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10 October 2024 APFF Roundtable Q. 6, 2024-1028881C6 F- Revenu protégé-- 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) safe income was not allocable to preferred share issued on s. 85(1) roll-in of goodwill Example 12 of the " CRA Update on Subsection 55(2) and Safe Income: Where are we Now? ” was essentially as follows: In Year 1: Holdco1 transferred goodwill with an FMV of $500 and nominal cost amount on a rollover basis to Opco in consideration for preferred shares with a $500 redemption amount and nominal dividend entitlement; and Holdco2 subscribed a nominal amount for Opco common shares. ...

CRA responded: The excess corporate holdings regime … places limits on a private foundation’s share ownership that also takes into account the holdings of any relevant person (defined in subsection 149.1(1) to generally mean a person not dealing at arm's length with the foundation). ... More specifically, subsection 188.1(3.5) deems a private foundation (or, in certain circumstances, a relevant person in respect of the foundation) to own shares that are actually held by a trust, in proportion to the value of the foundation's proportionate interest in the trust, where the … conditions in subsection 188.1(3.3) are met at a particular time in a taxation year …. …Whether subsections 188.1(3.3) to (3.5) apply to a particular situation is a mixed question of fact and law …. ...

. … Furthermore, in a situation where it was paragraph 55(2)(c) that applied, rather than paragraph 55(2)(b) … the deemed capital gain realized by the corporation for the taxation year in which the dividend was received from the disposition of a capital property could be distributed by it as a capital dividend only in subsequent taxation years. ...

The CRA’s Guidance on the Common Reporting Standard states that a “person is treated as a beneficiary if … they receive, directly or indirectly, a discretionary distribution from the trust … in the calendar year....” ... Of particular interest is that the UK chapter of STEP, in collaboration with the OECD, posted a Guidance Note on the interpretation of what “settlor” means in the CRS rules: 1.3 … [T]here may be trusts in existence where an individual (X) acts as the named settlor of the trust and contributes a nominal amount on its creation but where another individual (Y) then makes the substantive contribution of assets to the trust. ...

3 December 2024 CTF Roundtable Q. 3, 2024-1038151C6- Notifiable Transactions-- summary under Paragraph 237.4(4)(b) Summary Under Tax Topics- Income Tax Act- Section 237.4- Subsection 237.4(4)- Paragraph 237.4(4)(b) B2B reporting engaged where loan from immediate NR parent (funded in turn in part with debt from ultimate parent) bears reduced (10%) withholding References in NT 2023-05 to a designated transaction include: [S]ubsections 212(3.1) to (3.3) help to ensure that withholding tax under Part XIII is not circumvented through the use of back-to-back lending arrangements …. There are also character substitution rules in the Part XIII context. … A non-resident person (NR1) enters into an arrangement to indirectly provide financing to a taxpayer through another non-resident person (NR2). ...

CRA responded: [A] taxable dividend designated in favour of a particular beneficiary pursuant to subsection 104(19) will be deemed to have been received by the beneficiary at the time that is the end of the particular taxation year of the trust in which the trust received the dividend … [given that] the designation under subsection 104(19) could only occur at the end of the taxation year of a trust, since … paragraphs 104(19)(a) and (d) require that the designation is made in the [trust] income tax return … [and] it is only at the end of its taxation year that a trust will know its income for the year…. Accordingly … B Co. would be deemed to have received the taxable dividend on the shares of A Co. on December 31 … and …[a]t that date, A Co. and BCo. are not connected. Therefore, B Co. would be subject to Part IV tax …. ...

2 November 2023 APFF Roundtable Q. 6, 2023-0982831C6- Paragraph 12(1)(x)-- summary under Government Assistance Summary Under Tax Topics- Income Tax Act- Section 127- Subsection 127(9)- Government Assistance CAE followed CAE indicated that a government loan lacking sufficient "ordinary commercial terms" – including one that was made otherwise than to promote the governmental commercial interests or that has a below-market interest rate – will be considered "government assistance" within the meaning of ss. 12(1)(x) and 127(9). ... In the context of agreements of this nature, it seems to us that it is appropriate to use the "ordinary business arrangement" test developed in the jurisprudence (notably in Immunovaccine Technologies …) to determine whether the amount received constitutes government assistance for purposes of paragraph 12(1)(x). ...

10 October 2014 APFF Roundtable Q. 20, 2014-0534671C6 F- D&D Livestock-- summary under Subsection 245(4) Summary Under Tax Topics- Income Tax Act- Section 245- Subsection 245(4) unjustified duplication of fiscal attributes is abusive What is the CRA position on D & D Livestock? ... However, the CRA would not hesitate to invoke the GAAR in similar files. … The CRA considers among other things that transactions or series of transactions permitting the double utilization of the same amount of safe income in order to reduce a capital gain realized on an ultimate disposition of shares of a corporation are abusive and go against the object of subsection 55(2). ...

10 October 2014 APFF Roundtable Q. 20, 2014-0534671C6 F- D&D Livestock-- summary under Subparagraph 55(2.1)(b)(i) Summary Under Tax Topics- Income Tax Act- Section 55- Subsection 55(2.1)- Paragraph 55(2.1)(b)- Subparagraph 55(2.1)(b)(i) CRA is concerned by planining that can result in an unjustified duplication of fiscal attributes including ACB What is the CRA position on D & D Livestock? ... However, the CRA would not hesitate to invoke the GAAR in similar files. … The CRA considers among other things that transactions or series of transactions permitting the double utilization of the same amount of safe income in order to reduce a capital gain realized on an ultimate disposition of shares of a corporation are abusive and go against the object of subsection 55(2). ...

Liebig & Co. v Leading Investments Ltd., [1986] 1 S.C.R. 70, "the primary meaning of sale is the transfer of property to another for a price. ...