Income Tax Severed Letters - 2026-07-22

Ruling

2025 Ruling 2024-1002911R3 - Debt Reorganization

Unedited CRA Tags
9 ; 13(34) ; 13(35) ; 13(35)(d) ; 18(1)(a) ; 18(1)(b) ; 18(9.1) ; 20(1)(c) ; 20(1)(e) ; 20(1)(e)(ii.2) ; 20(1)(f) ; 20(3) ; 39(2) ; 39(3) ; 40 ; 40(1)(a) ; 40(2)(e.1) ; 40(2)(g)(i) ; 40(2)(g)(ii) ; 40(3.4) ; 51 ; 51.1 ; 54 “Proceeds of disposition” ;

Principal Issues: 1) Whether the Proposed Transactions would result in a disposition of a given debt instrument, otherwise than for the assignor, upon assignment of the debt; 2) Whether the Proposed Transactions would impact the deduction pursuant to paragraph 20(1)(c) ; 3) What is the proceeds of disposition of a given debt receivable that is assigned in satisfaction of bonds, as contemplated by the Proposed Transactions ; 4) How would section 80 apply to the Proposed Transactions.

Position: 1) No ; 2) No ; 3) The proceeds for the assignor will be equal to the FMV of the corresponding bonds that are extinguished as a result of the assignment ; 4) Section 80 will apply to the difference between the lesser of principal amount of the given debt that is extinguished and the amount for which it was issued, on the one hand, and the FMV of the debt receivable assigned therefor, on the other hand.

Reasons: The Law.

2025 Ruling 2024-1039511R3 - Computation of FAT

Unedited CRA Tags
91(1), 91(4), 95(1)

Principal Issues: Allocation of discretionary deductions allowed under foreign law between the active business and the FAPI-generating business of a foreign affiliate for the purpose of determining the foreign tax that “may reasonably be regarded as applicable” to the FAPI for purposes of determining FAT.

Position: In determining the amount of foreign tax that may reasonably be regarded as applicable to FAPI, foreign discretionary deductions should first be allocated to the income from an activity to which they may reasonably be regarded as applicable.

Reasons: The language in the FAT definition in subsection 95(1) requires an allocation of foreign tax to FAPI on reasonable basis.

2023 Ruling 2023-0962051R3 F - Entity classification

Principal Issues: Whether a French “société civile immobilière” is a corporation for purposes of the Income Tax Act.

Position: A “société civile immobilière” would not be viewed as a corporation for the purposes of the Income Tax Act.

Reasons: The characteristics of a “société civile immobilière” does not more closely resemble a corporation than other forms of business arrangements under Canadian commercial law.

Technical Interpretation - External

13 May 2026 External T.I. 2024-1033121E5 F - Déduction pour gains en capital et méthode de reco

Unedited CRA Tags
40(1)a), 110.6(1), 110.6(2.1), 110.6(31)

Principales Questions: Un particulier peut-il bénéficier de l'augmentation du plafond de la déduction pour gains en capital lorsqu'il utilise la méthode de recouvrement du coût pour déclarer un gain provenant de la vente d'actions admissibles de petite entreprise? / Whether an individual may benefit from an increase in the capital gains deduction limit when using the cost recovery method to report a gain arising from the sale of qualified small business corporation shares.

Position: Dans le cadre de la méthode de recouvrement du coût, lorsque le plafond de la DGC a augmenté depuis l'année de la disposition initiale des AAPE, cette augmentation est prise en compte dans le calcul du montant de DGC qu'un particulier peut demander en vertu du paragraphe 110.6(2.1) à l'égard du gain en capital réalisé dans l'année où le montant du produit de disposition devient déterminable. / In the context of the cost recovery method, where the capital gains deduction limit has increased since the year of the initial disposition of the QSBC shares, that increase is taken into account in calculating the amount of the capital gains deduction that an individual may claim under subsection 110.6(2.1) in respect of the capital gain realized in the year in which the amount of the proceeds of disposition becomes determinable.

Raisons: Application de la Loi et du Bulletin.