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CRA rules on a post-mortem pipeline where the estate is paid off over 3 years commencing 1 year after its transfer of the subject portfolio company to Newco

2 January 2023- 11:18pm CRA rules on a post-mortem pipeline where the estate is paid off over 3 years commencing 1 year after its transfer of the subject portfolio company to Newco Email this Content CRA ruled on a post-mortem portfolio under which: some of the preferred shares of the subject portfolio company (Holdco) were redeemed in its hand in order to generate the recovery of Holdco’s ERDTOH and NERDTOH and a capital loss to be carried back to the deceased’s terminal year pursuant to s. 164(6) the estate transferred, to a “Newco” formed by it, preferred shares of Holdco in consideration for a demand note ("Note 2") of Newco and a Newco common share (apparently, its only issued and outstanding share), electing under s. 85(1). after a period of at least one year following such transfer, Newco may progressively repay the note at the rate of 1/3 of its principal per year, with such repayments funded through Holdco redeeming preferred shares. after the expiry of a specified period of years, Newco will be wound up. ...

CRA finds that an employer’s lump sum contribution to an employee life and health trust in relation to future hires was non-deductible

In consideration for this discontinuance, it agreed to make contributions to a trust to fund certain designated employee benefits as described in s. 144.1(1) for the New Hires. ...

CRA finds that a rescission fee paid to the vendor of a B.C. residential property generally is not subject to GST

It also reiterated its position that generally damages payments not within s. 182 are not consideration for taxable supplies. ...

CRA will not change its GAAR positions in IC 88-2 and the Supplement as a result of the GAAR amendments

10 March 2024- 10:57pm CRA will not change its GAAR positions in IC 88-2 and the Supplement as a result of the GAAR amendments Email this Content Regarding the impact of Bill C-59 on the GAAR positions in IC 88-2 and IC 88-2 Supplement 1, CRA stated: [T]he application of the amended section 245 must be in accordance with the object, spirit and purpose of such provision and of the other provisions that are relied upon by the taxpayer as well as, ensure that economic substance receives proper consideration. ...

CRA finds that charges to a company for a negotiated municipal sewage plant expansion were for a taxable supply

CRA found that such charges were consideration for a taxable supply of wastewater treatment services made by the municipality, and that such supply was not an exempted supply of municipal services under ETA s. ...

CRA rules on a split-up butterfly entailing an immediate sale of distributed shares by one TC to the other

The shares of Subco2, which might be a significant subsidiary of DC, are split 50-50 between TC1 and TC2 on the butterfly, then TC1 sells its shares of Subco2 to TC2 for FMV consideration. ...

CRA indicates that fees paid by a land developer to a regional municipality to obtain approvals preliminary to receiving GST/HST-exempt permits from the local municipality are not also exempt

In rejecting a submission that such additional fees are part of the consideration for a single supply of the ultimate permits, CRA noted that “the provision of property and/or services by two or more suppliers generally indicates that multiple supplies are being made, even if the various supplies are provided together,” and that “many of the fees identified are payment for a separate supply, e.g., approval of a plan amendment or a condominium conversion.” ...

On the Agrium/PotashCorp merger, all shareholders would move to a new holdco and s. 85.1 treatment for non-electing shareholders would be busted through a 3-party exchange

The other shareholders would transfer their Agrium and PotashCorp shares to two new subsidiaries of New Parent (“Agrium AcquisitionCo” and “PotashCorp AcquisitionCo”) in exchange for the delivery to them of New Parent shares (with the two AcquisitionCos simultaneously issuing shares to New Parent as payment for the New Parent share consideration). ...

Evoy Estate – Tax Court of Canada finds that a s. 104(2) trust-consolidation designation requires that the respective trusts’ future income cannot accrue to different beneficiaries

Paris J stated that the quoted test “contemplate[s] a consideration of the right to receive the income of the trust over the entire lifetime of the trust rather than for each taxation year,” whereas here, after the death of the wife, the income of each trust went to a separate family rather than “ultimately accruing to the same group or class of beneficiaries.” ...

CRA accommodates a pension plan correcting excess borrowing on a going-forward basis through assumption of the debt by a 149(1)(o.2)(ii) sub

In this case, consideration should be given to requiring any excess investment earnings to be withdrawn from the Plan. ...

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