a situation where the partnership return of income has been filed, and no determination has been made within the three year period provided by subsection 152(1.4), the Minister may make a determination beyond this period only if a waiver has been filed, or one of the exceptions in 152(4) applies.

27 March 2018 Internal T.I. 2015-0592551I7 - Excluded property status of partnership interest

Unedited CRA Tags
91(1), 95(1) "foreign accrual property income", "excluded property", 5903(1), 5903(5)
Summary Under
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Excluded Property
partnership interests no longer were excluded property on dissolution given prior disposition of s. 95(2)(a)(ii) loans
Summary Under
Tax Topics - Income Tax Regulations - Regulation 5908 - Subsection 5908(10)
partnership interests no longer were excluded property on dissolution given prior disposition of s. 95(2)(a)(ii) loans/potential qualification of partnership interest under para. (c) ignored
Summary Under
Tax Topics - Income Tax Regulations - Regulation 5903 - Subsection 5903(5) - Paragraph 5903(5)(b)
foreign affiliate parent cannot carry back FAPLs generated by wound-up foreign affiliate
Summary Under
Tax Topics - Income Tax Act - Section 96
Icelandic Sameignarfelag was partnership
Summary Under
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(f.14)
once partnership interests were no longer excluded property, the components of their ACB calculation was to be translated at the rates when those components first arose
Summary Under
Tax Topics - Income Tax Act - Section 98 - Subsection 98(2)
partnership interest disposition occurred no sooner than final distribution date

Principal Issues: Is the disposition of a partnership interest by a foreign affiliate, on the partnership's dissolution, a disposition of "excluded property"? Can a parent foreign affiliate carry back the losses of its wound-up subsidiary to its prior taxation years?

Position: No, not in this case. No.

Reasons: Immediately before the final distribution of partnership property, the partnership held no excluded property. Subsection 5903(5) of the Regulations does not permit a parent affiliate to apply FAPL of the dissolved subsidiary affiliate to the parent's taxation years prior to the dissolution.