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Henry Shew, "Post Mortem Pipeline Fails for Non-Resident Beneficiaries", Canadian Tax Focus, Vol. 9, No. 1, February 2019, p. 1-- summary under Subsection 212.1(6) Summary Under Tax Topics- Income Tax Act- Section 212.1- Subsection 212.1(6) Result if s. 212.1 applies where a non-resident beneficiary (p. 1) [A]n estate has three beneficiaries- … and one is a non-resident—and the will provides that the residue … is to be divided equally among the three beneficiaries. ... If a regular pipeline transaction is performed by the estate—involving the sale of the shares of Opco to a newly incorporated Holdco in exchange for a promissory note—there is a deemed dividend equal to $33,300 … to the non-resident beneficiary…. 1 st s. 212.1 requirement: NAL relationship (under ss. 212.1(3)(b) and (a) (p.1) For section 212.1 to apply, the non-resident person and Holdco must not deal at arm’s length… [P]aragraph 212.1(3)(b) deems a beneficiary of a trust to own the shares that the trust actually owns…Thus, paragraph 212.1(3)(a) applies … and the non-arm's-length relationship of the non-resident person and Holdco is established. 2 nd s. 212.1 requirement: disposition to Newco under ss. 212.1(5) and (6) look-through rule (p.1) Another requirement for section 212.1 to apply is that the non-resident has disposed of Opco shares to Holdco. ...

", Canadian Tax Focus, Vol. 9, No. 4, November 2019, p.1-- summary under Subsection 125(5.1) Summary Under Tax Topics- Income Tax Act- Section 125- Subsection 125(5.1) Example of avoidance of s. 125(5.1) limitation where sub with realized passive gain is wound-up (p. 1) … Holdco…wholly owns an Opco that claims the SBD annually…. … Holdco also owns a second wholly owned subsidiary, Realestateco, which holds land with an accrued capital gain of $1 million. ... Even though Realestateco had a sizable capital gain in year 1, it is not considered for Opco’s SBD grind. … There are…two deemed association rules, neither of which should apply because Realestateco no longer exists: (1) subsection 125(5.2)…and (2) subsection 256(2.1)…. Second example: drop-down of passive asset to sub before it realizes gain and is wound-up (pp. 1-2) [I]nvestments are in Holdco, [and]…before triggering the capital gain in year 1, Holdco transfers the investments to a newly formed corporation (CGco) on a tax-deferred basis under subsection 85(1); and … before the end of year 1, CGco is wound up and legally dissolved with and CDA and RDTPH consolidated into Holdco.... ...

. … [A] listed financial institution that is registered for GST/HST can file returns and self-assess tax on imported taxable supplies on an annual basis. … [O]n the other hand, a registered entity may also have to file an annual information return if it is a “reporting institution” (ETA subsection 273.2(2)). … [W]hile an unregistered entity may have to remit tax on a monthly basis, a registered entity may have to pay tax only once or twice a year…. ... However, the CRA is increasingly refusing such applications; its reason is that the existence of a Canadian branch does not make the financial institution a Canadian resident for GST/HST purposes. … [A]ccording to ETA subsection 132(2), a non-resident person with a permanent establishment in Canada is considered to be resident in Canada in respect of the person's activities carried on through that establishment; thus, such a company should meet the definition of a listed financial institution resident in Canada (ETA paragraph 240(3) (c)) and should be allowed to register for GST/HST on a voluntary basis. ...

. … [T]he normal tax arising from the deemed disposition on death is supplemented by a deemed dividend from Opco to NR son of $100,000 (the FMV of property transferred by Opco to US FA). This occurs at the dividend time (defined in subsection 212.3(4)), which is one year after Opco capitalized US FA. … Effect of s. 212.3(26) (p. 9) NR son will be deemed to own 100 percent of the voting shares of Opco. Thus NR son is deemed to control Opco when Dad passes away. … Potential outs (pp. 9-10) The elective PUC reduction relief contained in section 212.3 is helpful only to the extent that Dad has capitalized Opco with more than nominal capital. … If Opco’s investment in US FA is a pertinent loan or indebtedness (PLOI), as defined in subsection 212.3(11), then the FAD amendments will not apply…. ...

Limitation to GREs (p.8) … We understand that Finance restricted the comfort letter to GREs in part because subsection 164(6) limits to one year the period within which loss carryback planning is available. In contrast, life interest trusts (LITs)—such as alter ego, spousal, and joint partner trusts—typically have three taxation years to carry back losses. … LITs are in a materially identical position to GREs …. Alternate transactions for life interest trusts (pp. 8-9) … Assume that the LIT transfers its shares of Opco for Holdco shares alone (that is, without receiving any non-share consideration). ...

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. ...

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. ...

Furthermore, it did so expressly taking a practical business view of what would constitute a directing mind (expressed as " de facto control of both sides of the transaction"). ... First, the willingness of the courts to take into account relatively subjective business considerations, such as strength of bargaining power, in finding a directing mind seems to have carried the latter concept a long way. …. ... Wiffen Financial (p. 16:19) In Wiffen Financial Services [… 2003 TCC 780 …], the issue was whether an employment relationship was at arm's length, thus constituting insurable employment pursuant to the Employment Insurance Act. ...

Formula One contravenes the requirement for separate-entity determination of a PE (p. 126) Philip Morris … held that an Italian corporation can be considered the permanent establishment of multiple non-resident members of the same corporate group. … [In response] paragraph 41.1 of The 20I0 Model Treaty Commentary on Article 5(7) (now paragraph 117 of the 2017 Model Treaty Commentary) states that: The determination of the existence of a permanent establishment under the rules of paragraph 1 or 5 of the Article must, however, be done separately for each company of the group. ... Control exercised analogous to that of franchisor (pp. 127-128) [T]he high degree of control provided for in its contract with Jaypee should be acceptable given FOWC's reasonable concern for preserving a quality product …. ... Inappropriate reliance on Fowler (p. 128) Fowler has never been followed in Canada …. ...

. … Maarsman v. Canada (CRA), 2003 FC 1234 … recognized the "absurdity" of assessing interest during years when no taxes were owing and held in the taxpayer's favour on an application for judicial review. ... Slau Limited, 2009 FCA 270 ….] Application to Agreeing Provinces (pp. 1184-5)... ... The third clause of section 94.1 of the TAA – the privative clause – was added in 1996. ...