Income Tax Severed Letters - 2019-08-07

Ruling

2019 Ruling 2019-0795761R3 - Variation of a trust

Unedited CRA Tags
107(2) and 248(1) disposition

Principal Issues: A. Will the proposed amendments to the Trust result in a resettlement of the Trust or a disposition by the Trust of its property for purposes of the Act?
B. Will the proposed amendments to the Trust result in a disposition by any Beneficiary of all or part of his, her or its beneficial interest in the Trust for purposes of the Act?
C. Will subsection 107(2) apply to the distribution of the assets of the Trust to Daughters A, B, and C as contemplated herein in paragraph 18?

Position: A. No resettlement. B. No disposition. C. Yes.

Reasons: See below.

Technical Interpretation - External

11 June 2019 External T.I. 2019-0795291E5 F - Tax on Split Income - 120.4(1) excluded amount

Unedited CRA Tags
120.4(1), 251(2)a), 251(6), 252(1)c)
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Related Business
no TOSI tax applied to a dividend received from the surviving step-mother’s company
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Excluded Amount - Paragraph (e) - Subparagraph (e)(i)
dividend received from widowed step-mother's company was not re a related business

Principal Issues: Whether Tax on Split Income would apply to a specific scenario, where the taxpayer’s father deceased in the previous taxation year in which the taxpayer attained the age of 33 and, during the current taxation year, he will receive dividends on shares of the capital stock of a private corporation that is controlled by his step-mother.

Position: No.

Reasons: Application of the Act. The taxpayer and his step-mother are not related since they are not connected by blood relationship, marriage or common-law partnership or adoption following the death of the taxpayer’s father. The step-mother will not be considered a source individual for the taxpayer and accordingly the dividends received from the corporation by the taxpayer may qualify as excluded amounts.

Technical Interpretation - Internal

26 June 2019 Internal T.I. 2019-0791761I7 - Participating employer in RPP

Unedited CRA Tags
147.1(1) "participating employer", 147.2(1), 147.2(2), 8502(b)(iii)
Summary Under
Tax Topics - Income Tax Act - Section 147.1 - Subsection 147.1(2) - Paragraph 147.1(2)(a) - Subparagraph 147.2(2)(a)(vi)
contributing employer who ceases to exist nonetheless considered to be an “employer [who] participates”
Words and Phrases
participating employer
Summary Under
Tax Topics - Income Tax Act - Section 147.1 - Subsection 147.1(1) - Participating Employer
dissolved corporation can be a “participating employer” in an RPP
Summary Under
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 33(3)
expansive phrase was as defined in short phrase definition

Principal Issues: Whether an employer ceases to be a participating employer where the employer no longer actively participates in the RPP?

Position: No.

Reasons: There is nothing in the definition that provides for such cessation. Consistent with general scheme of RPP rules that restricts employers from making contributions in respect of another employer’s employees and former employees.