Income Tax Severed Letters - 2020-12-23

Technical Interpretation - External

3 November 2020 External T.I. 2020-0848881E5 F - SSUC/CEWS - rémunération admissible

Unedited CRA Tags
125.7(1)
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration - Paragraph (c)
eligible remuneration is not reduced where the eligible entity on-charges a portion of its employees' time to an affiliate

Principales Questions: Une entité doit-elle réduire la rémunération admissible d'un employé admissible pour tenir compte des montants facturés à une autre entité à l'égard des services rendus par ses employés à cette autre entité?

Position Adoptée: Non.

Raisons: L'alinéa c) de la définition de "rémunération admissible" ne vise pas ce genre de situation.

15 July 2020 External T.I. 2020-0847141E5 - CEWS - Payments to Contractors

Unedited CRA Tags
Subsection 125.7(1) - "Qualifying Revenue" and subsection 125.7(6)
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue
gratuitous COVID-alleviation payments to a contractual counterparty are excluded from the latter’s qualifying revenues
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(6)
question of fact whether s. 125.7(6) could apply where gratuitous payroll reimbursements were made
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration
payments from third-party to cover part of eligible entity’s payroll not within para. (c)

Principal Issues: (1) Whether payments made by an operator of a mine to its third party contractors to assist with payroll costs during a temporary suspension of operations at the mine due to the COVID-19 pandemic will be required to be included in the qualifying revenue of the contractors, and (2) whether the anti-avoidance rule in subsection 125.7(6) will apply if the contractors reimburse the operator for such payments to the extent they receive assistance under the CEWS.

Position: General comments provided.

Reasons: See below.

Technical Interpretation - Internal

31 August 2020 Internal T.I. 2020-0851071I7 - Hong Kong Cash Payout Scheme

Summary Under
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a)
Hong Kong COVID-prompted cash payments to all permanent residents are not income from a source

Principal Issues: Whether the HK$10,000 received from the Hong Kong Cash Payout Scheme by a Canadian taxpayer would be taxable in Canada?

Position: Likely no

Reasons: The amount does not appear to be income from a source under the Income Tax Act.