Income Tax Severed Letters - 2023-11-29

Ruling

2023 Ruling 2022-0923451R3 F - 55(3)(a) internal reorganization

Unedited CRA Tags
40(3.6), 55(2), 55(3)(a), 55(3.01), 55(4), 87(2)aa), 87(2.11), 87(4), 88(1)e.2), 112(3), 129(1), 129(4), 186(1)(b), 186(2)
indirect spin-off of subsidiary groups to 2 transferee corporations held by holding companies for 2 brothers while such transferee corporations are controlled by father with special voting shares
proration of DSI on s. 55(3)(a) spin-offs based on the net cost amount of the property spun off

Principal Issues: Whether the reorganization meets the requirements of paragraph 55(3)(a).

Position: Yes.

Reasons: In compliance with the law and previous positions.

Technical Interpretation - External

7 March 2022 External T.I. 2021-0895571E5 - Clarification of Comments in 2020-086483

Unedited CRA Tags
248(1)
an RSU award as signing bonus or inducement to move, or as an award for a current performance accomplishment. might not engage the SDA rules
3 years may start counting from before the grant year/ unfavourable counting where employer has non-calendar year

Principal Issues: Clarification of prior comments in CRA technical interpretation 2020-0864831I7 regarding a grant of restricted share units with intrinsic value at the date of grant to an employee early in the taxation year of the employer and the availability of the three year bonus exception in paragraph (k) of the definition of salary deferral arrangement.

Position: Question of fact; clarification provided.

Reasons: There is a rebuttable presumption that restricted share units with intrinsic value at the date of grant are in respect of past services rendered prior to that date. Regard will be given to any relevant documentation or agreement in ascertaining when the services were rendered. However, such documentation or agreement, in and of itself, would not be determinative. The fiscal year of the hypothetical employer in technical interpretation 2020-0864831I7 coincided with the calendar year.

Technical Interpretation - Internal

4 October 2023 Internal T.I. 2020-0837811I7 F - Suspended loss

Unedited CRA Tags
40(3.3), 40(3.4), 40(3.5), 87(2)g.4), 251.1
suspended loss rule continued to apply when the transferee was amalgamated, then wound-up into the transferor
corporation in its 2 capacities of transferor, and continuation of transferee, was affiliated with itself

Principal Issues: Whether a wind-up of a subsidiary that is deemed to be proprietor of the shares pursuant to subparagraph 40(3.5)(c)(i) into its parent corporation that is the “transferor” for the purposes of subsection 40(3.4) would result in a previously suspended capital loss becoming available under the specific facts and circumstances.

Position: The loss would not become available provided that paragraphs 40(3.5)(c) and 87(2)(g.4) apply to the specific facts and circumstances in the present case.

Reasons: Wording of the Act and previous CRA’s position.