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17 July 2016- 10:31pm CRA provides s. 55(3)(a) rulings conditional on the U.S. parents receiving, and waiving the right to object to, GAAR assessments to reduce outside Canadian basis that they “paid for” by paying 5% Canadian withholding tax Email this Content In connection with a s. 55(3)(a) distribution of a Canadian subsidiary (Canco3) to a sister chain of companies held by U.S. parents, Canco3 redeemed all but one of its common shares held by its immediate Canadian parent in consideration for a promissory note, thereby resulting in a step-up in its outside basis. ...

In finding that her bonuses were taxable to the taxpayer, Woods J found that there was no evidence that they were reasonably intended to compensate her for her duties of employment and, in particular, no evidence that her contribution was greater than her husband’s- and found, more generally, that there was no substantive connection between the reserve lands and the bonuses. ...

In any event, “’effectively connected with’ should be understood to mean having a real or actual connection with the activities carried on through the permanent establishment,” which was not the case here. ...

Before summarizing some of the s. 40(2)(g)(ii) jurisprudence, CRA states that The burden of demonstrating a sufficient connection between the taxpayer’s loan to (or the taxpayer’s guarantee of the debts of) the debtor and the potential for income will be much higher in situations where the taxpayer is not a direct shareholder of the debtor. ...

.$2.02 billion in the 2007 income of Petro-Canada as an imputed reimbursement to Petro-Canada by its UK subsidiary of the settlement payments (and assessed a s. 247(3) penalty for failure to prepare contemporaneous documentation in connection with the imputed reimbursement.) ...

“No significant assessments have come to light in connection with the treatment of the servicing...since... ...

In order to rely on the exemption from withholding tax under the Canada-US treaty, the Canadian requests a representation from the licensor that there is no licensing arrangement that may be caught by the connection test in the back-to-back rules. ...

10 May 2017- 12:01am Rio Tinto Alcan – Tax Court of Canada confirms the validity of a reassessment made without a proper audit in order to beat statute-barring Email this Content When the normal reassessment period for one of the taxation years of Rio Tinto Alcan (RTA) was about to expire, CRA had not received any waiver from RTA in connection with the items under review (SR&ED expenditures incurred through a joint venture, whose manager was uncooperative with CRA) because the form of waiver demanded by CRA was unreasonable. ...

14 November 2017- 12:13am Scott – Tax Court of Canada finds that compensation to former Nortel employees for loss of life insurance was non-taxable Email this Content In connection with the Nortel asset distributions, a Nortel health and welfare trust made lump sum payments in 2011 to various beneficiaries in satisfaction of their entitlement to payments under the trust. ...

The Directorate found that the lump sum was not a royalty on general principles and, in light of Farmparts (which stated that an exclusive right to buy and sell could, “under no circumstances, be said to constitute the use or the right to use” the product) likely also was not caught by s. 212(1)(d)(i), nor did the Directorate recommend challenging the characterization under the agreement of the licence of a trademark as being gratuitous (as the “Distribution Agreement does not contemplate an extensive use of the trade-mark, but only limited use in connection with the distribution, promotion and advertising of the product.”) ...