Income Tax Severed Letters - 2021-07-21


2021 Ruling 2020-0858321R3 - Defined Contribution SERP

Unedited CRA Tags
248(1) "salary deferral arrangement", 147.1(8)
conversion of a defined benefit to a defined contribution SERP does not engage SDA rules

Principal Issues: Will the proposed SERPs be an SDA?

Position: No.

Reasons: The SERPs will provide for reasonable pension benefits and therefore none of the main purposes will be to postpone the payment of tax.

Technical Interpretation - External

16 July 2021 External T.I. 2021-0893621E5 - CERS - Content Insurance

Unedited CRA Tags

Principal Issues: Is content insurance included for the purposes of calculating the CERS?

Position: Generally, no.

Reasons: A taxpayer's entitlement to the CERS is calculated in reference to the taxpayer's qualifying rent expense. Although the definition of qualifying rent expense includes "insurance", “content insurance” should generally be excluded. However, it is still a question of fact as to whether particular insurance should be included when calculating a taxpayer's entitlement under the CERS.

12 April 2020 External T.I. 2020-0857161E5 - Medical practitioners - counselling therapists

Unedited CRA Tags
ITA: 118.4; B.C. Health Professions Act.

Principal Issues: Whether counselling therapists in the province of B.C. are authorized medical practitioners for the purposes of the medical expense tax credit.

Position: See response.

Reasons: See response.

Technical Interpretation - Internal

16 July 2021 Internal T.I. 2020-0872521I7 - CERS - Qualifying property for rental income

Unedited CRA Tags
125.7; 66(15) - "Canadian resource property"; 122.1(1); 125(7) - "specified investment business"; 212(1)(d); 248(1) - "former business property"; 1100 ITR
significant additional services transform rental income into income from services
Words and Phrases
rent income primarily

Principal Issues: Whether the owner of a qualifying property that operates a hotel, or other similar business like a motel or a bed and breakfast, would be considered to use its qualifying property primarily to earn rental income as described in paragraph (b) of the definition of “qualifying rent expense” in subsection 125.7(1) of the Act, such that the owner would not have any qualifying rent expense and therefore, would be prevented from claiming the CERS for that qualifying property.

Position: Question of fact

Reasons: Generally, any income earned from the use or occupation of a property or a right to use or occupy property is considered to be rental income. Where, in addition to basic services that are customarily supplied with rental of real or immovable property, an entity also provides significant additional services that are integral to the success of its ordinary activities, it is the CRA’s longstanding position that the operation of that entity would be earning income from the services provided instead of earning rental income for the use or occupation of the property.