Income Tax Severed Letters - 2022-06-22

Ruling

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

2016-0649061R3 and 2017-0732001R3 are similar
Unedited CRA Tags
212(1)(b)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b)
interest that could be cancelled in issuer's discretion was interest for Pt. XIII purposes
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c)
note interest that could be cancelled in issuer's discretion 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)
Summary Under
Tax Topics - Income Tax Act - Section 123.4 - Subsection 123.4(1) - Full Rate Taxable Income - Paragraph (b)
a CCPC not entitled to the SBD and with more than 5 employees receives the regular corporate rate on its rental income
Summary Under
Tax Topics - Income Tax Act - Section 129 - Subsection 129(4) - Aggregate Investment 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.