Income Tax Severed Letters - 2022-04-06

Ruling

2019 Ruling 2017-0696792R3 F - Internal reorganization

Unedited CRA Tags
20(1)(c), 51, 55, 80(1), 85(1), 89(1), 245.

Principal Issues: 1. Whether paragraph 20(1)(c) will apply to the proposed transactions? 2. Whether GAAR will apply to the proposed transactions?

Position: 1. Yes. 2. No.

Reasons: 1. Provisions of the ITA and previous positions. 2. Case law, provisions of the ITA, no abuse of section 55.

2017 Ruling 2017-0696791R3 F - Reduction of PUC/capital

Unedited CRA Tags
20(1)(c), 51(1), 53(2)(a)(ii), 55, 80, 85(1), 245(2)
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i)
interest on money borrowed by Subco for distribution of share-capital account to its parent is deductible if the Subco property continues generating business income
Summary Under
Tax Topics - Income Tax Act - Section 51 - Subsection 51(1)
s. 51(1) will apply where convertible note, that was issued as boot, will be converted to shares

Principal Issues: 1. Whether interest will be deductible under paragraph 20(1)(c) on borrowed money used for a PUC/capital reduction? 2. Whether subsection 51(1) will be applicable?

Position: 1. Yes. 2. Yes.

Reasons: 1. Paragraphs 1.48 and 1.49 of Income Tax Folio S3-F6-C1, and previous positions in rulings letters. 2. Conditions satisfied.

Technical Interpretation - External

21 March 2022 External T.I. 2021-0887711E5 - CERS - Employer Rented Home

Unedited CRA Tags
125.7

Principal Issues: Whether a home rented by an employer for its employees at a remote work location is a self-contained domestic establishment.

Position: Question of fact.

Reasons: It is a question of fact as to whether such a rented home is a self-contained domestic establishment. However, the fact that multiple employees are living in the rented home would not, in and of itself, preclude that rented home from being a self-contained domestic establishment.

7 January 2022 External T.I. 2020-0866751E5 F - CEWS and government financial assistance

Unedited CRA Tags
125.7, 163(2), 163(2.901)
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(4)
government assistance based partly on payroll levels would not be qualifying revenue if normal accounting practice would be to contra payroll expense
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue
government assistance that under normal accounting practice was applied to reduce recorded expenses would not be qualifying revenue

Principales Questions: Quel est l’impact de certaines aides gouvernementales non liées à la pandémie de COVID-19 sur la SSUC? / What is the impact of some government assistance not related to the COVID-19 pandemic on the CEWS?

Position Adoptée: Aucune. / None.

Raisons: Question de fait. / Question of fact.

22 December 2021 External T.I. 2021-0914081E5 - RPP in-kind distribution

Unedited CRA Tags
52(1); 56(1)(a); 149(1)(o); Regs. 8300(1); 8502(d)
Summary Under
Tax Topics - Income Tax Act - Section 52 - Subsection 52(1)
s. 52(1) applied to give full basis to a member receiving a distribution-in-kind of RPP property
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(o)
taxable capital gain from distribution-in-kind of RPP property was exempted

Principal Issues: 1. How is the cost of property that is distributed in-kind from an RPP to a member determined? 2. Whether the in-kind distribution of the property will result in Part I tax payable by a trusteed RPP.

Position: 1. The FMV of the property at the time of distribution is the cost of the property to the member. 2. No.

Reasons: 1. Subsection 52(1) sets out the rules for determining the cost of certain property. 2. Paragraph 149(1)(o) exempts the income of a trusteed RPP from Part I tax.

Technical Interpretation - Internal

17 November 2021 Internal T.I. 2021-0909641I7 - Retroactive salary increases

Unedited CRA Tags
81(1)(a), 110.2, 120.31 of the Income Tax Act and 87 of the Indian Act

Principal Issues: 1. Whether retroactive salary increases resulting from a collective agreement are qualifying amounts for purposes of reporting on Form T1198 “Statement of Qualifying Retroactive Lump-Sum Payment”.

Position: 1. No.

Reasons: 1. These payments do not fall under any of the categories described in the definition of "qualifying amount" in subsection 110.2(1) of the Act.