Income Tax Severed Letters - 2025-02-26

Ruling

2023 Ruling 2022-0943871R3 - Cross-border spin-off butterfly

Unedited CRA Tags
55(1), 55(2), 55(3)(b), 55(3.1), 55(3.2), 212.1

Principal Issues: Whether the proposed cross-border spin-off butterfly qualifies for the exemption in paragraph 55(3)(b).

Position: Yes.

Reasons: Meets the statutory requirements and our prior positions and rulings on cross-border butterfly reorganizations.

Technical Interpretation - External

27 January 2025 External T.I. 2024-1018491E5 - U.K. Endowment Policy

Unedited CRA Tags
12.2(1); 128.1; 138(12); 148(9).
Summary Under
Tax Topics - Income Tax Act - Section 138 - Subsection 138(12) - Life Insurance Policy
UK endowment policy would appear to be a life insurance policy
Summary Under
Tax Topics - Income Tax Act - Section 148 - Subsection 148(9)
it generally will be impossible for a resident individual to properly compute the Canadian income tax results of holding to maturity a UK endowment policy

Principal Issues: Tax treatment of UK endowment policy acquired by a non-resident individual, and the individual later immigrates to Canada.

Position: Provided general comments.

Reasons: Unable to provide a definitive response due to insufficient information. When a policy is issued by a non-resident insurer, the required information to determine the tax implications is usually not readily available.

2 January 2025 External T.I. 2024-1020361E5 - Indian Act Tax Exemption & Employment Income

Unedited CRA Tags
ITA para. 81(1)(a); IA s. 87

Principal Issues: Whether the employment income of the Employees is situated on a reserve and exempt from income tax under section 87 of the Indian Act and paragraph 81(1)(a) of the Income Tax Act.

Position: Based on the information provided, no.

Reasons: Based on the information provided, none of the Indian Act Exemption for Employment Income Guidelines apply and the connecting factors identified by the requestor are not sufficient to situate the income on a reserve.

Technical Interpretation - Internal

18 November 2024 Internal T.I. 2024-1015501I7 - Part-year residence

Unedited CRA Tags
114; 250(1)(a); 250(5); Reg 2601(1).
Summary Under
Tax Topics - Income Tax Act - Section 250 - Subsection 250(1) - Paragraph 250(1)(a)
an individual who is resident under the s. 250(1)(a) sojourning rule cannot be a part-year resident

Principal Issues: Whether an individual who is deemed to be resident in Canada pursuant to paragraph 250(1)(a) in a taxation year and who subsequently becomes factually resident in Canada in the same taxation year has a period of part-year residence.

Position: No.

Reasons: An individual who is deemed to be resident in Canada pursuant to paragraph 250(1)(a) is deemed to be so resident throughout the taxation year.