Income Tax Severed Letters - 2022-06-22


2021 Ruling 2020-0843131R3 - XXXXXXXXXX Butterfly

Unedited CRA Tags
55(3)(b), 55(3.1)

Principal Issues: Whether the proposed transactions qualify for the butterfly exemption found in paragraph 55(3)(b).

Position: Yes.

Reasons: The proposed transactions meet the requirements found in paragraph 55(3)(b) and are not subject to any of the butterfly exemption denial rules found in subsection 55(3.1).

2020 Ruling 2020-0854741R3 - Subordinated Notes without Maturity

Unedited CRA Tags
interest that could be cancelled in issuer's discretion was interest for Pt. XIII purposes
note interest that could be cancelled in issuer's discretionary stated to be non-deductible

Principal Issues: Whether payments under subordinated notes exempt from withholding under paragraph 212(1)(b).

Position: Yes.

Reasons: The law.

Technical Interpretation - External

2 June 2022 External T.I. 2019-0828381E5 - Tax Rate on Rental Income in Excess of SBD

Unedited CRA Tags
123(1), 123.4, 124(1), 125(7), 129(4), 248(1)
a CCPC not entitled to the SBD and with more than 5 employees receives the regular corporate rate on its rental income
rental income of CCPC from non-specified investment business rental property is not AII

Principal Issues: What is the tax rate applicable to a CCPC on rental income if the business is not a specified investment business.

Position: General rate.

Reasons: Income from a business that is not a SIB is active business income and is not aggregate investment income.

16 March 2022 External T.I. 2019-0834191E5 - Travel Allowances

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

Principal Issues: Whether payments provided to, or made on behalf of, an elected member of a provincial legislative assembly for housing and incidental expenses are required to be included in income?

Position: Likely no. Where it is established that the constituency office of an elected member of a provincial legislative assembly is a regular place of employment, that member will likely be considered to be travelling to perform duties related to the legislative assembly at another location.

Reasons: An employer’s direct payment of, or a reasonable allowance or reimbursement provided to an employee for travel expenses is not included in income under subsection 6(1) of the Income Tax Act in such circumstances.