Translations of recent severed letters

Bundle Date Translated severed letter Summaries under Summary descriptor
2018-01-10 6 December 2017 External T.I. 2016-0667361E5 F - Taxable Capital Gains Designation Income Tax Act - 101-110 - Section 104 - Subsection 104(21.2) eligibility of a gain for the capital gains deduction is lost when it is distributed by a lower-tier to upper-tier trust
Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Annual Gains Limit annual gains limit of upper-tier trust does not include QSBC gains distributed and designated by lower-tier trust
2018-01-03 30 August 2017 External T.I. 2017-0718311E5 F - Capital dividend account Income Tax Act - Section 83 - Subsection 83(3) a late s. 83(3) election causes a retroactive increase to the CDA of the corporate recipient of the dividend
Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (b) late capital dividend election retroactively affects CDA of dividend recipient
2017-12-27 27 October 2017 External T.I. 2017-0688971E5 F - New Class 14.1 Income Tax Act - Section 13 - Subsection 13(38) - Paragraph 13(38)(c) a s. 85 roll of purchased goodwill at an agreed amount of unamortized cost can trigger recapture
Income Tax Act - Section 13 - Subsection 13(39) non-application on s. 85 roll can result in recapture -but disposition bump available to NAL transferee
Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e) permitted agreed amount for Class 14.1 property rollover must be UCC even where amortized cost (equalling boot) is higher
31 October 2017 External T.I. 2017-0690691E5 F - New section 15 back to back loan rules Income Tax Act - Section 15 - Subsection 15(2.16) - Paragraph 15(2.16)(c) - Subparagraph 15(2.16)(c)(i) - Clause 15(2.16)(c)(i)(B) application to a term deposit pledged by a family corporation to secure a business loan taken out by a shareholder
Income Tax Act - Section 15 - Subsection 15(2.16) - Paragraph 15(2.16)(c) - Subparagraph 15(2.16)(c)(ii) term deposit to secure shareholder loan potentially a specifed right
Income Tax Act - Section 18 - Subsection 18(5) - Specified Right pledged term deposit could be specified right
2017-12-06 23 October 2017 External T.I. 2017-0685001E5 F - Withdrawal of RRSP over-contributions after death Income Tax Act - Section 146 - Subsection 146(8.2) the deemed s. 146(8.8) RRSP benefit on death can be treated as a withdrawal of an excess RRSP contribution
3 November 2017 External T.I. 2017-0712141E5 F - Borrowing to make interest-free loans Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) interest on shareholders’ borrowings to fund an interest-free corporate loan may be deductible even if the proportionate-to-shares test is not met
2017-11-29 11 October 2017 Internal T.I. 2017-0719181I7 F - Agreement in writing Income Tax Act - Section 66.1 - Subsection 66.1(6) - Canadian exploration expense - Paragraph (g.4) pre-production mine development expenses that qualify under CEE – (g.4) need not qualify under (g.3)
Income Tax Act - Section 66.1 - Subsection 66.1(6) - Canadian exploration expense - Paragraph (g.3) unresolved ambiguity re whether agreement can refer to a subcontracting agreement
2017-11-01 21 April 2016 External T.I. 2015-0607451E5 F - Use of capital of a trust by a spouse Income Tax Act - Section 73 - Subsection 73(1.01) - Paragraph 73(1.01)(c) - Subparagraph 73(1.01)(c)(ii) occupation of trust property (a residence) by individual’s spouse does not breach the capital-use requirement "under" the trust
14 September 2017 External T.I. 2017-0685121E5 F - Associated corporations Income Tax Act - Section 256 - Subsection 256(1.2) - Paragraph 256(1.2)(f) - Subparagraph 256(1.2)(f)(ii) Childco associated with Parent-controlled corp whose non-voting equity is held by family trust
Income Tax Act - Section 256 - Subsection 256(2) - Paragraph 256(2)(b) - Subparagraph 256(2)(b)(ii) election under s. 256(2)(b)(ii) busts s. 256(2)(a) transitivity but not association with 3rd corporation
Income Tax Act - Section 125 - Subsection 125(5.1) making s. 256(2)(b)(ii) election, by eliminating s. 256(2)(a) transitivity, reduces the reduction for taxable capital employed in Canada
2017-10-18 5 June 2017 Internal T.I. 2014-0561391I7 F - Deemed security pursuant to 220(4.51)
Income Tax Act - Section 220 - Subsection 220(4.51) s. 220(4.51) exemption from providing security for deferred emigration tax on up to $100,000 of capital gains is available for larger gains
2017-10-04 27 June 2017 External T.I. 2017-0708951E5 F - TSFA - Conditions Income Tax Act - Section 146.2 - Subsection 146.2(4) (apparently permitted) covenant in TFSA declaration requiring asset minimum to support loan to holder
Income Tax Act - Section 146.2 - Subsection 146.2(2) - Paragraph 146.2(2)(a) negative covenant in favour of lender to TFSA holder permitted
2017-09-13 21 July 2017 Internal T.I. 2017-0714931I7 F - Retiring allowance - Sick Leave Income Tax Act - Section 248 - Subsection 248(1) - Retiring Allowance payout of accumulated (non-excess) sick leave credits on termination of employment was a retiring allowance
Income Tax Act - Section 248 - Subsection 248(1) - Death Benefit includes payout on death of accumulated (non-excess) sick leave credits
Income Tax Act - Section 5 - Subsection 5(1) payout on termination of accumulated sick leave credit is employment income to extent otherwise would have been paid at year end
2017-09-06 28 October 2016 External T.I. 2016-0654331E5 F - Transfer of rights to income Income Tax Act - Section 9 - Nature of Income where rental lands purchased subject to obligation to pay the rents to vendor, rents did not have quality of income to purchaser under s. 9
Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense where rental lands purchased subject to obligation to pay the rents to vendor, no income inclusion and deduction of the rents by the purchaser under ss. 9 and 18(1)(a)
Income Tax Act - Section 56 - Subsection 56(4) where rental lands purchased subject to obligation to pay the rents to NAL vendor, s. 56(4) trumps s. 9 to include rents in purchaser’s income
Income Tax Act - Section 56 - Subsection 56(2) s. 56(2) could apply to shareholder of purchaser of lands if vendor did not pay FMV consideration for retaining rights to rents
2017-08-23 21 June 2017 External T.I. 2016-0678361E5 F - Capital Dividend Account Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (a) - Subparagraph (a)(i) - Clause (a)(i)A) negative ACB gain realized by a partnership is subject to the exclusion for s. 40(3.1) gains when allocated to a partner
Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) a negative ACB gain retains its character when allocated
2017-08-09 12 May 2017 External T.I. 2017-0683511E5 F - Purpose tests of a dividend or repurchase of share Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) - Subparagraph 55(2.1)(b)(ii) redeeming common shares otherwise than out of safe income may be GAARable
Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) using s. 55(3)(a) to distribute cash otherwise than from safe income likely abusive
Income Tax Act - Section 245 - Subsection 245(4) use of s. 55(3)(a) redemption exception to circumvent safe income limitation could be offensive
2017-08-02 12 July 2017 Ministerial Correspondence 2017-0697761M4 F - Publicité des plateformes Web étrangères Income Tax Act - Section 19.1 - Subsection 19.1(1) ads by Canadian advertisers on foreign websites generally are deductible
2017-07-26 28 June 2017 External T.I. 2016-0653921E5 F - Beneficiary/person beneficially interested Income Tax Act - Section 70 - Subsection 70(3) a testamentary trust could be a beneficiary or beneficially interested in an estate
Income Tax Act - Section 248 - Subsection 248(25) testamentary trust could be considered to have a right as beneficiary in estate
2017-07-12 21 November 2016 Internal T.I. 2016-0675761I7 F - Obligation de produire un T4A Income Tax Regulations - Regulation 200 - Subsection 200(1) artists’ union must issue T4A slips to incorporated artists respecting benefits received from the union
6 June 2017 External T.I. 2015-0617331E5 F - TFSA - Exempt Contribution Income Tax Act - Section 207.01 - Subsection 207.01(1) - Exempt Contribution - Paragraph (b) payment of family-law debt out of TFSA to surviving spouse would occur as a consequence of the deceased’s death
Income Tax Act - Section 248 - Subsection 248(23.1) - Paragraph 248(23.1)(a) payment of family-law obligation of deceased to surviving spouse out of deceased's TFSA could qualify

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