Translations of recent severed letters

Bundle Date Translated severed letter Summaries under Summary descriptor
2023-01-25 2022 Ruling 2020-0858451R3 F - Trust to trust transfer Income Tax Act - 101-110 - Section 108 - Subsection 108(1) - Trust - Paragraph (g) deemed disposition under s. 104(4) avoided through irrevocable vesting of interests in successor trust
Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (f) no disposition on transfer of assets of Trust 1 to Trust 2 with essentially the same terms other than a clause facilitating irrevocable-vesting designations
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 1, 2022-0936241C6 F - T1135 and situs of cryptocurrencies Income Tax Act - Section 233.3 - Subsection 233.3(1) - Specified Foreign Property - Paragraph (a) expanded crypto disclosure may be required
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 2, 2022-0936281C6 F - police d'assurance-vie & avantage Income Tax Act - Section 246 - Subsection 246(1) taxable benefit where 2 Holdcos pay premiums on life insurance policies of which their jointly-owned sub is beneficiary unless s. 246(2) applies
Income Tax Act - Section 9 - Expense Reimbursement premiums paid by parent on a sub’s life insurance policies are non-deductible even if reimbursed on income account
Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Financing Expenditures premiums paid by Holdcos on policies of which their jointly-owned company (Opco) is the beneficiary are non-deductible capital expenditures even if reimbursed by the Opcos
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 3, 2022-0943261C6 F - Average Exchange Rate Income Tax Act - Section 261 - Subsection 261(1) - Relevant Spot Rate circumscribed acceptance of using average exchange rates
Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) use of average exchange rates for capital property dispositions not generally accommodated
Income Tax Act - Section 39 - Subsection 39(1.1) use of average exchange rate under s. 39(1.1) is permitted
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 4, 2022-0940941C6 - Stop-loss Rules Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(f) superficial loss allocated on a pooled basis to shares held at the end of the 61-day period by affiliated persons
Income Tax Act - Section 40 - Subsection 40(3.3) suspended loss rules engaged by shareholder, and shareholder’s RRSP acquiring and then holding identical shares during the 61-day period
Income Tax Act - Section 54 - Superficial Loss formula for prorating superficial loss is inapplicable where the number of shares held by affiliated persons has increased at the end of the 61-day period
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 5, 2022-0936301C6 F - Guarantee fee Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e.1) one-time fee to subsidiary for mortgaging its property as security for a bank loan to the shareholder would not qualify under s. 20(1)(e.1)
Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) one-time fee to subsidiary for mortgaging its property as security for a bank loan to the shareholder could qualify under s. 20(1)(e)
Income Tax Act - Section 248 - Subsection 248(1) - Business guarantee or pledge fee is from a service and, therefore, is from an undertaking of any kind whatever
Income Tax Act - Section 15 - Subsection 15(1) no shareholder benefit where corporation receives a reasonable pledge (or “guarantee”) fee from its shareholder
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 6, 2022-0936311C6 F - Illness insurance policy used as collateral Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e.1) critical illness insurance policy premiums on policy assigned to lender cannot be deducted under s. 20(1)(e.1)
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 7, 2022-0938221C6 F - Régime d'accession à la propriété (RAP) - rembours Income Tax Act - Section 146.01 - Subsection 146.01(1) - Regular Eligible Amount - Paragraph (i) an HBP balance is not reduced at the beginning of the year of a contribution repayment by the repayment amount until the repayment is made
Income Tax Act - Section 146.01 - Subsection 146.01(1) - HBP Balance HBP balance not reduced until s. 146.01(3) repayment is made and prescribed form filed
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 8, 2022-0940961C6 F - RRIF - successive deaths Income Tax Act - Section 146.3 - Subsection 146.3(1) - Designated Benefit spouse of a deceased RRIF annuitant must be still alive at the time of a payment out of the RRIF in order for the designated benefit rules to apply
Income Tax Act - Section 146.3 - Subsection 146.3(6.2) s. 146.3(6.2) reduction unavailable where surviving spouse dies before payment made out of deceased's RRIF
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 9, 2022-0940951C6 F - FRB créée par testament après 2015 Income Tax Act - Section 118.1 - Subsection 118.1(5.1) a gift by will of a capital interest in a charitable remainder trust can be claimed only by the GRE, not the deceased
Income Tax Act - Section 118.1 - Subsection 118.1(5) - Paragraph 118.1(5)(b) gift of capital interest in charitable remainder trust is considered to be made by GRE when such interest vests in the charity
7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 10, 2022-0938301C6 F - Rebate on purchase of GIC Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) broker’s waiver of commission could be an inducement payment
Income Tax Act - Section 54 - Adjusted Cost Base broker-waived commission included in cost of GIC
2023-01-18 7 October 2022 APFF Roundtable Q. 1, 2022-0942081C6 F - Safe Income Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) contingent liabilities that reduce shares’ FMV should also reduce safe income on hand
7 October 2022 APFF Roundtable Q. 2, 2022-0942091C6 F - Taxable preferred shares and shareholders’ agreement Income Tax Act - Section 248 - Subsection 248(1) - Taxable Preferred Share - Paragraph (f) - Subparagraph (f)(ii) whether a right to a top-up in the event of an IPO is inconsistent with receiving FMV proceeds
7 October 2022 APFF Roundtable Q. 3, 2022-0942121C6 F - THRP- PRTA – Versement de dividendes imposables Income Tax Act - Section 125.7 - Subsection 125.7(2.01) parent could pay a dividend in, say, Period 27, without adverse CEWS impact on Canadian sub
Income Tax Act - Section 125.7 - Subsection 125.7(14.1) there is no adverse CEWS impact of a non-resident parent paying dividends to individuals
7 October 2022 APFF Roundtable Q. 4, 2022-0942131C6 F Income Tax Regulations - Regulation 1101 - Subsection 1101(5b.1) CRA is willing to adapt a prescribed requirement, that an election be made by letter attached to the return, to internet filings
7 October 2022 APFF Roundtable Q. 5, 2022-0947611C6 F - Limited Partnership and Loans Income Tax Act - Section 40 - Subsection 40(3.1) loans made only to avoid s. 40(3.1) gains due to income gains not being added to ACB until next year, may be acceptable
Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(v) guarded acceptance of distributions of LP profits as loans, followed by set-off against draws in January
7 October 2022 APFF Roundtable Q. 6, 2022-0942141C6 F - Rollover under 70(6) and gifts to charities Income Tax Act - Section 70 - Subsection 70(6) - Paragraph 70(6)(b) - Subparagraph 70(6)(b)(ii) charitable gifts by a spousal trust will disqualify it
7 October 2022 APFF Roundtable Q. 7, 2022-0942731C6 F - Permanent establishment and teleworking Income Tax Regulations - Regulation 400 - Subsection 400(2) - Paragraph 400(2)(b) employer is required to be carrying on business through an employee’s cottage to be considered to have a PE there under Reg. 400(2)(b)
Income Tax Regulations - Regulation 102 - Subsection 102(1) Reg. 400(2)(b) PE is not necessarily an employer establishment to which the employee reports to work
Treaties - Income Tax Conventions - Article 5 having an employee, with general authority to contract, telework from his cottage in another province does not necessarily create an employer PE there
7 October 2022 APFF Roundtable Q. 8, 2022-0942151C6 F - Surplus stripping Income Tax Act - Section 84.1 - Subsection 84.1(1) incorporating a sub through which a share sale will occur so as to avoid s. 84.1 is not per se GAARable
Income Tax Act - Section 256 - Subsection 256(5.11) range of factors considered
Income Tax Act - Section 245 - Subsection 245(2) permissible use of sale through subsidiary to avoid s. 84.1
7 October 2022 APFF Roundtable Q. 9, 2022-0942281C6 F - Section 80 - proposals under BIA Income Tax Act - Section 80 - Subsection 80(2) - Paragraph 80(2)(a) forgiveness under a Bankruptcy proposal occurred when it was court-approved

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