Translations of recent severed letters

Bundle Date Translated severed letter Summaries under Summary descriptor
2014-01-15 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
Income Tax Act - Section 56 - Subsection 56(4) payment of distributed family trust income by children to father did not engage s. 56(4) as it was only potential income to him
11 October 2013 APFF Roundtable Q. 18, 2013-0495851C6 F - Safe income adjustments Income Tax Act - Section 54 - Adjusted Cost Base downward adjustment under price adjustment clause reduces shares' ACB
Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) CRA post-closing reassessment of Target's pre-closing income changes its SIOH
2013-12-04 19 November 2013 External T.I. 2012-0455731E5 F - Interprovincial income allocation Income Tax Regulations - Regulation 402 - Subsection 402(3) where franchisor takes over Ontario franchisee's operations, its royalties from other Ontario franchisees are not assimilated to the Ontario PE
19 November 2013 External T.I. 2011-0414201E5 F - Coop, ristournes, société de personne Income Tax Act - Section 135 - Subsection 135(1) a Coop dealing with an LP of which it is a partner has the LP as its customer, and not the LP customers
Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(a) customers of LP rather than of members
11 October 2013 Roundtable, 2013-0495801C6 F - Dividend Paid to Trust and Schedule 3 of T2 Income Tax Act - Section 104 - Subsection 104(19) s. 104(19) designation is not effective until year end of trust
Income Tax Act - Section 186 - Subsection 186(1) - Paragraph 186(1)(b) s. 104(19)-designated dividend is not received for s. 186(1)(b) purposes until year end of trust
11 October 2013 APFF Roundtable, 2013-0495811C6 F - De Facto Control Income Tax Act - Section 256 - Subsection 256(5.1) statutory right of chair to tie-breaking vote does not per se confer de facto control
2013-11-27 11 October 2013 Roundtable, 2013-0495281C6 F - Question 9 - APFF Round Table Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(l) transfer to RRSP or RRIF of surviving non-resident spouse: SIN required; payment can be made directly to RRSP/RRIF of surviving spouse in accordance with joint instructions even where no specific non-will designation is made
Income Tax Act - Section 146 - Subsection 146(8.1) deemed receipt of refund of premiums for amount paid to executor, with deemed benefit to recipient spouse
Income Tax Act - Section 146.3 - Subsection 146.3(6.1) transfer of RRIF by executor to RRIF of surviving spouse

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