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When asked about its interpretation of “reasonable error,” CRA first stated that “[f]or the error to be reasonable, it must … be considered by an impartial person to be more likely to occur rather than less likely to occur based on the circumstances of the taxpayer.” ... CRA then gave the following examples of instances where CRA has accepted that there was reasonable error: The taxpayer's notice of (re)assessment) indicated an RRSP deduction limit of $0, where in fact the limit was a negative amount, so that the taxpayer may have mistakenly believed that the taxpayer was entitled to the $2,000 allowance …; The taxpayer, through no personal fault, had over-contributed due to inaccurate information provided on the RRSP deduction limit statement [or by] the CRA…; The taxpayer's RRSP deduction limit had been reduced retroactively, due to events such as the late submission of a pension adjustment or amended pension adjustment, or the late submission of an exempt past service pension adjustment or T215 slip … for exempt past service pension adjustments; The taxpayer, a TFSA holder, had made multiple contributions to and withdrawals from his TFSA with the objective of maintaining a TFSA account balance below the contribution limit. ...

This excess space could be used in the future in the manufacturing business if ABC Inc. were to need additional space – or, alternatively, the latter space might be leased to third parties for use as residential housing, so that such conversion to manufacturing use is not anticipated. ... However, there is nothing in the facts submitted … to support such a conclusion. ... (b)(ii) of the definition income is derived from property that is used or held principally for the purpose of gaining or producing income from an active business: [T]here are arguments to support the contention that the building used 65% by ABC Inc. in its manufacturing activities could be a property used or held primarily to earn income from its manufacturing business for the purposes of subparagraph (b)(ii) …. ...

On the subsequent sale, s. 74.2(1) would apply to attribute ¼ (i.e., $50,000/$200,000) of B’s taxable capital gain to A. ... Here, CRA assumed that the initial payment by A represented a loan to B as to ½ and that the return received by A on the sale of the property for $700,000 represented interest on that loan. Here, again, s. 74.2(1) generally would apply to attribute ¼ of B’s taxable capital gain to A, given that the requirements of s. 74.5(2)(c) for timely payment of interest on that loan would not have been satisfied. ...

Situation 1 – If Individual A had designated three siblings as equal beneficiaries under the FHSA in accordance with provincial law, would each sibling be required to report $10,000 in Year 2? Situation 2 – If Individual A’s estate had been designated as beneficiary under the FHSA in accordance with provincial law, would it be required to report $30,000 in Year 2? Situation 3 – If Individual A had not designated any beneficiary under the FHSA so that the FHSA proceeds were payable to the individual’s estate, whose residual beneficiaries per the will were the three siblings, would the estate be required to report $30,000 in Year 2. ...

. … As a result [of s. 9(3)], the appreciation in the value of a property that is capital property … is not in itself a source of income that is property. ...

Accordingly, Child X receives the Class E shares (that had not previously been encroached on) on turning 36 – whereupon Child X requests their redemption, thereby resulting in the receipt of a deemed dividend of $100,000. ... X's will – would also be considered an acquisition of property made as a consequence of Mr. ... X's death – so that from that time on, the conditions in s. 120.4(1.1)(b)(ii) will be satisfied and the income from those shares (including the deemed dividend) will be an excluded amount to Child X. ...

CRA responded: … Easingwood does not stand for the general proposition that an Attorney may create such trusts for the grantor of a Power of Attorney for Property. … CRA would expect that an Attorney that is contemplating the creation of an alter ego trust would seek the affirmation of the applicable court that the particular terms of the Power of Attorney for Property provide for such a power and that the terms of the proposed trust conform with the terms of the existing will and any other relevant agreements. ...

As such … this amount would not qualify as an "income or profit tax". No foreign tax credit could be granted in respect of the excess amount. … In addition, it would not be deductible under subsection 20(11). ...

. … Furthermore, the courts have repeatedly emphasized that the safe income on hand of a corporation should not be subject to double taxation. … Moreover, in a situation where a corporation declines to deduct its safe income on hand from the taxable dividend subject to subsection 55(2), for example, in order to convert the safe income on hand into a capital gain as part of a surplus stripping scheme, we are of the view that subsection 245(2) could be invoked. ...

. … Our response would remain the same in the case of a painting located in the office of a director who does not receive clients in that office …. ...