Income Tax Severed Letters - 2021-03-17

Ruling

2020 Ruling 2020-0850081R3 - Retiring Allowance

Unedited CRA Tags
6(3); 248(1); 56(1)(a); 212(1)(j.1) *

Principal Issues: What is the character of periodic amounts paid to an employee under an employment agreement who was terminated pursuant to the terms of the employment agreement?

Position: The periodic payments constitute a retiring allowance.

Reasons: The periodic payments are in respect of loss of employment and falls within paragraph (b) of the definition of retiring allowance in subsection 248(1).

2020 Ruling 2020-0860231R3 - Post-mortem planning

Unedited CRA Tags
84(2), 84.1, 88(1), 245(2) *
Summary Under
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2)
redemption of shares stepped up with CGD, giving rise to s. 164(6) carryback, and pipeline followed by s. 88(1)(d) bump, having regard to s. 88(1)(d.2) and (d.3)
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d.3)
bump applied to amalgamation occurring in a pipeline transaction

Principal Issues: Post-mortem pipeline and bump transaction ruling

Position: Favourable rulings issued.

Reasons: In accordance with the Act and our published positions.

Technical Interpretation - External

28 January 2021 External T.I. 2020-0870981E5 - CEWS - Asset sales rules 125.7(4.1)

Unedited CRA Tags
125.7(4.1) & 125.7(4.2) *
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(4.2)
where there has been a s. 125.7(4.1)(e) election, the asset purchaser picks up all rather than part of the seller’s qualifying revenues for the prior reference period

Principal Issues: 1. How does subsection 125.7(4.2) adjust qualifying revenue with respect to an asset sale? 2. Which of the two companies, the seller or the acquirer, can claim the CEWS for the qualifying period?

Position: 1. The qualifying revenue of the seller that is reasonably attributable to the acquired assets is to be included in the qualifying revenue of the acquirer and subtracted from the qualifying revenue of the seller for the prior reference period or the current reference period, as the case may be, for the qualifying period. 2. Where all other conditions are met, both the seller and acquirer can consider their respective eligibility for the CEWS for the qualifying period.

Reasons: Legislation.

20 October 2020 External T.I. 2020-0856781E5 - CEWS - eligible remuneration and outsource staff

Unedited CRA Tags
125.7 *
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration
CEWS may be passed along by an outsource staffing company to its clients

Principal Issues: What are the implications to an outsource staffing company where the outsource staffing company has received the CEWS wage subsidy and the client receiving the staffing services has received an offsetting discount for the subsidy received, in effect providing a cost-subsidy to the end customer?

Position: General comments provided

Reasons: See below

23 June 2020 External T.I. 2020-0849761E5 F - SSUC - Entité déterminée et institution publique

Unedited CRA Tags
149(1)(a), 149(1)(b), 149(1)(c), 149(1)(d) to (d.6), 149(1.1), 125.7(1), 125.7(2) *

Principales Questions: Est-ce que l'entité est admissible à la SSUC? / Is the entity eligible for the CEWS?

Position Adoptée: Question de fait / Question of fact

Raisons: Ça dépend si l'entité est une institution publique ou non. Des commentaires généraux sont fournis pour aider à déterminer si l'entité est une institution publique ou non. / It depends if it is a public institution or not. General comments are provided to help determine if the entity is a public institution or not.