Income Tax Severed Letters - 2025-04-02

Ruling

2023 Ruling 2023-0989821R3 - Post mortem planning - Pipeline

Unedited CRA Tags
40(3.3) and (3.4); 40(3.6); 70(6); 84.1; 84(2); 86(1); 104(4)(a); 112(3.2); 112(7); 248(25)(a); 251.1(1)(b) and (g)

Principal Issues: (1) Whether section 84.1 will apply to reduce the PUC of the Newco shares received by the Spousal Trust in consideration for the disposition of its Investco shares to Newco upon the Transfer; (2) Whether subsection 84(2) will apply to the Proposed Transactions; (3) Whether the Capital Loss to be realized by the Spousal Trust upon the Redemption will be denied pursuant to subsection 40(3.6); (4) Whether the Capital Loss that may be realized by the Spousal Trust upon the Transfer will be denied pursuant to subsections 40(3.3) and (3.4).

Position: (1) No; (2) No (3) No; (4) No.

Reasons: (1) Although the statutory requirements found in section 84.1 are satisfied, the increase in the PUC of the Newco shares will not exceed the greater of the PUC and the Hard ACB of the Investco shares immediately before the Transfer; (2) The Proposed Transactions comply with CRA views applicable to similar pipeline transactions; (3) The Spousal Trust will not be affiliated with Investco immediately after the Redemption; (4) Neither the Spousal Trust nor a person that is affiliated with the Spousal Trust will acquire the Disposed Property or a Substituted Property within the Prescribed Period, and will own the Disposed Property or a Substituted Property at the end of the Prescribed Period.

Technical Interpretation - External

11 March 2025 External T.I. 2020-0845931E5 F - Transfert d’une propriété intellectuelle

Summary Under
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Patents and Know-How
the consequences of a sale of IP by a partnership for the benefit of a university and its researchers might be addressed in a ruling

Principales Questions: Quel est le traitement fiscal de sommes reçues par des contribuables lors du transfert d’une propriété intellectuelle dans une situation donnée? / What is the tax treatment of amounts received by taxpayers upon the transfer of intellectual property in a given situation?

Position Adoptée: Aucune / None.

Raisons: Question de fait / Question of fact.

19 February 2025 External T.I. 2018-0744821E5 F - Régime d’assurance collective - groupe de personne

Unedited CRA Tags
6(1)a)(i), 6(1)e.1), 15(1)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(i)
for a 2-person plan, a higher level of benefits for the majority shareholder would suggest that there was an individual policy for him, rather than being a group plan component
Summary Under
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1)
rebuttable presumption that benefits of shareholder-employees from disability plan premiums were taxable/ meaning of "contemplated" shareholder
Words and Phrases
contemplated shareholder

Principales Questions: 1- Une assurance supplémentaire offerte à un groupe de deux personnes constitue-t-elle un régime d’assurance collective? / Is a supplemental insurance offered to a group of two persons a group plan?
2- Est-ce que les primes payées par l’employeur sont un avantage imposable? / Are the premiums paid by the employer a taxable benefit?

Position Adoptée: 1- Possiblement, oui / Possibly, yes.
2- Question de fait / Question of fact.

Raisons: 1- Positions antérieures / Past positions.
2- Positions antérieures / Past positions.

23 January 2025 External T.I. 2024-1030091E5 - Specified Corporate Income - Realtor Commissions

Unedited CRA Tags
125(1), 125(7) "Specified corporate income"
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Corporate Income - Paragraph (a) - Subparagraph (a)(i)
a corporation could earn active business income through another private corporation if the true customers were third parties
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(1) - Paragraph 125(1)(a) - Subparagraph 125(1)(a)(i) - Clause 125(1)(a)(i)(B)
the specified corporate income carve-out may be avoided by earning active business income through rather than from a private corporation

Principal Issues: Whether real estate commissions earned by a personal real estate corporation ("PREC"), which are paid from a brokerage in which the shareholder of the PREC has an indirect interest in, would be described in subparagraph (a)(i) of the definition of specified corporate income in subsection 125(7) of the Act.

Position: Question of fact.

Reasons: If all or substantially all of the income is from the provision of services to arm’s length persons other than the private corporation (i.e., the brokerage), then the income received would not be an amount described in clause (a)(i)(B) of the definition “specified corporate income” in subsection 125(7) of the Act.

Technical Interpretation - Internal

28 November 2024 Internal T.I. 2024-1014251I7 - Classification of Arizona Limited Partnerships

Summary Under
Tax Topics - Income Tax Act - Section 96
an Arizona limited partnership is a partnership rather than a corporation for ITA purposes
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Corporation
separate legal personality of an Arizona LP did not render it a corporation

Principal Issues: Whether the particular Arizona Limited Partnerships should be considered as corporations or partnerships for purposes of the Income Tax Act.

Position: Partnerships.

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