Income Tax Severed Letters - 2021-03-24

Ruling

2020 Ruling 2019-0819871R3 - Loss Consolidation Involving Canadian Branch

Unedited CRA Tags
Sections 111 and 245 and subsections 87(2.1), 15(1), 56(2), 69(1), 69(11) and 246(1) *
Summary Under
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.1)
utilization of the Canadian branch losses of a US affiliate through its continuance to Canada and amalgamation with Profitco
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition
US corp is same corporation after its continuance to Canada

Principal Issues: (1) Whether a US corporation will continue to be the same corporation following its continuance from the XXXXXXXXXX as an unlimited liability company; (2) Whether subsection 87(2.1) will apply in respect of an amalgamation between the continued corporation and its Canadian sister corporation; (3) Whether various benefit rules would apply in respect of the proposed transactions; and (4) whether the federal or provincial GAAR rules would apply in respect of the proposed transactions.

Position: (1) Yes; (2) Yes; (3); No; (4) No.

Reasons: (1) The governing corporate legislation provides for continuance and treats the continued corporation as the same corporation; (2) Meets statutory requirements; (3)/(4) Consistent with previous rulings and CRA positions on loss consolidation transactions.

Technical Interpretation - External

19 March 2021 External T.I. 2021-0876571E5 - Support documentation to be kept by employer

Unedited CRA Tags
Section 87 of the Indian Act

Principal Issues: Information for employers with employees exempt under section 87 of the Indian Act.

Position: See information provided in letter.

Reasons: See information provided in letter.

9 December 2020 External T.I. 2020-0852321E5 - Flow Through Shares - Fees Paid to Promoter

Unedited CRA Tags
s. 66(15) definitions of “flow-through share,” “principal business corporation;” s. 237.1, s. 118.1, section 6202.1 of the Regulations. *
Summary Under
Tax Topics - Income Tax Regulations - Regulation 6202.1 - Subsection 6202.1(1) - Paragraph 6202.1(1)(b)
payment by a flow-through share issuer of fees for investor procurement services of an arm’s length promoter would not taint the shares as prescribed shares

Principal Issues: Will the payment of fees by the Issuer to the Promotor cause the shares to be prescribed shares within the meaning of section 6202.1 of the Regulations?

Position: All the facts and circumstances of a particular situation would need to be considered before determining whether a particular share is a prescribed share within the meaning of section 6202.1 of the Regulations.

Reasons: The law.

5 December 2020 External T.I. 2020-0864651E5 - Tax exemption under section 87 of the Indian Act

Unedited CRA Tags
81(1)(a); Indian Act 87 *

Principal Issues: Would an employee’s tax exemption be affected where the employee is now required to work from their home office located off-reserve as a result of COVID-19?

Position: In response to numerous requests for guidance on this topic, the Canada Revenue Agency released a webpage titled CRA and COVID-19: Indigenous income tax issues available at: canada.ca/en/revenue-agency/campaigns/covid-19-update/guidance-application-indian-act-exemption.html

16 November 2020 External T.I. 2020-0864141E5 - TI – Tax Treatment of Loan Forgiveness under CEBA

Unedited CRA Tags
12(1)(x); 12(2.2); 80 *

Principal Issues: What is the tax treatment of forgiveable portion of a loan granted under the CEBA program?

Position: Generally, forgiveable portion is included in income under paragraph 12(1)(x) in the year of receipt, with an off-setting deduction available under paragraph 20(1)(hh) if the amount is repaid, in the year of repayment.

Reasons: See OA to file no. 2020-086146.