Income Tax Severed Letters - 2023-05-10

Technical Interpretation - External

13 February 2023 External T.I. 2021-0912801E5 - CCA Classification - Digital Smart Meters

Unedited CRA Tags
ITR Schedule II, Class 50; ITR 1104(2)

Principal Issues: Whether Digital Smart Meters employed by an electricity distributor may be classified under Class 50 of Schedule II to the Income Tax Regulations.

Position: Question of fact. However, in our view, the Digital Smart Meters may not be included in Class 50.

Reasons: Even if the Digital Smart Meters are GPEDPE, the Digital Smart Meters appear to be electronic process control or monitor equipment, which is excluded from Class 50.

1 February 2023 External T.I. 2022-0945221E5 - Directed gift to a municipality

Unedited CRA Tags
149.1(2), 149.1(3), 149.1(4)
Summary Under
Tax Topics - Income Tax Act - Section 149.1 - Subsection 149.1(1) - Qualifying Disbursement
a directed gift is not a gift
Words and Phrases
gift
Summary Under
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts
done must have discretion as to use of donated funds for there to be a gift

Principal Issues: Can amounts collected by a charity and provided to a municipality that will be directed to a non-profit organization qualify as a gift for purposes of subsections 149.1(2), 149.1(3) and 149.1(4) of the Act?

Position: If a municipality is merely collecting funds from donors, including a charity, on behalf of an organization that is legally or otherwise entitled to the funds so donated, the municipality is not in receipt of a gift.

Reasons: Prior positions.

26 January 2023 External T.I. 2021-0887661E5 - Small Business Deduction - Related

Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Corporate Income - Paragraph (a) - Subparagraph (a)(i)
2 related but not associated CCPCs do not have their SBD ground under s. 125(1)(a)(i)(B) if they have no business dealings with each other
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(1) - Paragraph 125(1)(a) - Subparagraph 125(1)(a)(i) - Clause 125(1)(a)(i)(B)
2 related but not associated CCPCs with no cross-business dealings did not have an s. 125(1)(a)(i)(B) grind
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(5.1) - Paragraph 125(5.1)(a)
non-associated but related corporations not required to aggregate their taxable capital

Principal Issues: 1. Whether two corporations that are related but not associated may be considered to have earned income that is described in subparagraph (a)(i) of the definition “specified corporate income” in subsection 125(7) of the Act. 2. Whether two corporations that are related but not associated are required to aggregate their taxable capital employed in Canada pursuant to paragraph 125(5.1)(a) of the Act.

Position: 1. Question of fact. 2. No.

Reasons: 1. See below. 2.

Technical Interpretation - Internal

31 January 2023 Internal T.I. 2022-0956851I7 - Ontario Energy and Property Tax Credit

Unedited CRA Tags
Ontario Taxation Act, 2007 98(2), 98(5), 103.9(3)

Principal Issues: Are tenants who live in rent geared to income housing eligible to claim the OEPTC where the housing provider receives a property tax subsidy after paying their assessed property taxes in full?

Position: Yes.

Reasons: In the scenario described, the housing units are not exempt from municipal tax.