Income Tax Severed Letters - 2026-07-08

Ruling

2025 Ruling 2024-1022431R3 - Loss Consolidation Arrangement

Unedited CRA Tags
9; 12(1)(c) and (x); 20(1)(c); 55(2) and (2.1); 112(1), (2.1), (2.2), (2.3), (2.4) and (2.5); 187.1; 187.2; 191(1) and (2); 191.1(1); 245(2)

Principal Issues: (1) Whether each of the Losscos will be entitled to apply the Non-Capital Losses that it incurred against the interest income that it will earn on the Profitco Notes as part of the Loss Consolidation; (2) Whether Profitco will be entitlled to deduct the aggregate interest expenditures that will be payable on the Profitco Notes, and the Lossco PS Dividends that it will receive on the Lossco PS.

Position: (1) Yes; (2) Yes.

Reasons: The Loss Consolidations transactions will be legally effective, and will not contemplate dollar amounts and time frames that are blatantly artificial. In addition, Profitco will comply with the requirements found in paragraph 20(1)(c) and subsection 112(1), and the CRA views applicable to loss consolidation arrangements.

Technical Interpretation - External

2 April 2026 External T.I. 2025-1085691E5 F - Application of section 74.4 to an indirect transfer or loan

Unedited CRA Tags
74.1 ; 74.2 ; 74.4(2) ; 74.4(2)(d) ; 74.4(2)(e) ; 74.4(2)(f) ; 74.4(3) ; 74.5(1) ; 74.5(2) ; 74.5(5) ; 74.5(6) ; 74.5(8) ; 160 ; 94(1)

Principal Issues: How would the CRA apply paragraphs 74.4(2)(e) and (f) [in the French version: les sous-alinéas 74.4(2)b)(i) et (ii)], in various situations involving indirect loans or transfers?

Position: In the situations described, the CRA would be prepared to recognize the amounts received by the transferor as reducing the deemed interest on the indirect loan or transfer, provided it is reasonable to consider that such amounts are indirectly paid by the ultimate transferee corporation.

Reasons: Wording and purpose section 74.4.

Technical Interpretation - Internal

8 January 2026 Internal T.I. 2025-1080161I7 - Subsection 127.421(2) and a bankrupt CCPC

Unedited CRA Tags
127.421, 128(1)(d)

Principal Issues: Whether a CCRB claimed under subsection 127.421(2), being related to a specific period and deemed to be received at a time specified by the Minister of Finance that is after the end of that specific period, should be considered to relate to a pre-bankruptcy 2023 taxation year, a post-bankruptcy 2023 taxation year, or both.

Position: The interpretation that best reconciles subsection 127.421(2) with paragraph 128(1)(d) is that the CCRB be treated as a payment on account of Part I tax payable for the first taxation year ending in the 2023 calendar year. In a bankruptcy context, this would generally be the pre-bankruptcy taxation year.

Reasons: Section 127.421 is structured to limit an eligible corporation to one CCRB per calendar year, calculated based on factors for a calendar year, which is claimed through the filing of a return of income for a particular taxation year. This limitation, and the proposed amendment to extend subsection 127.421(11) to apply for the purposes of subsection 127.421(2), supports the interpretation that a CCRB claim cannot relate to both taxation years of a bankrupt ending in a calendar year.

January 8, 2026

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Income Tax Rulings
Directorate
J. Clarkson

c/o XXXXXXXXXX 2025-108016

27 November 2025 Internal T.I. 2025-1072771I7 - Schedule 15 - Subsection 143(1) - Deemed Trust

Unedited CRA Tags
143(1), 150(1.2), Reg 204, Reg 204.2

Principal Issues: Whether a trust deemed to be created pursuant to subsection 143(1) (Deemed Trust) must file Schedule 15 with its T3 Return for the December 31, 2023 tax year.

Position: Where a Deemed Trust, which is not otherwise structured as an express trust, is not required to file a T3 Return for a particular tax year pursuant to paragraph 150(1)(c), but is required to do so pursuant to section 204 of the Regulations, it will not be required to complete Schedule 15 for the year. However, where a Deemed Trust is required to file a T3 Return pursuant to paragraph 150(1)(c), subsection 204.2(1) of the Regulations will apply to the Deemed Trust such that it would be required to include Schedule 15 with its T3 Return for the year, unless the Deemed Trust is one of the trusts described in paragraphs 150(1.2)(a) to (r).

Reasons: see below.