Translations of recent severed letters

Bundle Date Translated severed letter Summaries under Summary descriptor
2014-01-22 3 January 2014 External T.I. 2013-0514021E5 F - Subsection 55(2) - redemption of shares Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) dividend recipient unrelated to nephew's company; "small" percentage not "significant;" previous estate freeze might be part of series
18 December 2013 External T.I. 2011-0414841E5 F - All interests vested indefeasibly Income Tax Act - Section 108 - Subsection 108(1) - Trust - Paragraph (g) s. 75(2) trust made non-discretionary to avoid 21-year rule
2014-01-15 15 October 2013 External T.I. 2013-0498001E5 F - Transfert de sommes inutilisées entre régimes Income Tax Act - Section 248 - Subsection 248(1) - Private Health Services Plan transfer from individual healthcare spending account to another PHSP is permitted
28 November 2013 External T.I. 2013-0504221E5 F - Fin d'années réputées Income Tax Act - Section 249 - Subsection 249(3.1) Amalco not a continuation of predecessors for election purposes/ "immediately before" treated as one minute before
8 October 2013 External T.I. 2011-0428931E5 F - Assurance-invalidité Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose non-deductibility of disability insurance premiums
Income Tax Act - Section 9 - Exempt Receipts/Business proceeds received as a result of business credit card insurance were not income
15 October 2013 Internal T.I. 2013-0491951I7 F - Travaux en cours au moment du retrait d'un associé Income Tax Act - Section 34 no new s. 34 election required if s. 98(6) or (5) applies/election can be made in income reconciliation
18 December 2013 External T.I. 2013-0479421E5 F - Section 30 and Cranberry Farm Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense initial cranberry plant planting is a cost of land
Income Tax Act - Section 30 costs of clearing, levelling and draining lands, but not of constructing basins, for a cranberry farm are currently deductible
Income Tax Regulations - Schedules - Schedule II - Class 17 - Paragraph 17(c) costs of constructing cranberry farm basins included in Class 17
Income Tax Regulations - Schedules - Schedule II - Class 6 costs of constructing irrigation pond included
Income Tax Regulations - Schedules - Schedule II - Class 8 irrigation system included, drainage costs deductible under s. 30
30 October 2013 External T.I. 2013-0500831E5 F - Frais de bureau à domicile Income Tax Act - Section 8 - Subsection 8(13) inapplicable where corporation uses its individual shareholder's office
Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose to deduct applicable home expenses, individual shareholder must charge rent to corporation using home office
Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c) incidental rental use of home does not result in part disposition
12 November 2013 Internal T.I. 2013-0497611I7 F - Feuillet T1204 Income Tax Regulations - Regulation 237 - Subsection 237(2) T1204 disclosure applicable only where contract with federal supplier and includes travel reimbursements as “services” consideration
11 October 2013 APFF Roundtable, 2013-0495771C6 F - Late eligible dividend designation Income Tax Act - Section 89 - Subsection 89(14.1) late designation generally available where CRA, contrary to grounded expectations, denied small business deduction status thereby retroatively creating GRIP/late designation cannot be used to delay GRIP computation
11 October 2013 APFF Roundtable, 2013-0495681C6 F - Bien de remplacement Income Tax Act - Section 44 - Subsection 44(5) - Paragraph 44(5)(b) a different related person can use the replacement property in a similar business
11 October 2013 APFF Roundtable, 2013-0495631C6 F - Actions admissibles de petites entreprises Income Tax Act - Section 110.6 - Subsection 110.6(1) - Qualified Small Business Corporation Share failure to satisfy the 50% test for even a moment in time will disqualify
Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation 90% is generally a safe harbour, and in a particular context CRA may accept lower than 90%
11 October 2013 APFF Roundtable, 2013-0495641C6 F - Taux de rendement annuel moyen Income Tax Act - Section 110.6 - Subsection 110.6(9) average annual rate of return on estate freeze hi-low prefs based on redemption amount, not PUC
11 October 2013 APFF Roundtable, 2013-0495691C6 F - Clause restrictive Income Tax Act - Section 56.4 - Subsection 56.4(1) - Eligible Interest must be one, rather than more than one, underlying corp
Income Tax Act - Section 56.4 - Subsection 56.4(3) - Paragraph 56.4(3)(c) non-solicitation clause/divergence of covenanter and seller
Income Tax Act - Section 56.4 - Subsection 56.4(7) - Paragraph 56.4(7)(b) non-solicitation clause could be treated as part of a non-compete
Income Tax Act - Section 56.4 - Subsection 56.4(7) - Paragraph 56.4(7)(f) maintenance of Holdco fmv/divergence of seller and covenanter
11 October 2013 APFF Roundtable, 2013-0496511C6 F - Actions prescrites Income Tax Regulations - Regulation 6205 - Subsection 6205(2) simultaneous freezes by arm's length shareholders for their respective families to not qualify because the respective trusts/beneficiaries are not NAL with each freezor
11 October 2013 APFF Roundtable, 2013-0495671C6 F - Déduction d'une partie d'une créance irrécouvrable Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(p) - Subparagraph 20(1)(p)(i) 20(1)(p)(i) deduction for trade debts of a customer are determined on a receivable by receivable basis
Income Tax Act - Section 50 - Subsection 50(1) comparison of 20(1)(p)(i) and 50(1): latter requires full uncollectibility
2014-01-08 10 December 2013 External T.I. 2013-0480771E5 F - Winding-Up of a Corporation Income Tax Act - Section 88 - Subsection 88(2) deemed year end under s. 88(2)(a)(iv) is only for surplus computation purposes
2013-12-18 26 November 2013 External T.I. 2012-0449631E5 F - Amount deductible under paragraph 20(1)(e.2) Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e.2) reduction of deductible premium amount re pledged policy where net cost of pure insurance (“NCPI”) is lower than premiums
15 November 2013 Internal T.I. 2013-0478621I7 F - Transfer of intangibles - TP adjustments Income Tax Act - Section 247 - New - Subsection 247(2) group sale with Canco not charging for intangibles should engage s. 247(2)
Income Tax Act - Section 56 - Subsection 56(2) secondary adjustment re group sale with Canco not charging for intangibles
Income Tax Act - Section 69 - Subsection 69(4) s. 69(4) inapplicable where grandchild Canco undercharges for asset sale, enhancing sales proceeds received by ultimate U.S. parent
2013-12-11 18 November 2013 Internal T.I. 2011-0399581I7 F - Application of section 212(1)(d) ITA Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) - Subparagraph 212(1)(d)(i) seriatim benchmark lump sums, although not royalties, came within s. 212(1)(d)
Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) - Subparagraph 212(1)(d)(viii) cost-sharing agreement with catch-up payment provisions qualified
Treaties - Income Tax Conventions - Article 12 contingent payments came within broad Treaty definition of royalty
10 July 2013 Internal T.I. 2013-0475501I7 F - Amounts returned to trustee/beneficiary Income Tax Act - Section 104 - Subsection 104(13) family trust income distributed to children but repaid as reimbursement to father for family expenses was income to him, not them
Income Tax Act - Section 104 - Subsection 104(24) distributions to children immediately paid to father
Income Tax Act - Section 104 - Subsection 104(6) distributions to children immediately paid to father were deductible even though received by children as his agents
Income Tax Act - Section 105 - Subsection 105(1) payment of income distributions by children to father not a benefit under the trust

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