Income Tax Severed Letters - 2018-10-24

Technical Interpretation - External

20 September 2018 External T.I. 2018-0771871E5 - Passive Income Reduction and the Business Limit

Unedited CRA Tags
125(5.1)(b)
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(5.1) - Paragraph 125(5.1)(b)
effective date references the taxation year of the SBD corp rather than the associated corp

Principal Issues: We have been asked to provide guidance on how the new passive income reduction will apply to the reduction of the business limit for associated corporations with differing taxation years.

Position: The passive income reduction will apply for taxation years that begin after 2018. A corporation’s adjusted aggregate investment income is the total of all amounts each of which is the adjusted aggregate investment income of the corporation or any corporation with which it is associated at any time in a particular taxation year for each taxation year of the corporation, or associated corporation that ended in the preceding calendar year.

21 August 2018 External T.I. 2018-0771811E5 - 120.4 Excluded Shares

Unedited CRA Tags
120.4
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Excluded Shares - Paragraph (b)
10% of votes and FMV tests can be satisfied on a collective basis

Principal Issues: Can ownership of multiple classes of shares satisfy bright line tests in paragraph (b) of the definition of "excluded shares"?

Position: Yes.

Reasons: General not specific language used in preamble "specified individual owns shares".

13 August 2018 External T.I. 2018-0755191E5 - Mineral Resource Certification

Unedited CRA Tags
248(1)(d)(i) of the definition of "mineral resource"

Principal Issues: Whether the limestone deposits described below meet the definition of "mineral resource" in subparagraph 248(1)(d)(i) (Minister of Natural Resources Certification is required).

Position: The limestone deposits described below do not meet the requirements of the definition of "mineral resource" in subparagraph 248(1)(d)(i), such that no certification from the Minister of Natural Resources has been provided.

Reasons: The taxpayer is extracting rock, rather than a mineral, from the deposits.

4 June 2018 External T.I. 2016-0669531E5 - Eligible housing loss

Unedited CRA Tags
ITA: 6(1)(a), 6(19) – (22)

Principal Issues: Whether an amount paid by a former employer as compensation for the loss in the value of an employee’s house is an eligible housing loss for the purposes of subsection 6(20) of the Act.

Position: The amount paid for the housing loss must be in respect of an eligible relocation.

Reasons: See response.

4 June 2018 External T.I. 2017-0716001E5 - Eligible housing loss

Unedited CRA Tags
ITA: 6(1)(a), 6(19) – (22)

Principal Issues: Whether an amount paid by a former employer as compensation for the loss in the value of an employee’s house is an eligible housing loss for the purposes of subsection 6(20) of the Act.

Position: The amount paid for the housing loss must be in respect of an eligible relocation.

Reasons: See response.