Income Tax Severed Letters - 2023-07-26

Ruling

2023 Ruling 2021-0896671R3 - Sequential Butterfly Ruling: Real estate business

Unedited CRA Tags
55(2), 55(3.1), 88(2), 40(3.4), 88(1), 87(1)

Principal Issues: Will the intercorporate dividends incurred by the various corporations be exempted from subsection 55(2) in light of the exception in para. 55(3)(b)?

Position: Yes.

Reasons: The Proposed Transactions comply with the requirements of para. 55(3)(b) and do not run afoul of the butterfly denial rules in subsection 55(3.1).

2023 Ruling 2022-0948521R3 F - Supplemental Ruling - 2021-089507

Unedited CRA Tags
40(3.1), 40(3.12), 98(1), 98(3), 99(1)

Principal Issues: 1. Whether certain amendments to the proposed transactions would affect the rulings given in document no 2021-089507. 2. Whether the time to complete the proposed transactions can be extended until XXXXXXXXXX.

Position: 1. Supplemental ruling given. 2. Yes.

Reasons: See below.

Technical Interpretation - External

13 March 2023 External T.I. 2023-0961401E5 - Multigenerational home renovation tax credit

Unedited CRA Tags
The definition of "eligible dwelling" and "eligible individual" in subsection 122.92(1).
Summary Under
Tax Topics - Income Tax Act - Section 122.92 - Subsection 122.92(1) - Qualifying Renovation
no requirement that the secondary unit be built as a renovation to an existing unit

Principal Issues: For the purpose of claiming a multigenerational home renovation tax credit (MGHRTC), should a principal housing unit be constructed first and occupied for a specified period of time before adding a secondary unit for one’s parents to live in, or can both units be constructed at the same time?

Position: Provided that all the eligibility criteria for claiming a MGHRTC are met, the credit may be claimed regardless of whether a principal housing unit (that meets the definition of eligible dwelling) is built before, or concurrently with, a secondary unit. Nevertheless, there must be a reasonable expectation that both units will be ordinarily inhabited within 12 months after the end of the renovation period.

Reasons: The wording in paragraph (b) of the definition of “eligible dwelling” and paragraph (a) of the definition of “eligible individual.” The former definition refers to reasonable expectation that the housing unit will be ordinarily inhabited within 12 months after the end of the renovation period. Similarly, the latter definition refers to the individual’s intention to ordinarily reside in the eligible dwelling within 12 months after the end of the renovation period.

10 March 2023 External T.I. 2022-0943881E5 - Charitable Remainder Trusts

Unedited CRA Tags
118.1(1)
Summary Under
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Gifts - Paragraph (a) - Subparagraph (a)(iii) - Variable B
an individual’s taxable capital gain on settling a charitable remainder trust increases the individual’s total gifts limit by 75%, not 100%, thereof
Summary Under
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts
gift of remainder interest in CRT is not a gift of the capital property with which the CRT was settled

Principal Issues: An individual transfers property to a charitable remainder trust (CRT) and gifts an equitable interest in the trust to a qualified donee. Is the individual eligible to include the amount of the taxable capital gain realized on the transfer of the property to the CRT in Variable B of the definition “total gifts” in subsection 118.1(1)?

Position: The realized taxable capital gain on the transfer of the property to the CRT is not eligible for inclusion of Variable B.

Reasons: The property that is the subject of the gift referenced in Variable B is the equitable interest in the trust, not the property being settled in the trust.

3 March 2023 External T.I. 2022-0959251E5 - Microprocessor knee prosthesis & the METC

Unedited CRA Tags
118.2(2)(i) of the Act and 5700(i) of the Regulations

Principal Issues: Whether the cost of a microprocessor knee prosthesis (or C-Leg) would be an eligible expense for the purpose of the medical expense tax credit.

Position: Yes.

Reasons: The wording in paragraph 118.2(2)(i) which provides for amounts paid “for, or in respect of, an artificial limb […].”