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Regarding the latter, it stated: [A] reasonable one-time guarantee fee … paid respecting the term of the loan would generally be deductible pursuant to paragraph 20(1)(e), taking into account the application of subsection 18(9), if applicable. ...

CRA indicated that, no, its position remained that premiums payable in respect of a CII policy assigned as security for a loan of the corporation cannot be deducted in computing its income from a business or property pursuant to s. 18(1)(b) since they constitute capital expenditures, and that they are not deductible pursuant to s. 20(1)(e), (e.1) or (e.2) – and that this position would not change if the CII policy was assigned to the lender by naming the lender as the beneficiary of the policy or by way of a movable hypothec. ...

CRA characterized the arrangement as one under which the client invested $21,000 in the GIC, of which $20.842.50 came from the client’s own funds and $157.50 came from the commission received by the broker from the bank which it applied to the payment of the balance of the client’s GIC – so that the cost of the GIC to the Client was $21,000. ...

However, CRA instead characterized the arrangement as one under which the client invested $21,000 in the GIC, of which $20.842.50 came from the client’s own funds and $157.50 came from the commission received by the broker from the bank which it applied to the payment of the balance of the client’s GIC – so that the cost of the GIC to the client was $21,000. ...

Although the Income Tax Rulings program is there to provide advance comfort on the tax consequences of a transaction, as noted in IC70-6R12, CRA will not confirm the fair market value of a property, and the Rulings program is not in a position to verify the facts provided – and there are also timing considerations. ...

29 November 2022 CTF Roundtable Q. 3, 2022-0949771C6- Post-closing adjustments and the impact to escrow shares-- summary under Subsection 84(3) Summary Under Tax Topics- Income Tax Act- Section 84- Subsection 84(3) cancellation of escrow shares triggered a deemed dividend Under an agreement for the sale of a corporation (Target) solely for shares of the purchaser, which were validly issued on the closing, a portion of such shares were placed in escrow at the time of their issuance – then were cancelled to satisfy an obligation of the vendor to repay a downward adjustment to the purchase price equal to such shares’ value (which exceeded their paid-up capital). ...

20 June 2023 STEP Roundtable Q. 7, 2023-0959581C6- Deemed Resident Trust and the Resident Portion-- summary under Subparagraph 94(2)(g)(iv) Summary Under Tax Topics- Income Tax Act- Section 94- Subsection 94(2)- Paragraph 94(2)(g)- Subparagraph 94(2)(g)(iv) application where a s. 94 trust lent to a resident beneficiary, and when loan repaid Regarding where a loan is made by a non-resident trust (which has made a valid (resident portion) election under s. 94(3)(f)) to a Canadian resident beneficiary, CRA noted that s. 94(2)(g)(iv) provides that the loan to the beneficiary involves the acquisition by the trust of the debt which entails a deemed transfer by the debtor – so that, here, there is a deemed transfer of property from the beneficiary to the trust. ...

Regarding the computation of the benefit, in cases where the fair market rent did not provide a reasonable return on the value of the property, the amount of the benefit is to be determined using the imputed rent approach – which in general entailed multiplying what would generally be a normal rate of return for the non-resident corporation by the greater of the cost and fair market value of the property, and adding operating costs other than interest paid on liabilities connected with the property. ...

Regarding the situation where the parties had made the election in their contractual agreement without knowing that they were required to report their election in a letter pending the prescribed form becoming available, CRA indicated that, given that s. 56.4(7)(g) was one of the provisions prescribed in Reg. 600, application could be made to extend the prescribed time for filing the election – and that this discretionary power would be exercised in light of the guidelines set out in IC 07-1, Taxpayer Relief Provisions. ...

No discretion is afforded the Minister or the Minister’s agents …. [T]he Minister was bound to apply Parliament’s direction in the Act, as interpreted by a court of law, unless and until that interpretation is judged to be incorrect by a higher court. ...