Translations of recent severed letters

Bundle Date Translated severed letter Summaries under Summary descriptor
2023-01-25 7 October 2022 APFF Financial Strategies and Instruments Roundtable Q. 4, 2022-0940941C6 - Stop-loss Rules 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
Income Tax Act - Section 80 - Subsection 80(13) s. 80(13) tax liability does not arise until the forgiveness
7 October 2022 APFF Roundtable Q. 10, 2022-0942161C6 F - Règles particulières sur les changements d’usage Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c) no change in the regular use under s. 45(1)(c) where a property regularly alternates between personal and rental use
Income Tax Act - Section 45 - Subsection 45(2) where s. 45(2) election is made on change to rental use, no change of use when the property changes back to actual personal use
7 October 2022 APFF Roundtable Q. 11, 2022-0942751C6 F - Changement de fin d'exercice et opposition Income Tax Act - Section 249.1 - Subsection 249.1(7) a corporation cannot change its year end by objecting to the 1st year’s initial assessment
Income Tax Act - Section 165 - Subsection 165(3) CRA will not vacate an assessment that was not invalid or unfounded
7 October 2022 APFF Roundtable Q. 12, 2022-0950691C6 F - Revenu de location - DPE Income Tax Act - Section 129 - Subsection 129(4) - Income or Loss rental income from the smaller portion of a building not used in manufacturing could be assimilated to active business income
Income Tax Act - Section 248 - Subsection 248(1) - Property building treated as a single property for purposes of principal use test
7 October 2022 APFF Roundtable Q. 13, 2022-0942181C6 F - Transfer of an RRSP at death Income Tax Act - Section 248 - Subsection 248(23.1) - Paragraph 248(23.1)(a) s. 248(23.1)(a) does not deem the amount paid to be received as beneficiary of the estate as per s. 146(8.1)
Income Tax Act - Section 146 - Subsection 146(8.1) an amount paid by an estate of the deceased’s RRSP to satisfy the claim of his separated surviving spouse did not qualify as a refund of premiums
7 October 2022 APFF Roundtable Q. 14, 2022-0942191C6 F - Safe-income determination time Income Tax Act - Section 55 - Subsection 55(1) - Safe-Income Determination Time incorporation of Buyco may trigger safe-income determination time
Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) no need for CRA flexibility regarding safe income issues arising from early formation of a Buyco

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