Income Tax Severed Letters - 2021-09-22

Ministerial Correspondence

17 June 2021 Ministerial Correspondence 2021-0822931M4 - Commuting allowance - 6(1)(b)(ii)

Unedited CRA Tags
6(1)(b); 6(1)(b)(ii)

Principal Issues: Taxable benefit - employer-paid commuting allowance received by civilian employee of Canadian Forces.

Position: Paragraph 6(1)(b), and 6(1)(b)(ii).

Reasons: See below.

Technical Interpretation - External

29 October 2020 External T.I. 2020-0835681E5 - Indian Act Exemption – Employment Income

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

Principal Issues: Are the employees (those working at the field office and those doing XXXXXXXXXX) exempt from income tax pursuant to Guideline 2?

Position: Maybe.

Reasons: The client would need to confirm whether the employer is in fact resident on a reserve. The client would also need to verify that the XXXXXXXXXX workers live on the reserve in a domestic establishment that is his or her principal place of residence and that is the centre of his or her daily routine.

Technical Interpretation - Internal

23 August 2021 Internal T.I. 2020-0856081I7 - Interaction of subsection 82(3) and section 120.4

Unedited CRA Tags
120.4, 82(3); 118(1)(a)
s. 82(3) election can convert a TOSI dividend to a dividend on an excluded share
s. 82)3) deeming applies before application of TOSI rules

Principal Issues: 1, Is there an ordering rule with respect to the subsection 82(3) election and the application of section 120.4? 2. Provide examples of the TOSI analysis in circumstances where an election under subsection 82(3) is filed.

Position: 1. There is no specific rule in the Act that governs the interaction of subsection 82(3) and the TOSI rules. Based on the text of the provisions, the subsection 82(3) election takes precedence over the TOSI rules. 2. Three hypotheticals provided.

Reasons: 1. Text of the provision. The contextual and purposive interpretation of the provisions does not clearly provide for a different result. This tax result is not inconsistent with the scheme of the TOSI because had the electing spouse received the dividends directly, the same tax consequences would have resulted (i.e. the TOSI would apply to the recipient based on the recipient’s tax circumstances). On the same basis, the result should generally also not be subject to the GAAR. 2. See discussion of hypothetical examples.