Income Tax Severed Letters - 2019-10-09


2018 Ruling 2018-0768161R3 F - Supp Ruling-amendments-advanced income tax ruling

Principales Questions: Whether amendments to an advanced tax ruling relating to a loss consolidation transaction should be accepted by the CRA.

Position Adoptée: Yes.

Raisons: Wording of the Act and previous positions.

2016 Ruling 2016-0671701R3 F - Loss consolidation arrangement

Unedited CRA Tags
20(1)(c); 55(2); 112(1); 245(2): Part IV.1; Part VI.1

Principal Issues: Whether the proposed transactions fall within CRA's positions on loss consolidation arrangement.

Position: Yes.

Reasons: Wording of the Act and previous positions.

Technical Interpretation - External

12 September 2019 External T.I. 2017-0732681E5 - Payment of pension surplus to US resident beneficiary

Unedited CRA Tags
212(1)(h); definition “periodic pension payment” in section 5 of the ITCIA; Article XVIII of Canada-U.S. Tax Convention
Reg. 8503(26) minimum amount payments or commutation payments are lump sums ineligible for reduction under Canada-U.S. Treaty
winding-up IPP payment or commutation or minimum amount payments are not periodic

Principal Issues: Is a payment to a U.S. resident beneficiary of the funds remaining in an Individual Pension Plan on plan wind-up considered to be a periodic pension payment for the purpose of the reduced withholding tax rate in subparagraph 2(b) of Article XVIII of the Canada-U.S. Tax Convention?

Position: No.

Reasons: The payment is a lump sum distribution of surplus.

Technical Interpretation - Internal

8 June 2018 Internal T.I. 2018-0744881I7 - Regulation 403 – allocation of income

Unedited CRA Tags
138, 248 (definition of insurance corporation), Regulations 400 and 403
PE for 403(3) purposes includes any PE of any partnership of which insurer is member
a partner is attributed each PE of a partnership for Reg. 400(1) purposes

Principal Issues: For the purposes of taxable income allocation under Regulation 403, should the taxpayer ignore the PEs of the partnerships in which the taxpayer is a partner?

Position: No.

Reasons: Any PE of the partnerships of which the taxpayer is a partner is a PE of the taxpayer. In addition, Regulation 403 does not restrict corporations to only use PEs related to the insurance business. Since the taxpayer is a member of a partnership that has a PE in XXXXXXXXXX, the taxpayer must make an allocation of taxable income to XXXXXXXXXX in accordance with Regulation 403.