Income Tax Severed Letters - 2020-06-24


2019 Ruling 2019-0811641R3 - Multi-wing split up butterfly

Unedited CRA Tags
55(2), 55(3)(b), 55(3.1), 13(7)(e), 1100(2.2), 1102(14)

Principal Issues: Whether the butterfly dividends arising on the proposed transactions are exempt under paragraph 55(3)(b) from the application of Subsection 55(2).

Position: Yes.

Reasons: Proposed transactions meet the requirements of the Act.

2019 Ruling 2019-0818291R3 - Loss consolidation arrangement

Unedited CRA Tags
20(1)(c), 55(2)

Principal Issues: Whether the LCA is acceptable.

Position: Yes.

Reasons: The proposed transactions fall within CRA's policy position.

Technical Interpretation - External

4 June 2020 External T.I. 2018-0753611E5 - Form T1135 and US pension plan

Unedited CRA Tags
233.2(1) "exempt trust", 233.3(1) "specified foreign property"
assumption of US pension payments by Pension Benefit Guaranty Corp. did not affect exempt trust status
Pension Benefit Guaranty Corp.’s taking over a US pension plan does not affect its s. 233.2 exempt trust status

Principal Issues: Whether a Canadian-resident individual is required to file Form T1135 in respect of their interest in a US pension plan where the benefits are being paid by the Pension Benefit Guaranty Corporation?

Position: No.

Reasons: The individual's interest in the pension plan satisfies the exception for foreign pension trusts.

28 January 2020 External T.I. 2019-0815841E5 - Educational institution

Unedited CRA Tags
118.5(1), 118.5(1.1)

Principal Issues: Whether a secondary school that provides courses at a post-secondary level could be considered an educational institution as described in subparagraph 118.5(1)(a)(i).

Position: Question of fact, but likely yes.

Reasons: Where a secondary school provided courses at a post-secondary school they could be considered an educational institution as described in subparagraph 118.5(1)(a)(i).

Technical Interpretation - Internal

6 May 2020 Internal T.I. 2020-0846711I7 - CEWS - Meaning of extraordinary item

Unedited CRA Tags
emergency COVID-19 governmental relief generally would meet the 3 conditions for being "extraordinary"

Principal Issues: Whether government funding specifically related to COVID-19 would be considered an extraordinary item for purposes of the term "qualified revenue" in subsection 125.7(1).

Position: Question of fact, but likely yes.

Reasons: COVID-19 funding would not generally be expected to occur frequently over several years, does not result from risks inherent in an entity's normal business operations, and is not driven primarily by decisions of management or owners.