Income Tax Severed Letters - 2020-07-29

Technical Interpretation - External

8 May 2020 External T.I. 2020-0837481E5 - Child care expense deduction

Unedited CRA Tags

Principal Issues: Whether amounts paid under section 7 of the Federal Child Support Guidelines by Spouse B to Spouse A, for specific child care expenses can be claimed for the child care expense deduction by either Spouse?

Position: No.

Reasons: Not in this hypothetical situation. Spouse B does not reside with the child at the time the amounts are paid. The amounts would likely be considered a reimbursement or other assistance to Spouse A.

3 April 2020 External T.I. 2020-0836991E5 - Eligible property and stock options

Unedited CRA Tags
85(1), 85(1.1), 54(b)

Principal Issues: Can "in the money" stock options, not subject to the rules of section 7, be transferred into the issuing corporation on a tax deferred basis receiving share consideration instead of exercising the options?

Position: Yes.

Reasons: Stock options meet the definition of eligible property. Tax consequences can vary depending on the fact scenario.

Technical Interpretation - Internal

19 May 2020 Internal T.I. 2020-0841791I7 - Application of paragraph 111(4)(e)

Unedited CRA Tags
and IP that were not on target’s tax books could be written up under s. 111(4)(e)
goodwill and customer relationship constituted single goodwill property

Principal Issues: 1) Whether the designation under paragraph 111(4)(e) could be made with respect to internally generated goodwill? 2) Whether a capital loss would be realized with respect to a loan receivable from a controlled foreign affiliate? 3) Whether the designation under paragraph 111(4)(e) could be made with respect to class 12 property?

Position: 1), 2) and 3): Yes.

Reasons: According the law and previous positions.