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(d) of the TCP definition (“RCP”) indirectly held by Canco, is $600 ($1,000 × 60%) – or 55% of all of the assets owned by Canco ($1,100), so that the Canco shares (the only asset of Canhold) cause the Canhold shares to be TCP to Forco. ... Similarly, the $400 value of the upstream loan should be deducted from the value of the Cansub shares, resulting in a $600 value (referred to as the "relevant FMV of the shares" by the CRA) – so that the prorated FMV of the Cansub shares derived indirectly from the RCP is $600. ...

Each such taxable dividend does not arise as a foundational component of a sanctioned divisive reorganization but, rather, has the potential, as in D & D Livestock, to effect a significant reduction in a capital gain on any share, a significant reduction in the fair market value of any share, or a significant increase in the total cost of property of the dividend recipient…. ... [T]o neutralize that threat, amended paragraph 55(5)(f) (and new subsection 55(2.3) for high-low stock dividends) (collectively, the " bifurcation rules ") now compel die distribution of safe income on hand pursuant to a taxable dividend…. ... In contrast, if the bifurcation rules divide the whole taxable dividend into a safe-income dividend and a non-safe income dividend before the "purpose" of either divided is ascertained … [o]nly the purpose of the non-safe income dividend … must be ascertained. … [C]onsider where a taxpayer miscalculates its safe income on hand before undertaking a safe income crystallization. ...

However,…the term must be interpreted in context. … Office Overload … held that the vendor was not a "person” for the purposes of section 85D, on the basis that the provision was intended to apply only to persons who "fall to be taxed or otherwise dealt with under the provisions of the Canadian Income Tax Act and who report to the Canadian Government the income arising from the operation of the business… Holiday Luggage … held that a corporation referred to in section 256 did not include a non-resident corporation that did not carry on business in Canada. Lea-Don Canada … held that … It is clear that s. 20(4) is concerned with taxpayers entitled to a deduction, not with persons who are not subject to assessment under Part I. ... Oceanspan … stated: [A] non-resident without income from Canadian sources can never be liable to pay tax under the Act on its foreign income. ...

[fn 6: This characterization has recently been confirmed in … 2003-0006645 …] However, an Extendible Step-Up Note should not be considered a prescribed debt obligation for these purposes, as a holder of an Extendible Step-Up Note has no present right, at the time that the note is acquired, to any interest beyond the initial maturity date or extended maturity date, as the case may be…. ...

.-- summary under Subsection 248(25.4) Summary Under Tax Topics- Income Tax Act- Section 248- Subsection 248(25.4) Example of sale of ½ of capital interest plus ½ of right to enforce income payment (p.271) [A]ssume that a beneficiary's capital interest in a unit trust initially consists of 1,000 units purchased for $10,000 on December 23, 2015. ... Consequently, the total adjusted cost base of the 500 units sold is $5,200: $5,000 + $200. ...

[fn: 58: See … Viking Food … and Ekamant Canada] …. [Finance’s] commentary associated with the application of the strategic business expansion exception in subsection (16) … would imply that the deeming rule under 212.3(25) is not intended to supplant any party who would otherwise be considered to have control in the absence of such deeming rule…. [T]he most appropriate … approach to determine whether a non-resident corporation controls a CRIC in the context of a partnership is to apply a two-part test (the “Two-Part Test”): one examining control under the current state of affairs and the second under the legal fiction created by the deemed ownership rule. ... The shares of this Canadian general partner, in turn, will be owned by one or more individuals- likely principals of the private equity firm. … This first alternative private equity structure works well in a situation where the fund is at the beginning stages of its life cycle…. ...

Brian Kearl, Carl Deeprose, "Leaving Canada's New High Tax Rate Regime: Considerations, Tips and Traps", 2016 Conference Report (Canadian Tax Foundation),32:1-24-- summary under Article 4 Summary Under Tax Topics- Treaties- Income Tax Conventions- Article 4 Test of a permanent home available (p. 32:9) In Salt, … [t]he appellant successfully argued that the tie-breaker rules deemed him to be resident in Australia because he had leased his house in Canada to an unrelated third party on arm's length terms and conditions, and therefore did not have a permanent home available in Canada. ... The CRA's position is that a home in Canada that is leased to someone other than "a third party on arm's length terms and conditions" counts as a permanent home that is "available" to the individual. … Test of centre of vital interests (p.32:10) In Gaudreau, … the Court ruled that … if a person who has a home in one state sets up a second in the other state while retaining the first, the fact that he retains the first in the environment where he has always lived, where he has worked, and where he has family and possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first state. ...

For 2011 and later periods, these items include ■ exempt surplus dividends received (or deemed to have been received) from another foreign affiliate; ■ tax refunds or credits received by a shareholder affiliate in respect of exempt surplus dividends received from another foreign affiliate; ■ taxable dividends received by an affiliate from a corporation resident in Can­ada that would be deductible under section 112 if the dividend were instead received by the Canadian taxpayer in respect of which the affiliate is a foreign affiliate; ■ certain amounts in respect of tax payments or tax losses in a consolidated group added under regulation 5907(1.02), (1.1), or (1.2); and ■ certain adjustments under regulation 5905, such as those required under the fill-the-hole rule in regulation 5905(7.2). Inclusion in exempt earnings of taxable gain already recognized in Canada or abroad (p. 1257) …[E]xempt earnings include ■ the taxable portion of capital gains from dispositions of capital property used in active business operations that, if the dispositions are internal, have been recognized under foreign tax laws as required by regulation 5907(5.l); and ■ the non-taxable portion of capital gains where the taxable portion of the cap­ital gain has been included in FAPI, either because the property was not excluded property or, if it was excluded property, because the disposition was subject to one of the rollover rules. ... Meaning of deduction from exempt loss (p. 1259) Regulation 5907(2.02) also potentially applies when a disposition of property gives rise to an amount that is deducted in computing exempt loss. … … Presumably the word "deduction" was intended to capture positive amounts that, when netted with negative amounts arising in the same year, result in an overall loss that is included in exempt loss. ...

See also … 2003-0019235] provide that trust property can be distributed to the children of the deceased in any circumstances before the spouse's death (for example, if the spouse remarries); [F.n.220 … 2002-0154435] or permit or require the trust to pay life insurance premiums. [F.n.221 … 2006-0185551C6] The CRA's view regarding life insurance on the life of the spouse is questionable. ... Although … Gilbert Estate … [F.n.222 83 DTC 645 (TRB).] … held that a son's disclaimer of his interest in a trust did not cleanse an otherwise qualifying spousal trust, Maria Elena Hoffstein noted that Gilbert Estate was decided before subsection 248(8) was enacted and may have been legislatively overturned by the enactment. ...

Marc-Antoine Mongrain, Jean-François Thuot, "Income, Phantom Income, and Phantom Deductions", Canadian Tax Focus, Vol. 15, No. 1, February 2025, p. 2-- summary under Paragraph 55(2.1)(c) Summary Under Tax Topics- Income Tax Act- Section 55- Subsection 55(2.1)- Paragraph 55(2.1)(c) CRA or ARQ treatment of not adjusting for phantom income or phantom deductions (pp. 2-3) At the 2024 " CRA Update on Subsection 55(2) and Safe Income: Where are we Now? ”, CRA departed from its previous interpretation of Kruco, and indicated that “phantom” income (i.e., income for ITA purposes not resulting in tangible cash inflows) should no longer be included in computing safe income. ... Example 2 Where Opco has revenue of $1 million, tangible expenses of $200,000 and a phantom deduction of $150,000 so that its net income is $650,000, and it pays taxes of $150,000, one can consider that the phantom deduction offsets the taxes payable (which otherwise would reduce the safe income attributable to the shares), and that $650,000 ($650,000 net income + [$150,000 phantom deduction − $150,000 tax]) is the resulting safe income contributing to the capital gain on the shares. ...