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In finding that the NCLs accumulated by Holdco likely could not be deducted in computing Amalco's taxable income in light of the ss. 87(2.1) and 111(5) restrictions, CRA stated: [O]n the limited basis of the facts submitted … it would be reasonable to consider that the business that generated the losses, namely the management services business that was carried on by Holdco prior to the acquisition of control … ceased to be operated after the amalgamation. This conclusion is based in particular on … the management activities performed by the Amalco employee [being] intended solely to support the corporation in the manufacturing field, and … not in themselves represent[ing] the carrying on of a business. … Regarding the factual variation where Amalco had two divisions: one carrying on the manufacturing business; and the second division for management services, including those previously rendered by Holdco to Opco, CRA stated: [C]reating two divisions with a separate financial statement for the management services and manufacturing businesses would not change our conclusion … that it would be reasonable to consider that the management services business that was carried on by Holdco ceased to be carried on after the amalgamation of Holdco and Opco. ...

CRA responded: In general terms, the determination of whether an obligation has been disposed of for Canadian income tax purposes depends on whether these events are considered to result in the discharge of the obligation and the substitution of a new obligation under the law governing the former obligation …. Where the governing law is Canadian … making a RFR Amendment to an IBOR Instrument to accommodate the transition from IBOR to RFRs, in and of itself, would generally not constitute a disposition of the IBOR Instrument …. Where foreign law governs an obligation … the legal effect of these events on such an obligation under the relevant foreign law must be considered in order to determine if the obligation has been disposed of …. ...

7 October 2020 APFF Roundtable Q. 6, 2020-0852181C6 F- Par. 5(2)(b) of the Employment Insurance Act-- summary under Paragraph 5(2)(b) Summary Under Tax Topics- Other Legislation/Constitution- Federal- Employment Insurance Act- Section 5- Subsection 5(2)- Paragraph 5(2)(b) CRA now applies a “proportionate attribution approach” in applying the s. 5(2)(b) test of “control … of … voting shares” Équipements Boifor, 2019 CAF 69 concluded that two shareholders did not have insurable employment by virtue of s. 5(2)(b) of the EIA given that they controlled more than 40% of Boifor's shares, taking into account those individuals’ shares held indirectly through a holding corporation, even though the shares were held on a 50-50 basis and no one individually held control of the holding corporation. ... CRA responded: In light of the FCA's decision, the CRA must now consider the proportionate attribution approach in similar situations to determine whether the employment of a person who controls more than 40% of the voting shares of the employing corporation is insurable. … … The proportionate attribution approach leads to the conclusion that the two shareholders each control more than 40% of Opco's voting shares (50% of 100%) for the purposes of EIA paragraph 5(2)(b). … The approach remains the same where the shareholders held 51% and 49% of the voting shares of Holdco, respectively. ...

Y would not constitute "split income" … [as it] is not an amount described in paragraphs 120.4(1)(a) to 120.4(1)(e) of the definition of "split income". There may, however, be abusive situations where the CRA would consider the use of the general anti-avoidance rule …. [f]or example … if it were found that the transactions were put in place to circumvent the application of the TOSI provisions. … Furthermore, it should be noted that the $400,000 allocated and distributed to Child Y by the family trust could, depending on the facts of the situation, constitute "split income" to Child Y …. ...

. … There is no established principle (or rule of law) in Canadian jurisprudence that provides that the nature of a debtor's trade debt or of a debtor's gain from the forgiveness of a trade debt changes automatically merely because of the passage of time in a taxation year or a number of taxation years. … British Mexican has been distinguished in a number of subsequent Canadian decisions, including Alco Dispensing … [indicating that] the release of the liability to pay the bonuses could not be treated as having changed the character of the liability, … [and] it was contrary to common sense … to assert that the passage of a year end effects some sort of a magical conversion of executive compensation operations from current account transactions to capital account transactions. ...

In confirming this interpretation, CRA stated: [P]aragraph 84.1(2.3)(b) … does not apply for the purposes of section 110.6 … and, therefore, it does not reduce a taxpayer’s capital gains deduction. In addition, paragraph 84.1(2.3)(b) … does not otherwise affect a taxpayer’s ability to rely on the deeming rule in paragraph 84.1(2)(e) …. ...

Is the capital loss as computed before the application of s. 40(3.6) attributed to X or to the protective trust, and is it added to the ACB of the trust's or X's shares – and would the answers change if all the shares were held by the trust? CRA responded (TaxInterpretations translation): … 5(a) … Subsection 108(5) does not have the effect of modifying the application of subsection 75(2). In our view, the net rental income from the lease of the real property transferred to the trust...preserves its nature and the transferee must include this net rental income in his or her return of income. … For purposes of calculating the "RRSP deduction limit" of the person subject to subsection 75(2) …the income from the rental property…is included in his or her "earned income"…. … 5(b) …A loss deemed to be nil under paragraph 40(3.6)(a)(i) cannot be attributed to anyone. ...

CRA responded: Generally … to be a right or thing … the individual would have to be legally entitled to receive the amount at the time of the individual’s death (the right would have to exist) and the value of that right would have to be determinable at that time. … By virtue of paragraph 138.1(1)(f), the taxable income of the related segregated fund trust is deemed for the purposes of subsections 104(6), (13) and (24) to be an amount that has become payable in the year to the beneficiaries under the segregated fund trust and the amount therefor in respect of any particular beneficiary is equal to the amount determined by reference to the terms and conditions of the segregated fund policy. … We understand that, regardless of the method of income allocation used by the insurer, no amount is actually paid or payable to a related segregated fund policyholder in respect of income allocations made by the insurer. ... Consequently, income and capital gains allocated to a related segregated fund policyholder in accordance with the terms of the policy … are not rights or things for the purposes of subsection 70(2) …. ...

CRA responded: [O]n the limited basis of the facts submitted … it would be reasonable to consider that the business that generated the losses, namely the management services business that was carried on by Holdco prior to the acquisition of control and prior to the amalgamation of Holdco and Opco, ceased to be operated after the amalgamation. This conclusion is based in particular on … the management activities performed by the Amalco employee [being] intended solely to support the corporation in the manufacturing field, and … not in themselves represent[ing] the carrying on of a business. … [C]reating two divisions with a separate financial statement for the management services and manufacturing businesses would not change our conclusion … that it would be reasonable to consider that the management services business that was carried on by Holdco ceased to be carried on after the amalgamation of Holdco and Opco. ...

A's loss is not a "superficial loss" …. [T]he RRSP trust under which Ms. ... However, the RRSP trust does not own the substituted property or have the right to acquire it at the end of the [30-day] period …. ... B's RRSP trust had instead reacquired the shares on October 2, 2021 … subparagraph 40(2)(g)(i) would not apply …. ...