Income Tax Severed Letters - 2020-07-08

Ruling

2020 Ruling 2019-0824211R3 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 rulings where the underlying operating business was sold for cash after the death and before the pipeline transactions
Summary Under
Tax Topics - Income Tax Act - Section 51 - Subsection 51(1)
s. 51 applicable to exchange of common shares of Opco for common and preferred shares of Opco

Principal Issues: 1) Whether section 84.1 applies to deem the Estate to have received a dividend on the disposition of shares to the new corporation or to reduce the PUC of the shares of the new corporation received as consideration for the disposition of the shares. 2) Whether subsection 84(2) applies to the proposed transactions. 3) Whether subsection 245(2) applies to the proposed transactions.

Position: Favourable rulings provided.

Reasons: Wording of the Act and previous positions.

2020 Ruling 2019-0832601R3 F - Post-mortem Pipeline

Unedited CRA Tags
84(2), 84.1, 245(2)
Summary Under
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2)
one year required to pass before a pipeline note commences to be paid off

Principal Issues: 1) Whether section 84.1 applies to deem the Estate to have received a dividend on the disposition of shares to the new corporation or to reduce the PUC of the shares of the new corporation received as consideration for the disposition of the shares. 2) Whether subsection 84(2) applies to the proposed transactions. 3) Whether subsection 245(2) applies to the proposed transactions.

Position: Favourable rulings provided.

Reasons: Wording of the Act and previous positions.

Technical Interpretation - External

13 February 2020 External T.I. 2019-0826051E5 - Income from a securities trading business

Unedited CRA Tags
12(1)(j), 12(1)(k), 112(1), 125(1), 125(7), 129(4), 186(1)
Summary Under
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges
a CCPC can have a trading business
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business
a CCPC can generate active business income from its trading in securities

Principal Issues: 1. Whether the gains (losses) from a securities trading business will be on account of income or capital. 2. If on account of income, whether the gains (losses) will be active business income. 3. Whether dividends and interest will be active business income.

Position: While a question of fact: 1. Could be on account of income. 2. Likely, yes. 3. Likely, yes.

Reasons: The securities trading activities possess many of the characteristics of a business noted in IT-479. The business is unlikely to be a Specified Investment Business and, accordingly, gains (losses) and any income incident to that business (dividends and interest) will be active business income.

16 January 2020 External T.I. 2019-0828841E5 - Enhanced Net Metering Program of Nova Scotia

Unedited CRA Tags
s.3, 9, 12(1)(b), 18(1)(a)

Principal Issues: What are the income tax consequences for participants in the Nova Scotia Enhanced Net Metering Program?

Position: 1. For taxpayers generating electricity solely for personal consumption the electricity credits are not taxable. 2. For taxpayers generating electricity for commercial use, the electricity credit is taxable at the time the credit is earned under the Nova Scotia Net Metering Program.

Reasons: Application of the law.