Income Tax Severed Letters - 2020-03-25

Ruling

2019 Ruling 2019-0822951R3 F - Post-mortem Hybrid Pipeline

Unedited CRA Tags
84(2), 84.1, 245(2)
Summary Under
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2)
pipeline transaction for marketable securities company that includes full use of the ERDTOH/NERDTOH balances and s. 164(6) carryback
Summary Under
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.61)
s. 164(6) carryback of capital loss coupled with dividend to generate dividend refund

Principales Questions: 1) Whether section 84.1 will apply to deem the Estate to have received a dividend upon the disposition of shares to the new company. 2) Whether subsection 84.1 will apply to reduce the PUC on the share of the new company received as consideration for the disposition of the shares. 3) Whether subsection 84(2) applies to the proposed transactions. 4) Whether subsection 245(2) applies to the proposed transactions.

Position Adoptée: 1) No. Favorable ruling given. 2) No. Favorable ruling given. 3) No. Favorable ruling given. 4) No. Favorable ruling given.

Raisons: In accordance with the provisions of the Act and our previous positions.

Conference

6 June 2019 CPTS Roundtable, 2019-0816111C6

Unedited CRA Tags
Sections 9, 18(1)(b), 20, 66.2(5), 231.2(1), Class 14.1
Summary Under
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1)
taxpayers can choose between reasonable alternative formats (e.g. hard or soft) for providing their tax working papers/records
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 29
Folio S4-F15-C1 applies for purposes of the new accelerated CCA rules
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2)
extension of M&P guidance to oil and gas sector
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Oversight or Investment Management
project expenses incurred after determining economic feasibility and before project approval are generally deductible
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Start-Up and Close-Down Expenditures
no acceptance that expenses incurred before decision to proceed are thereby on current account
Summary Under
Tax Topics - Income Tax Act - Section 66.2 - Subsection 66.2(5) - Accelerated Canadian Development Expense - Paragraph (a) - Subparagraph (a)(ii)
accelerated CDE deduction can be available for drilling on land acquired from an affiliate

Principal Issues: Various questions.

Position: See below.

Reasons: See below.