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31 August 2005 External T.I. 2005-0114421E5 F- Frais de garde d'enfants-- summary under Child Care Expense Summary Under Tax Topics- Income Tax Act- Section 63- Subsection 63(3)- Child Care Expense fees for breach of contract can qualify but not educational fees CRA commented on whether the following categories of expenses incurred by parents at a childcare centre qualified as child care expense: fees paid for child care services yes additional fees paid for child care services generally yes – “fees for additional child care (where the parent picks up the child after official daycare hours) are child care expenses … provided they satisfy the other requirements of that section” outings outside the daycare no – “the purpose of those activities is not to look after the children in order to protect them and thus enable the parents to earn employment income … [but instead] is to ensure the development of the children's physical, social and artistic skills” classes and activities given at the daycare; no – “the primary purpose of those courses and activities is not to provide childcare but rather to promote the cultural, physical and artistic development of the children.” fees incurred for breach of contract generally, yes – “ 2003-0183697 … [indicated] that the phrase ‘an expense incurred...for the purpose of providing… child care services’ found in subsection 63(3) was broad enough to include expenses incurred for the breach of a contract. This conclusion is valid as long as these costs are the result of an undertaking required of the parents in order for the child care to be provided.” interest charges paid by parents who pay their bills late no – these are not “charges that are … paid to provide childcare but rather to compensate the childcare centre when a parent fails to make a payment by the agreed date” annual dues for parents wishing to be on daycare's Board no fees for sunscreen and insect repellent yes ...

1 May 2020 External T.I. 2020-0846931E5- CEWS- public institution-- summary under Paragraph 149(1)(d.3) Summary Under Tax Topics- Income Tax Act- Section 149- Subsection 149(1)- Paragraph 149(1)(d.3) functional approach to determining the ownership of the “capital” of a non-share corporation In response to an inquiry on the Crown corporation branch of the definition of a public institution in s. 125.7(1) of the CEWS rules, CRA first paraphrased the rules in ss. 149(1)(d) to (d.6) as well as referring to the deeming rule in s. 149(1.1), and then indicated that, in determining the ownership of the “capital” of a non-share corporation for these purposes, it would consider the following factors: • the identity of members, • the structure of the corporation, • who exercises control over the financing, operation and direction of the corporation, • who has the right to elect or change the board of directors or to reverse its decision, • who can contribute capital and receive a distribution of capital, • details regarding asset distribution on winding-up or dissolution and • whether a person other than her Majesty in right of Canada, a province or a Canadian municipality has any right to acquire any capital of the corporation. ...

A under subsection 74.2(1) …. By virtue of paragraph 40(3.6)(b), the amount of the Denied Loss … could, however, be added to … the ACB, to Mr. B, of each of the common shares of the capital stock of Opco that is owned by him immediately following the disposition …. … [A subsequent] taxable capital gain or an allowable capital loss [realized by Mr. B] on the disposition of a common share … of Opco … would not be realized or sustained by Mr. ...

Accordingly … the provision of benefit coverage to non-unionized employees, in and of itself, would not disqualify the trust as a HWT. … [T]he provision of benefit coverage to retired employees or non-employees would not disqualify a trust as a HWT where the underlying plan or policy (i.e., a GSAIP, PHSP, or GTLIP) allows for the provision of benefit coverage to such individuals. … [A] GTLIP may only provide benefit coverage to current and former (including retired) employees. … …Folio S2-F1-C1 … clarifies that a trust funded only with contributions made by employees or an employee union would not qualify as a HWT. However … there is no explicit requirement that an employer be legally obligated to make contributions in respect of each plan or policy administered by a HWT. [W]here is it established that retired employees may be provided benefit coverage through a GSAIP, PHSP, or GTLIP, and none of the participating employers have a legal obligation to pay any premiums or contributions in respect of the particular plan or policy, it would appear permissible for a HWT to administer such a plan or policy provided that the trust also administers other employer-funded plans or policies. … A HWT may administer a plan that offers drug and alcohol rehabilitation services, provided the plan qualifies as a PHSP. … [A] plan that otherwise meets all of the conditions in paragraph 3 of … IT-339R2 … is considered a PHSP as long as all of the expenses covered under the plan are medical or hospital expenses (“medical expenses”) or expenses incurred in connection with and within a reasonable time period following a medical expense, and all or substantially all (generally 90% or more) of the premiums paid under the plan relate to the coverage of medical expenses that are eligible for the medical expense tax credit (“METC”). ...

[B]y reason of the subsection 256(9) election, a deemed taxation year end occurs … at the time immediately before 18:00 …. The corporation must take into account the taxation consequences of the asset sale and the rollover transaction… that occurred … in the corporation’s taxation year that terminated immediately before the effective time of the acquisition of control. … Furthermore, given that the amalgamation occurs after all the January 18, 20X1 transactions, including the acquisition of control … at 18:00 hours, the second taxation year of the corporation terminates immediately before the amalgamation by virtue of paragraph 87(2)(a). … The corporation would therefore technically have two taxation years that would be deemed to end during January 18, 20X1. The second … would be very short. ...

23 December 2003 External T.I. 2003-0014655 F- article 125.5-- summary under Taxpayer Summary Under Tax Topics- Income Tax Act- Section 248- Subsection 248(1)- Taxpayer province is a “taxpayer” exempt from tax In finding that the exclusion from “eligible production corporation” status where the corporation was “controlled directly or indirectly in any manner whatever by one or more persons all or part of whose taxable income is exempt from tax under [Part I]” applied to control (through another corporation) by the province, CCRA stated: … Braithwaite, 70 DTC 6001 … stated: “Her Majesty is just as capable … of being a "person taxable" as is an ordinary person … as is evidenced by the fact that there are various federal statutes that do impose direct and indirect taxes on Her Majesty in one way or another.” … We believe that Her Majesty in right of a province is a person and a taxpayer for the purposes of the Act. … [T]he exemption from tax under Part I of the Act referred to in paragraph (d) of the definition … refers not only to persons whose taxable income is exempt because of section 149 but also to persons whose taxable income is exempt because of, inter alia, the immunity from tax enjoyed by certain persons such as Her Majesty in right of a province. ...

We consider that the following factors would be relevant in making such determination: • the identity of members, • the structure of the corporation, • who exercises control over the financing, operation and direction of the corporation, • who has the right to elect or change the board of directors or to reverse its decision, • who can contribute capital and receive a distribution of capital, • details regarding asset distribution on winding-up or dissolution and • whether a person other than her Majesty in right of Canada, a province or a Canadian municipality has any right to acquire any capital of the corporation. ...

CRA stated: It appears … that the sale of the shares of Holdco B and Holdco A by Holdco C takes place as part of the same series of transactions as the share redemptions …. While it might be reasonable to conclude that the deemed dividends … do not affect the fair market value of the Holdco A and Holdco B shares (and consequently any capital gain realized by Holdco C on its disposition of such shares), such dividends would reduce a portion of the capital gain that, but for such dividend, would have been realized on a disposition at fair market value of any shares (i.e., the shares of Realco and Opco). … … If the shares of Opco and Realco represent more than 10% of the value of Holdco A and Holdco B.. then … clause 55(3)(a)(iii)(B) and clause 55(3)(a)(iv)(B) will technically apply. …[P]aragraph 55(3)(a) is intended to provide an exemption from the application of subsection 55(2) for certain dividends received in the course of related-party transactions. … [S]ince the other direct or indirect shareholders of Holdco A are not related persons, and the transactions … include a sale of Holdco A shares as part of the same series as the deemed dividends … the application of subsection 55(2) is operating as intended. ...

DSI of Holdco 2 after reorg: (DSI of Holdco 2 prior to reorg ($10) + $72 DSI considered to have been received from Opco per 2 above) x net cost amount of assets considered retained by Holdco 2 ($37 per 3 above, plus the $20 cost of other assets, totaling $57) / (net cost amount of assets of Holdco 2 “prior to” [sic] reorg ($57) + net cost amount of assets considered to have been received from Opco ($100 cost of Property 1)) = 82 x 57/157 = $30. 5. DSI of Holdco 2 considered to be transferred to Holdco 1: $82 – $30 = $52. 6. ... DSI of Holdco 1 after reorg: DSI of Holdco 1 prior to reorg ($1,000) + amount considered to have been received from Holdco 1 ($52) = $1,052. ...

The percentage of relevant Canadian property for TCPCo is 100% (equal to $2 M / $2 M x 100). … [T]he percentage of relevant Canadian property for AusCo is 0% (equal to $0 / $10 M x 100). ... The proportionate value approach as described in 2015-0624511I7 can be summarized as follows: the percentage of relevant Canadian property of a particular subsidiary entity should be multiplied by the FMV of the shares of that entity; and the product resulting from above is the prorated FMV of the shares of the particular subsidiary entity which represents the FMV of a relevant Canadian property asset indirectly held by the parent. … [T]his would result in BVCo having a percentage of relevant Canadian property of 67% = $1 M / $1.5 M. Since more than 50% of the FMV of BVCo’s shares is derived from real or immovable property situated in Canada, the shares of BVCo are TCP …. ...