Income Tax Severed Letters - 2024-05-22

Ruling

2024 Ruling 2023-0993651R3 - Post-mortem pipeline

Unedited CRA Tags
84(2), 84.1, 245
Summary Under
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2)
post-mortem pipeline with a 24-month implementation timeline, and an earlier note repayment to fund terminal return taxes

Principal Issues: 1) Whether subsection 84.1(1) applies to the proposed transactions. 2) Whether subsection 84(2) applies to the proposed transactions. 3) Whether subsection 245(2) applies to the proposed transactions.

Position: 1) No. Favorable ruling given. 2) No. Favorable ruling given. 3) No. Favorable ruling given.

Reasons: In accordance with the provisions of the Act and our previous positions.

Technical Interpretation - External

5 March 2024 External T.I. 2023-0962831E5 - Active business income – Income from solar panels

Unedited CRA Tags
125(1), 125(7) “income of the corporation for the year from an active business”, “active business carried on by a corporation”, “personal services business”, “specified investment business”, 129(4) “income or loss”, 248(1) “business”, “property"
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business
income from solar array panel might not be income from property, so that there was no SIB
Words and Phrases
income from property

Principal Issues: Whether income earned by a corporation from selling electricity generated from solar panels would be active business income eligible for the small business deduction pursuant to subsection 125(1) of the Income Tax Act.

Position: Question of fact.

Reasons: Income from an active business does not include income from a specified investment business (“SIB”). Generally, if the principal purpose of the business is to derive income from property, the business could be considered a SIB. Whether income received from selling electricity generated from solar panels is income from property is a question of fact.

Technical Interpretation - Internal

19 October 2023 Internal T.I. 2020-0856851I7 - Ordinary Course of Business

Unedited CRA Tags
258(3), 258(4)
Summary Under
Tax Topics - Income Tax Act - Section 258 - Subsection 258(4) - Paragraph 258(4)(a)
MRPS acquired by a Canadian insurance company subsidiary in order for the Luxco to loan-finance US operations were not acquired in the ordinary course
Words and Phrases
ordinary course of the business carry on
Summary Under
Tax Topics - Income Tax Act - Section 112 - Subsection 112(2.1)
MRPS used to finance US opco or opco acquisition were not acquired in the ordinary course of the business

Principal Issues: Whether subsection 258(4) applies in the particular situation described in the letter so as to deny the application of subsection 258(3) of the Act?

Position: Question of fact but likely yes.

Reasons: Based on a textual, contextual and purposive analysis of subsections 258(3) and (4), and examination of the facts of the particular situation.

22 December 2022 Internal T.I. 2021-0892121I7 - Classification of SCS

Unedited CRA Tags
248(1) definition of "corporation"
Summary Under
Tax Topics - Income Tax Act - Section 96
Gabon and Ivory Coast sociétés en commandite simple were partnerships notwithstanding separate legal personality
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation
Gabon and Ivory Coast SCS with separate legal personality were partnerships given inter alia unlimited general partner liabiity

Principal Issues: Whether particular "sociétés en commandite simple" should be corporations or partnerships for Canadian tax purposes.

Position: Partnerships.

Reasons: The general characteristics of these entities more closely resemble partnerships than other forms of business entities or arrangements under Canadian commercial law.