Income Tax Severed Letters - 2019-01-09

Ruling

2018 Ruling 2017-0713071R3 - Permanent Establishment

Unedited CRA Tags
Article V of the Canada-US Treaty
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 5
no Cdn PE of LLC through Cdn home office of former employee who is now employed by Cdn SPV under pass-through payroll arrangement

Principal Issues: Whether a U.S. LLC will be considered to be carrying on business in Canada through a permanent establishment in Canada as a result of the emigration to Canada of a member of that U.S. LLC and the subsequent provision of services after emigration by that member to the U.S. LLC as an employee of an unrelated Canadian resident service provider?

Position: No, in the circumstances.

Reasons: Determination as to whether a non-resident entity has a permanent establishment in Canada is a question of fact; however, based on the facts, as submitted, we are of the view that the emigration of the formerly US-resident member of the U.S. LLC to Canada and the subsequent provision of services to U.S. LLC by the individual as an employee of an arm`s length Canadian resident service provider will not cause the U.S. LLC in question to be considered to be carrying on business in Canada through a permanent establishment.

2018 Ruling 2018-0756881R3 - Net Asset Butterfly - Farm

Unedited CRA Tags
55(2); 55(3)(b)

Principal Issues: Do the proposed transactions, structured as a net asset butterfly of a farming corporation by two 50% shareholders that are brothers, qualify under s. 55(3)(b) for exemption from s. 55(2)?

Position: Yes.

Reasons: In accordance with legislative and administrative requirements.

Technical Interpretation - External

4 December 2018 External T.I. 2016-0670851E5 - Regular Places of Employment and Personal Travel

Unedited CRA Tags
6(1)(a); 6(1)(b); 6(1)(e); 6(1)(k); 6(1)(l); 6(6)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(b)
scope of “regular place of employment"
Words and Phrases
regular place of employment
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(6) - Paragraph 6(6)(b) - Subparagraph 6(6)(b)(i)
travel between temporary place of residence and special work site not excluded

Principal Issues: 1) When a particular work location becomes a regular place of employment (RPE) for an employee. 2) Whether there are circumstances when the value of employer-provided transportation between an employee’s home and his or her RPE (or a reasonable allowance or reimbursement received in respect of such travel) is not included in income. 3) Whether tax consequences may arise when an employer reimburses an employee for the cost of a rental car (including its rental cost, insurance, mileage, and gas) that is used for both personal and employment-related travel.

Position: See response.

Reasons: See response.

19 July 2018 External T.I. 2014-0551941E5 F - Déplacement effectué par un employé

Unedited CRA Tags
6(1)b); 6(1)b)(v) et (vii.1)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(b)
travel allowances of employees at accounting firms for travel on their audit engagements might be taxable
Words and Phrases
regular place of employment

Principales Questions: Est-ce que l’ARC pourrait donner des précisions sur le sens de l’expression « lieu habituel de travail »? / Could the CRA give more general precisions on the interpretation of the expression « regular place of work »?

Position Adoptée: La question de savoir quel est le « lieu habituel de travail » d’un employé est une question de fait. / The question of what is the employee « regular place of work » is a question of fact.

Raisons: Pour que les exceptions aux sous-alinéas 6(1)b)(vii) et (vii.1) s’appliquent, les allocations doivent, entre autres, avoir été reçues de son employeur pour voyager « dans l’accomplissement des fonctions de sa charge ou de son emploi ». La question de savoir si l’allocation a été reçue de son employeur pour voyager « dans l’accomplissement des fonctions de sa charge ou de son emploi » ou pour un « déplacement personnel » est une question de fait qui ne peut être répondue qu’après avoir analysé tous les faits d’une situation particulière. La Loi ne précise pas le sens de l’expression « dans l’accomplissement des fonctions de sa charge ou de son emploi » pour les fins de l’article 6. Toutefois, l’ARC considère qu’un déplacement personnel s’entend d’un déplacement entre le domicile de l’employé et son « lieu de travail habituel ». Par conséquent, ce déplacement n’est pas considéré comme un déplacement « dans l’accomplissement des fonctions de sa charge ou de son emploi ». L’expression « lieu habituel de travail » n’est pas prévue dans la Loi. / In order for the subparagraphs 6(1)(b)(vii) and (vii.1) exceptions to apply, allowances must, inter alia, have been received from her/his employer for traveling « in the performance of the duties of the office or employment ». The question of whether the allowance was received from her/his employer for traveling « in the performance of the duties of the office or employment » or for « personal travel » is a question of fact which can only be answered after a review of all the facts of a particular situation. The Act does not define the meaning of the expression « in the performance of the duties of the office or employment » for the purposes of section 6. However, the CRA considers that personal travel means traveling from home to his/her « regular place of work ». Consequently, this travel is not considered as traveling « in the performance of the duties of the office or employment ». The expression « regular place of work » is not defined in the Act.