Income Tax Severed Letters - 2020-02-05

Ruling

2018 Ruling 2018-0766701R3 - Supplemental Ruling

Unedited CRA Tags
20(1)(c); 112(1); 245; 55(2); 88(1.1)

Principal Issues: Changes to the facts in ATR 2017-070621

Position: The rulings in file 2017-070621 will continue to be valid.

Reasons: The changes do not affect our conclusions.

2017 Ruling 2017-0706211R3 - Standard Loss Consolidation

Unedited CRA Tags
245; 20(1)(c); 112(1); 55(2); 88(1.1)
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a)
annual transfer of losses from losscos to a new Lossco, which is then sold at FMV to Profitco for s. 88(1.1) wind-up
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i)
interest-deductibility on limited-recourse loans

Principal Issues: Whether the losscos would be entitled to apply existing non-capital losses against the interest income that would be generated as part of particular loans that would be made under the loss consolidation transactions and whether the accompanying interest expense would be deductible by the debtor. Further, would the profitco be entitled to deduct the losses transferred by the debtor corporation on the winding up of such debtor corporation under section 88(1).

Position: Yes.

Reasons: The proposed transactions conform to our requirements for these types of loss consolidation rulings. The proposed transactions would be legally effective and commercially realistic.

Technical Interpretation - External

6 January 2020 External T.I. 2019-0800941E5 - In-kind contributions to a NPO

Unedited CRA Tags
9(1); 18(1)(a)
Summary Under
Tax Topics - Income Tax Act - Section 9 - Computation of Profit
a deduction for services donated to an NPO could be offset by imputed barter income

Principal Issues: Whether a deduction is available to suppliers who contribute in-kind contributions of goods or services to a non-profit organization.

Position: Question of fact.

Reasons: Depends on whether the in-kind contribution is an expense made to earn income from a business.

Technical Interpretation - Internal

14 January 2020 Internal T.I. 2018-0785991I7 F - Subsection 86.1(2)

Unedited CRA Tags
86.1; 15(1.5); 52(2); 84(3); 85.1(3)
Summary Under
Tax Topics - Income Tax Act - Section 86.1 - Subsection 86.1(2)
s. 86.1(2)(c)(i) references central management and control test/tracking shares satisfied s. 86.1(2)(a)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Common Share
tracking shares were common shares

Principales Questions: (1) In the course of a corporate reorganisation, does a distribution of common shares of the capital stock of a particular corporation received by a Canadian individual shareholder with respect to all of his common shares of another corporation qualify as an eligible distribution under subsection 86.1(2)? (2) Do the central of management and control common law principles apply to determine whether a corporation is resident in the United States for the purpose of subparagraph 86.1(2)c)(i)?

Position Adoptée: (1) Yes, provided that all conditions stated in paragraphs 86.1(2)(e) and 86.1(2)(f) are met. (2) Yes.

Raisons: (1) The conditions provided in paragraphs 86.1(2)(a) to 86.1(2)(c) are met. (2) Previous positions and application of the Act.