Income Tax Severed Letters - 2024-05-22

Ruling

2024 Ruling 2023-0993651R3 - Post-mortem pipeline

Unedited CRA Tags
84(2), 84.1, 245
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"
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)
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
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"
Gabon and Ivory Coast sociétés en commandite simple were partnerships notwithstanding separate legal personality
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.