Income Tax Severed Letters - 2026-01-28

Ruling

2025 Ruling 2024-1042991R3 - Ruling - XXXXXXXXXX Agreement Payments

Unedited CRA Tags
3(a); 75(2); 104(6); 104(24)

Principal Issues: 1.Whether subsection 75(2) of the Act will apply to any income or loss from the First Milestone Payment received by the Trust, or from property substituted therefor, and any taxable capital gain or allowable capital loss from the disposition of the First Milestone Payment, or property substituted therefor.
2.Whether any Annual Income from the Trust Property in a Fiscal Year to which subsection 75(2) of the Act does not apply, will be considered to have become payable in the Fiscal Year to the First Nation and may be deducted in computing the income of the Trust for the Fiscal Year pursuant to paragraph 104(6)(b) of the Act.
3. Will the payment of per capita distributions, which includes an accrued income portion, from the First Nation to its members be taxable?

Position: 1.Yes, such income shall be deemed to be income or a loss, as the case may be, or a taxable capital gain or allowable capital loss, as the case may be, of the First Nation, pursuant to subsection 75(2) of the Act.
2. Such income will be considered to have become payable in the Fiscal Year to the First Nation and may be deducted in computing the taxable income of the Trust for the Fiscal Year pursuant to 104(6)(b) of the Act.
3. No.

Reasons: 1. The First Nation will be the settlor and the sole beneficiary of the Trust.
2. The terms of the trust are such that paragraph 104(6)(b) of the Act applies.
3. The payment of the per capita distributions, including the accrued income portion, is not considered income from a source within the meaning of paragraph 3(a) of the Act, another source of income under subdivision d, or a disposition of property. Therefore, it is our view that the initial per capita distributions received by the members of the First Nation would not be included in calculating their income under Part I of the Act.

2024 Ruling 2022-0941881R3 - RRSP transfer to non-resident surviving spouse

Unedited CRA Tags
56(1)(h), 60(l), 108(1), 146(1), 146(8), 146(8.1), 212(1)(l), 214(3)(c), 248(8), 248(25)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(l)
the transfer, via a revocable living trust, of the RRSP funds of a deceased non-resident to the RRSP of his non-resident widow, could be exempted from Part XIII tax
Summary Under
Tax Topics - Income Tax Act - Section 214 - Subsection 214(3) - Paragraph 214(3)(c)
indirect transfer under revocable living trust of RRSP of non-resident deceased to RRSP of non-resident widow could be deemed a refund of premiums under s. 146(8.1)

Principal Issues: Can a transfer of property in a non-resident deceased taxpayer's RRSP to the RRSP of a non-resident surviving spouse under the terms of a XXXXXXXXXX revocable living trust qualify for an exemption from Part XIII tax?

Position: Yes.

Reasons: As provided in paragraph 214(3)c), if Part I applied, the transferred amount would be required to be included in computing the surviving spouse’s income because of subsection 146(8.1). Indeed, the surviving spouse would be an indirect beneficiary of the deceased annuitant’s estate for purposes of subsection 146(8.1). The transfer would be deemed a refund of premiums because it is made indirectly under the deceased’s annuitant’s will, as a consequence of his death, and under the express terms of an inter vivos trust. The non-resident spouse would therefore be considered to receive a benefit that is a refund of premiums out of or under an RRSP, and, were the non-resident spouse a resident of Canada throughout the transfer year, a deduction under paragraph 60(l) would be available, such that the conditions in subparagraphs 212(1)(l)(i) and (ii) will be met.

2024 Ruling 2024-1029151R3 F - Hybrid Post-mortem pipeline

Unedited CRA Tags
84.1, 84(2), 191, 191.1, 245(2)

Principal Issues: 1) Whether section 84.1 applies to deem the Estate to have received a dividend on the disposition of shares to the new corporation or to reduce the PUC of the shares of the new corporation received as consideration for the disposition of the shares. 2) Whether subsection 84(2) will apply to the proposed transactions. 3) Whether subsection 245(2) will apply 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

7 November 2025 External T.I. 2024-1044451E5 - Directed Scholarship and subsection 168(1)

Unedited CRA Tags
149.1(1), 168(1)(b), 168(1)(f)

Principal Issues: Is a directed disbursement by a registered charity to a qualified done for a scholarship to a particular individual considered a gift from the registered charity?

Position: The determination of a gift is a question of fact. A scholarship is not a gift.

Reasons: See comments herein.

3 October 2025 External T.I. 2025-1075051E5 - Clean Tech ITC: Class 56 equipment

Unedited CRA Tags
127.45(1) and Class 56 of Schedule II of the Regulations

Principal Issues: Could the property described in the hypothetical facts qualify as clean technology property, despite the fact that it runs on rails and is powered by an attached electrical cable?

Position: In our view, these facts about the property do not prevent it from being considered to be automotive equipment that is fully electric. However, whether a particular property would qualify as clean technology property is a question of fact that can only be answered based on all the facts and circumstances of a particular situation.

Reasons: Our conclusion is based on a textual, contextual and purposive analysis of the legislation and an application of the legislation to the hypothetical facts presented herein.

Conference

19 November 2024 TEI Roundtable, 2024-1039461C6 - Regulation 105

Unedited CRA Tags
153(1)(g) and Regulation 105
Summary Under
Tax Topics - Income Tax Regulations - Regulation 105 - Subsection 105(1)
re policy reversal regarding Reg. 105 withholding where a Canadian subcontractor

Principal Issues: In CRA document 2022-0943241E5, the CRA changed the position expressed in document 2008-0297161E5 and provided a new position on the application of Regulation 105 to services billed by a non-resident for services rendered in Canada. What is the rationale for the change in CRA’s position?

Position: The position in CRA document 2008-0297161E5 expanded the conclusion of Weyerhaeuser case to payments to subcontractors. That CRA position was reversed in 2022.

Reasons: The 2022 CRA document indicates that the CRA will administer Regulation 105 in a manner which is consistent with the conclusion of the Court in Weyerhaeuser Company Limited v The Queen (2007 TCC 65).

Technical Interpretation - Internal

10 July 2025 Internal T.I. 2024-1030661I7 - DTC & Separated spouses in the absence of divorce

Unedited CRA Tags
251(2)(a); 251(6)(b); 118.3(2); 118(1)(d); 118(4); 118(5); 118(6)

Principal Issues: Whether a supporting person (the taxpayer) would be eligible to claim a disability tax credit (DTC) transfer from a DTC-eligible person with a disability (“PWD”), even though the taxpayer and the PWD’s mother are separated due to a breakdown of their marriage.

Position: Yes.

Reasons: Given that marriage is not dissolved by mere separation, the separated parties are still considered to be spouses for purposes of the Act, and the PWD is considered a child of the taxpayer’s spouse.