Income Tax Severed Letters - 2025-02-19

Technical Interpretation - External

25 November 2024 External T.I. 2023-0974111E5 - Elected Functional Currency and Expenditure Limit

Unedited CRA Tags
Subsections 127(5), 127(9), 127(10.1), 127(10.2), 181.2(1), 261(5), 261(7)
Summary Under
Tax Topics - Income Tax Act - Section 261 - Subsection 261(5) - Paragraph 261(5)(c)
expenditure limits of associated CCPCs should be converted into a functional currency based on the spot exchange rate at year end
Summary Under
Tax Topics - Income Tax Act - Section 127 - Subsection 127(10.3)
expenditure limits of associated corporations translated into functional currency at year end

Principal Issues: For the purpose of computing the expenditure limit under subsection 127(10.2) of a taxpayer who reports in its elected functional currency, which exchange rate should be used to convert the amount of taxable capital employed in Canada (TCEC) of an associated corporation into the taxpayer’s elected functional currency?

Position: The taxpayer should use the spot rate for the last day of the taxation year of the associated corporation for which the TCEC is computed to convert it into the taxpayer’s elected functional currency.

Reasons: For the purpose of computing the expenditure limit under subsection 127(10.2), the day the TCEC of the associated corporation is considered to “arise” for the purposes of paragraph 261(5)(c) is the last day of the taxation year of the associated corporation for which it is computed.

1 February 2024 External T.I. 2023-0995481E5 - Mineral Resource Certificate

Unedited CRA Tags
Definition of "mineral resource" in subsection 248(1)

Principal Issues: Whether NRCan can certify that the principal mineral to be extracted from the lithium-bearing spodumene deposits will be a principal mineral extracted from a non-bedded deposit.

Position: Yes.

Reasons: Positive Opinion provided by NRCan.

Technical Interpretation - Internal

18 June 2024 Internal T.I. 2024-1006551I7 F - Subsection 143.2(15) and statute-barred year

Unedited CRA Tags
143.2(15), 152(4) et 152(6)
Summary Under
Tax Topics - Income Tax Act - Section 143.2 - Subsection 143.2(15)
s. 143.2(15) authorized CRA to open-up a statute-barred year to deny the carryback of a loss which it will deny under s. 143.2

Principales Questions: Whether it is possible to open a statute-barred year to deny a carried-back business loss arising from an aggressive tax planning subject to tax shelter investments of section 143.2 ITA / S’il est possible d’ouvrir une année d’imposition prescrite afin de refuser le report rétrospectif d’une perte d’entreprise résultant d’une planification fiscale abusive assujettie aux règles sur les abris fiscaux déterminés de l’article 143.2.

Position Adoptée: Yes/Oui.

Raisons: Le paragraphe 143.2(15) L.I.R. bénéficie d'une interprétation large. Il est donc possible d'ouvrir une année d’imposition prescrite afin de refuser le report rétrospectif d’une perte d’entreprise résultant d’une planification fiscale abusive assujettie aux règles sur les abris fiscaux déterminés de l’article 143.2 L.I.R.