Income Tax Severed Letters - 2025-10-01

Ruling

2024 Ruling 2024-1031861R3 - Supplemental ruling to 2023-098066

Unedited CRA Tags
55(3)(a), 55(5)(e)(i)

Principal Issues: Supplemental ruling to 2023-098066.

Position: Supplemental ruling given.

Reasons: The changes don't impact the rulings given in 2023-098066.

2024 Ruling 2023-0980661R3 - 55(3)(a) internal reorganization

Unedited CRA Tags
55(2), 55(3)(a), 55(3.01), 55(4), 55(5)(e)(i), 84(2), 87(1), 88(2), 110.6(1), 191(1), 191(4), 187.1, 187.2

Principal Issues: Whether the reorganization meets the requirements of paragraph 55(3)(a).

Position: Yes, in compliance with the law.

2024 Ruling 2024-1021891R3 - 55(3)(a) Farm Butterfly Supplemental Ruling

Unedited CRA Tags
55(3)(a), 55(5)(e)(i)

Principal Issues: Supplemental ruling to 2023-098066.

Position: Supplemental ruling given.

Reasons: The changes don't impact the rulings given in 2023-098066.

Technical Interpretation - External

21 July 2025 External T.I. 2024-1039761E5 - CCUS timing issue: Paragraph 127.44(9)(h)

Unedited CRA Tags
127.44(9)(h), 127.44(2), 127.44(4), 127.44(1), 127.44(17), 127.44(9)(c)
NRCan project evaluation of a CCUS project in Year 2 can backdate qualification of a project expenditure for Class 57(a) property acquired in Year 1

Principal Issues: If a CCUS expenditure is incurred in a taxation year that is before the taxpayer receives its initial project evaluation and thus before the taxpayer has a qualified CCUS project, can that CCUS expenditure qualify for the CCUS ITC and in what taxation year can it be claimed by the taxpayer?

Position: Yes, it can qualify assuming all other applicable conditions in section 127.44 are met; and the taxpayer can make a claim for the CCUS ITC for the taxation year that the expenditure is incurred, provided that it does so in accordance with subsections 127.44(2) and 127.44(17).

Reasons: The conclusions are based on a textual, contextual and purposive analysis of the CCUS legislation in section 127.44.

21 July 2025 External T.I. 2025-1068511E5 - CCUS timing issue: Paragraph 127.44(9)(e)

Unedited CRA Tags
127.44(9)(e), 127.44(2), 127.44(4), 127.44(1)
the later-of-incurring-and-acquiring rule in s. 127.44(9)(e) applies on an expenditure-by-expenditure basis

Principal Issues: 1. In the hypothetical scenario presented, where expenditures were incurred in (i) the taxation year before the related Class 57 equipment was acquired, (ii) the taxation year the Class 57 equipment was acquired and (iii) the taxation year after the related Class 57 equipment was acquired, does the deeming rule in paragraph 127.44(9)(e) apply to the expenditure incurred in the taxation year after the Class 57 equipment was acquired? 2. If the answer to question 1 is "yes", does this rule deem the expenditures incurred in the two previous taxation years to have been incurred in the latest of the three years?

Position: 1. Yes; paragraph 127.44(9)(e) applies to expenditures incurred in taxation years before and after the related Class 57 equipment is acquired. 2. No; the application of 127.44(9)(e) to the expenditure incurred in the taxation year after the related Class 57 equipment is acquired does not change the timing of the related expenditures incurred in the previous years.

Reasons: The conclusions are based on a textual, contextual and purposive analysis of the CCUS legislation in section 127.44.