Income Tax Severed Letters - 2018-12-05


2018 Ruling 2018-0752291R3 - Underground Mine

Unedited CRA Tags
ss. 66(15); definition of CEE in ss. 66.1(6)(f)

Principal Issues: Will the expenses to be incurred by the taxpayer as part of the proposed exploration program qualify as CEE pursuant to paragraph (f) of that definition?

Position: Favourable ruling given provided that the proposed transactions are carried out as stated in the letter.

Reasons: Based on the opinion of NRCan, the expenses will not be considered to be related to a potential or actual extension of an existing mine that has come into production in reasonable commercial quantities.

2018 Ruling 2018-0752811R3 - Transfer of Debt as Qualifying Disposition

Unedited CRA Tags
107.4, 245(2)
a sideways transfer of property between two MFTs with identical unitholders came within s. 107.4(1)

Principal Issues: Will the proposed transfer of debt by one trust to another trust be a qualifying disposition for purposes of section 107.4 of the Act? Will GAAR apply?

Position: 1) Yes. 2) No.

Reasons: 1) Meets all of the requirements in 107.4(1). 2) There is no misuse or abuse of the Act.

Technical Interpretation - External

15 November 2018 External T.I. 2018-0762201E5 - Canadian Exploration Expense

Unedited CRA Tags
Paragraph (f) of the definition of CEE in s. 66.1(6)
costs of consultations with an aboriginal community respecting an exploration program qualified as CEE

Principal Issues: Whether certain expenses to be incurred in relation to community consultations or environmental studies will be Canadian exploration expenses.

Position: Expenses that are directly related to community consultations or environmental studies and that are incurred for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada will generally be Canadian exploration expenses, subject to the application of any of the exceptions set out in that definition.

Reasons: Application of the CRA guidelines in 2016-0675902I7.

20 August 2018 External T.I. 2017-0731541E5 - TFSA contributions

Unedited CRA Tags
taxable employer contribution to employee’s TFSA not subject to s. 146.2(2)(c)

Principal Issues: Is an employer permitted to make a payment to an employee’s tax-free saving account (“TFSA”) where the payment is made at the employee’s direction?

Position: Yes.

Reasons: The payments to the TFSA are contributions of the employee.

20 August 2018 External T.I. 2018-0739761E5 - TFSA contributions

Unedited CRA Tags
146.2(2)(c), 207.01(1) "advantage", 74.1(2)
remuneration or a trust distribution paid directly to a TFSA is not a 3rd-party contribution
the payment of remuneration or a trust distribution directly to a TFSA is not an advantage

Principal Issues: Whether payments made by a third party on behalf of an individual directly to their TFSA in several scenarios contravene the condition in paragraph 146.2(2)(c) that prohibits anyone other than the holder from making contributions to the TFSA.

Position: No. The payment constitutes a contribution made to the TFSA by the holder of the TFSA.

Reasons: The TFSA holder has ownership of the funds and the payment is made at the direction, or with the concurrence, of the holder.