Income Tax Severed Letters - 2021-05-12

Ruling

2020 Ruling 2020-0854401R3 - Internal Reorganization 55(3)(a)

Unedited CRA Tags
55(3)(a), 55(3.01)(g) and 55(4)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a)
s. 55(3)(a) spin-off with rep that TC does not intend to dispose of its acquired property
Summary Under
Tax Topics - Income Tax Act - Section 86 - Subsection 86(1)
s. 55(3)(a) spin-off that includes a s. 86 exchange of identical shares

Principal Issues: Whether an internal reorganization meets the requirements of paragraph 55(3)(a) and 55(3.01)(g).

Position: Yes

Reasons: Taxpayers’ transaction is consistent with the transaction described in CRA Document 2015-0570021E5.

2020 Ruling 2019-0833091R3 - Supplemental Ruling

Unedited CRA Tags
Subsections 55(2) and 86.1, paragraph 55(3)(b) and subparagraph 55(3.1)(b)(i)

Principal Issues: Changes (the Amendments) to Ruling no.2019-079457 (the Ruling Letter).

Position: Rulings E and G amended.

Reasons: The Amendments affect Rulings E and G.

Technical Interpretation - External

12 March 2021 External T.I. 2020-0867001E5 - RRIF - successive deaths

Unedited CRA Tags
104(6)(a.2), 146.3
Summary Under
Tax Topics - Income Tax Act - Section 146.3 - Subsection 146.3(1) - Designated Benefit
full FMV of a RRIF included in the annuitant’s income on death given no payment thereunder to the spousal beneficiary before that survivor’s death
Summary Under
Tax Topics - Income Tax Act - Section 146.3 - Subsection 146(3.1)
appreciation in RRIF between death and payout to estate of surviving spouse two years later was included in that estate’s income

Principal Issues: Whether an amount paid out of a RRIF to the estate of a surviving spouse can be a designated benefit?

Position: No

Reasons: The amount has to be paid to the surviving spouse while the spouse is alive.

Technical Interpretation - Internal

25 February 2021 Internal T.I. 2020-0865641I7 - Settlement Payments to Registered Plans

Unedited CRA Tags
146, 146.1, 146.2, 146.3, 146.4, “advantage” definition in 207.01(1), 207.05
Summary Under
Tax Topics - Income Tax Act - Section 146 - Subsection 146(8)
damages payment received by annuitant is not a benefit if paid over to the RRSP by year end
Summary Under
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Unused TFSA Contribution Room - Paragraph (b) - Element D
damages payments made to a TFSA are not treated as a contribution
Summary Under
Tax Topics - Income Tax Act - Section 146.4 - Subsection 146.4(6)
RDSP damages paid to and retained by the beneficiary would be taxable
Summary Under
Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Registered Plan Strip
advantage if RDSP damages are received by a holder who is not a beneficiary
Summary Under
Tax Topics - Income Tax Act - Section 146.1 - Subsection 146.1(7.1)
RESP damages received and retained by the subscriber would be included under s. 146.1(7.1)

Principal Issues: (1) Does the existing CRA position regarding settlement payments made to RRSPs and RRIFs also apply to payments made to TFSAs, RESPs and RDSPs? (2) Whether a settlement payment gives rise to an advantage?

Position: (1) Yes (2) Generally no

Reasons: (1) Surrogatum principle. (2) See below.