Income Tax Severed Letters - 2023-01-25

Principal Issues: When the use of an average rate would be acceptable and what would constitute an acceptable averaging period?

Position: Fundamental to the CRA’s acceptance of an average rate is whether it is reasonable to conclude that its use will still result in a reliable approximation of what a taxpayer’s income would have been using daily exchange rates.

Reasons: The appropriate and proper application of the CRA’s policy on the use of average exchange rates should be tax neutral and is not intended to provide any tax advantage.

Principales Questions: 1. Whether the guarantee fee is deductible in computing the income of the shareholder in the situation described in the question. 2. In a given situation, whether a guarantee fee received by a corporation from a shareholder is an income from a property or a business income. 3. Whether subsection 15(1) is applicable in the situation described in the question.

Position Adoptée: 1. Deduction under paragraph 20(1)(e) or 20(1)(e.1) (but also subject to the possible application of subsection 18(9)). 2. It is a question of fact but generally would be considered as a business income. 3. Question of fact, but in general no for the granting of the guarantee (in and by itself).

Raisons: 1. Wording of paragraph 20(1)(e) or 20(1)(e.1) and previous positions. 2. Previous positions. 3. Previous positions.

Principales Questions: Le solde RAP d’un particulier sera-t-il nul au début de l’année civile, tel que le requiert l’alinéa i) de la définition de « montant admissible principal » au paragraphe 146.01(1), si le particulier rembourse son solde RAP dans les 60 premiers jours de l'année où il veut effectuer un nouveau retrait de son REER dans le cadre du RAP? – Whether the HBP balance of an individual will be nil at the beginning of the calendar year, as required by paragraph (i) of the definition of “regular eligible amount” in subsection 146.01(1), if the individual repays his HBP balance within the first 60 days of the year in which he wants to make a new withdrawal from his RRSP under the HBP?

Position Adoptée: Possiblement. Le solde RAP du particulier sera nul tel que requis par l’alinéa i) de la définition de « montant admissible principal » une fois que le particulier aura versé des montants suffisants à un REER, au plus tard dans les 60 premiers jours de l’année, et indiqué le total des montants ainsi versés comme remboursement dans le cadre du RAP sur le formulaire prescrit joint à sa déclaration de revenu pour l’année d’imposition précédente.– Possibly. The individual’s HBP balance will be NIL as required by paragraph (i) of the definition of “regular eligible amount” only after the individual has contributed sufficient amounts to his RRSP, no later than within the first 60 days of the year, and designated such amounts as HBP repayment in prescribed form filed with his return for the preceding taxation year.

Raisons: Conformément au paragraphe 146.01(3) et à la définition de "solde RAP" au paragraphe 146.01(1). - Application of subsection 146.01(3) and the definition of "HBP balance" in section 146.01(1).

Principales Questions: a) Est-ce qu’un particulier décédé après 2015 peut réclamer le crédit d’impôt pour dons pour le don à un donataire reconnu d'une participation au capital dans une fiducie résiduaire de bienfaisance (FRB) créée par testament? b) Est-ce que la participation au capital de la FRB a été acquise par la SAITP au moment et par suite du décès du particulier? c) À quel moment la SAITP effectue-t-elle le don? / a) Whether an individual who died after 2015 may claim the tax credit for gifts with respect to the gift to a qualified donee of a capital interest in a charitable remainder trust (CRT) created by will? b) Whether the capital interest in the CRT was acquired by the GRE on and as a consequence of the death of the individual? c) When does the GRE make the gift?

Position Adoptée: a) et b) Non. c) Lorsque la FRB est créée et que la participation au capital de la FRB a été dévolue au donataire reconnu, ce qui implique que toutes les conditions énumérées au numéro 2 du IT-226R soient satisfaites. / a) and b) No. c) When the CRT is created and the capital interest in the CRT has vested in the qualified donee, which means that all the conditions in paragraph 2 of IT-226R have to be met.

Raisons: a) et b) L'objet du don est la participation au capital dans la FRB et la participation n’a pas été acquise par la SAITP au moment du décès du particulier et par suite de ce décès tel qu’exigé à l’alinéa 118.1(5.1)b). La participation n’est pas non plus un bien substitué à un tel bien. c) Numéros 2 et 4 du IT-226R. / a) and b) The subject of the gift is the equitable interest in the CRB and has not been acquired by the GRE on and as a consequence of the death of the deceased taxpayer as required under paragraph 118.1(5.1)(b). Nor is the interest a property substituted for such property. c)