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4 June 2024 STEP Roundtable Q. 10, 2024-1010241C6- Update on trust / estate issues-- summary under Paragraph 104(6)(b) Summary Under Tax Topics- Income Tax Act- 101-110- Section 104- Subsection 104(6)- Paragraph 104(6)(b) an amount paid by a trust to a beneficiary is not deductible under s. 104(6) if it was not payable under the trust deed CRA referred to an unreported 2023 Tax Court of Canada decision (which has not been appealed), which concerned a family trust that realized a substantial capital gain on the disposition of small business corporation shares, paid $100,000 to each of two minor beneficiaries in the same taxation year, and claimed the deduction therefor pursuant to s. 104(6)(b) – notwithstanding that the trust deed prohibited any distributions to designated persons in respect of the father. ...

10 October 2024 APFF Roundtable Q. 2, 2024-1028371C6- Transfert intergénérationnel d’entreprise – nouvelles règles-- summary under Paragraph 84.1(2.3)(i) Summary Under Tax Topics- Income Tax Act- Section 84.1- Subsection 84.1(2.3)- Paragraph 84.1(2.3)(i) parent remaining as director of the subject corporation would entail a retention of management A parent wishes to access the s. 84.1(2.31) or (2.32) rules regarding a transfer of shares of Parent Inc. ... Regarding the requirements in s. 84.1(2.31)(g) or s. 84.1(2.32)(h) for a timely transfer of business “management” to the children (specified in s. 84.1(2.3)(i) to refer to the direction or supervision of business activities), CRA stated: [W]here the parent remains a director of Parent Inc. and steps are not taken to completely and permanently cease to hold such office, within the time periods stipulated by paragraphs 84.1(2.31)(g) and 84.1(2.32)(h), including any longer period that is reasonable in the circumstances, the requirements of subparagraphs 84.1(2.31)(g)(ii) and 84.1(2.32)(h)(ii) would not be satisfied … regardless of whether the parent is the sole director or one of the directors, and regardless of whether the direction of the day-to-day activities is in the hands of the children. ...

26 February 2025 Internal T.I. 2023-0985151I7 F- Remboursement de frais juridiques par un actionnaire à sa société / Reimbursement of legal fees by a shareholder-- summary under Subparagraph 42(1)(b)(ii) Summary Under Tax Topics- Income Tax Act- Section 42- Subsection 42(1)- Paragraph 42(1)(b)- Subparagraph 42(1)(b)(ii) s. 42(1)(b)(ii) might apply to the vendor’s agreed reimbursement, post-sale, of the sold corporation’s legal costs of a failed suit An individual agreed to sell all the shares of a corporation except that he also agreed with the purchaser that he would retain a preferred share in that corporation on which he would receive a dividend equal to a percentage of any damages award to the corporation in its action against a 3 rd party for lost profits – but that if the law suit was unsuccessful, he would reimburse the corporation for certain of its legal fees. ...

11 October 2019 APFF Financial Strategies and Instruments Roundtable Q. 8, 2019-0811901C6 F- RRIF – Minimum amount after death-- summary under Subsection 146.3(6.11) Summary Under Tax Topics- Income Tax Act- Section 146.3- Subsection 146.3(6.11) deduction of RRIF minimum amount in post-terminal year of transfer out of deceased's RRIF to surviving spouse Monsieur, who died in November, bequeathed all his RRIF to his surviving spouse. ... (b) There is … no requirement for a RRIF issuer to pay the minimum amount by withdrawing from a retirement income fund after the death of the last annuitant. … Where the designated benefit is received by the spouse or common-law partner in the year following that of the death of the last annuitant of a RRIF, the eligible amount will be equal to the designated benefit after deducting the minimum amount to be withdrawn from the RRIF for the year in which the benefit is received. ...

5 October 2012 Roundtable, 2012-0453201C6 F- Règles d'attribution- séparation & décès-- summary under Subsection 74.5(3) Summary Under Tax Topics- Income Tax Act- Section 74.5- Subsection 74.5(3) s. 74.5(3) busting of attribution occurs even if they were living separate and apart for under 90 days before the death of the transferee common-law spouse Two common-law partners- within the meaning of s. 248(1)- separated on June 1, 2012 and started living separate and apart because of a breakdown of their common-law relationship. ... Respecting Q.2, CRA noted that, in light of s. 74.5(3)(a), s. 74.1(1) would not apply to the 2 ½ months’ of rental income and the recapture, so that it would be included in the Transferee's income; and that provided a s. 74.5(3)(b) election was made, s. 74.2(1) would not apply to attribute the amount of the taxable capital gain to the Transferor. ...

29 November 2016 CTF Roundtable Q. 1, 2016-0669301C6- GAAR & 21-year rule planning-- summary under Subsection 104(5.8) Summary Under Tax Topics- Income Tax Act- 101-110- Section 104- Subsection 104(5.8) making a s. 107(2) distribution to a corporate beneficiary held by a new trust is an abusive circumvention of the s. 104(4) 21-year rule A discretionary trust (Old Trust) that is approaching its 21st anniversary distributes property with an unrealized gain to a corporate beneficiary (Canco) that is wholly owned by a newly-established discretionary trust (New Trust – also resident in Canada) under s. 107(2). ...

2 February 2017 Quebec CPA Individual Taxation Roundtable Q. 1.7, 2016-0674811C6 F- Allocations automobiles & dépenses afférentes-- summary under Paragraph 8(1)(h.1) Summary Under Tax Topics- Income Tax Act- Section 8- Subsection 8(1)- Paragraph 8(1)(h.1) if vehicle allowance is too low, employee can include the allowance and deduct the vehicle expenses/T2200 production expected In discussing the situation where an employer limits the number of kilometers travelled by an employee in the course of employment for which it will pay a per-kilometer allowance, e.g., where the employer will stop paying once 10,000 kilometers have been driven in any year, or it does not pay for the first 20 km travelled in each employment-related trip, CRA stated: In such cases, an allowance may not be high enough in relation to expenses that an employee is expected to incur in a specific situation, and thus not be reasonable. ... An employee may, however, if all of the requirements are met, claim the deductions provided in paragraphs 8(1)(h), (h.1) or (j). … In addition, the CRA has stated…that where an employee elects to include in income the amount of a non-taxable motor vehicle allowance, the taxpayer can deduct the expenses for that vehicle which were actually incurred and which are otherwise deductible on condition that the taxpayer can demonstrate that such expenses are in excess of the allowance in question. ...

16 January 2017 Internal T.I. 2016-0651411I7- Reassessment period – transfer pricing-- summary under Subparagraph 152(4)(b)(iii) Summary Under Tax Topics- Income Tax Act- Section 152- Subsection 152(4)- Paragraph 152(4)(b)- Subparagraph 152(4)(b)(iii) s. 152(4)(b)(iii) permits a reallocation of taxable income among provinces where a taxpayer’s sales revenue has been increased under s. 247(2) Two years after the normal reassessment period, a transfer-pricing adjustment (“TPA”) is made under s. 247(2) respecting sales of goods to a non-resident affiliate at an undervalue, with the TPA increasing the “gross revenue” of the corporate taxpayer. ... [T]he CRA administers the tax legislation for several provinces. … Accordingly… the Minister may assess or reassess a taxpayer within 3 years after the normal reassessment period in respect of the computation of taxable income earned in the year in a province… to the extent of any transaction involving the taxpayer and a non-arm’s length non-resident person. ...

16 June 2017 External T.I. 2017-0698181E5- New principal residence rules & trusts-- summary under Subsection 40(6.1) Summary Under Tax Topics- Income Tax Act- Section 40- Subsection 40(6.1) s. 40(6.1) protected trust gain that accrued up to December 31, 2016 The estate of Deceased Parent, that qualified as a graduated rate estate (GRE) with a fiscal period of July 1, 2016 to June 30, 2017, sold the principal residence of the Deceased Parent in 2017 during that fiscal period at a gain. ... …[T]he transitional relief offered by proposed subsection 40(6.1) would be applicable in the scenario presented to any portion of the … gain that accrued up to December 31, 2016. ...

6 October 2017 APFF Roundtable Q. 14, 2017-0720321C6 F- GAAR & 21-year rule planning-- summary under Paragraph 104(4)(a) Summary Under Tax Topics- Income Tax Act- 101-110- Section 104- Subsection 104(4)- Paragraph 104(4)(a) Act does not contemplate any deferral beyond 21 years while property is directly in a discretionary trust or through a Canco If the terms of a discretionary family trust (“Old Trust”) so permit, the trustees (as the 21 st anniversary approaches) could choose to distribute the trust property to a corporate beneficiary (“Canco”), whose shares are held by a new discretionary trust (“New Trust”). ... CRA then stated: Our response would not be different even if the transactions put in place ensured that the realization of the capital gain inherent in the transferred property could not be postponed beyond the lifetime of the Old Trust's discretionary beneficiaries, who could have received property directly before the 21st anniversary. … [T]he Act does not contemplate any deferral beyond a 21-year period while property is directly or indirectly held in a discretionary trust and therefore, this situation raises the same policy concerns as in the situation described above. ...