Income Tax Severed Letters - 2020-11-18

Technical Interpretation - External

28 September 2020 External T.I. 2020-0840681E5 - Deduct for income tax withholding on s.7 benefit

Unedited CRA Tags
7(1); 7(3)(b)
deduction for the employer’s source deduction payment for s. 7 RSU benefits where that payment is funded by reducing the RSU shares issued
employer's payment of source deductions arising on vesting of RSUs constituted a s. 7(1)(b) benefit

Principal Issues: Does paragraph 7(3)(b) prohibit an employer from claiming a deduction for a portion of its expenses relating to the issuance of shares under a RSU plan that is subject to section 7, where the employer pays an amount to the Receiver General on behalf of an employee in lieu of issuing shares to the employee under the RSU plan?

Position: Yes.

Reasons: The employee is considered to have disposed of a portion of their rights under the RSU plan and is thus deemed to have received a benefit under paragraph 7(1)(b) equal to the amount of income tax remitted to the Receiver General by the employer. Since the benefit arose from the issuance of the shares, paragraph 7(3)(b) operates to preclude a deduction to the employer in respect of the benefit.

Technical Interpretation - Internal

1 October 2020 Internal T.I. 2019-0821651I7 - Filing of Long Term Project Election

Unedited CRA Tags
Subsection 13(29)
s. 13(29) election need only be filed once (generally in 3rd taxation year of project)

Principal Issues: Is the long-term project election in subsection 13(29) required to be filed annually or only once?

Position: The long-term project election in subsection 13(29) is required to be filed by a taxpayer only once, with its return for the taxation year that is referred to as the "particular year" in subsection 13(29).

Reasons: Wording of subsection 13(29).