Search - considered

Before reference were made to the prescribed debt obligation rule in Regulation 7000(2)(a) deeming discounts on stripped coupons or non-interest bearing debt to be interest, a zero-coupon bond could not be considered for these purposes to have been acquired as a (capital) investment as the bond does not generate interest income (Bernick), unless the discount from the bond's principal were be characterized as interest income on general principles (see " Discounts "). ... Loan discounts on purchases of distressed debt or venture capital investments Where an entrepreneur acquires the shares and debt of a company in financial difficulty with a view to turning the company around, so that the debt (which was purchased at a substantial discount from the amount owing) may be repaid in his or her hands at a substantial gain, any such gain subsequently realized by him or her will be considered to have arisen from an adventure in the nature of trade, and will be taxable (Sissons, Steeves, Woods, Perkins, Meronek, Hall, Bondar). ... It also would appear that the acquisition of a debt for its face amount (e.g., from an affiliate) is not a transaction of a type that a trader would engage in, so that such debt likely will be considered to have been acquired on capital account (Pollock Sokoloff). ...

Corporations Where a corporation is not deemed to be resident in Canada (for example, pursuant to s. 250(4) as a result of its incorporation in Canada after April 26, 1965), it generally will be considered to be resident in Canada (or another jurisdiction) if its central management and control is exercised there. ... Accordingly, where the directors meet to attend to the important decisions of the corporation's undertaking, the corporation will be considered to be resident (under this jurisprudential test) in the jurisdiction where they hold most or all of their meetings (1143132, Capitol Life, Wood v. ... The UK Supreme Court has indicated that whenever an individual has left the UK to pursue full-time employment abroad, it is likely that he will be considered to have made a "distinct break in the pattern of his life in the United Kingdom," and thereby ceased to be ordinarily resident in the UK, notwithstanding that he or she may not have severed his or her family and social ties with the UK (Davies). ...

The concept of "connectedness" is not defined, but for the purposes of these rules it is intended that the business activities of two corporations be considered "connected" in either of two circumstances. First, business activities can be considered connected where they are similar in nature or "parallel". ... Thus, for example, two corporations could be considered to have connected business activities if the primary activity of one corporation consists of selling the output of, or providing inputs to, the manufacturing process of the other corporation. ...

Effect on control of general partner S. 212.3(25)(b) may act as a relieving measure where a partnership with a non-resident general partner would otherwise be considered to control a CRIC. In this situation, no partner may be a non-resident corporation which (on the look-through basis described in s. 212.3(25)(b)) would be considered to own a majority of the voting shares of the CRIC. ... GP might be considered to control Canco on general principles (see 2000 APFF Roundtable, Q. 21, 2000-0038055), so that s. 212.3(2) applied to the investment. ...

A number of principles (and questions) can be considered to arise from the jurisprudence. ... Examples of when this has been considered to occur: Formal application has been made for subdivision approval for the whole property (Roos, Magilb, see also Jones). ... Given the resulting possibility that the change of use rules can be considered to apply only on an “all or nothing” basis and the Peachey doctrine that a change of use, in order to be recognized, must be “unequivocal,” a substantial argument can be made that no change-of-use can occur until the allocation between the inventory and rental use of the development property in question has been definitively determined through partition of the property. ...

Accordingly, draft s. 132(6) would effectively exempt an ILP from being considered to be a qualifying taxpayer if (as discussed further below) it did not (as per s. 217.1(1)(b)(ii)) have a qualifying establishment in Canada. ... (b), it could be considered that there is no circumstance in which an ILP, which has a Canadian-resident general partner (with personnel or agents exercising its functions qua general partner using a Canadian office of the general partner), will be deemed by s. 132(6) to not be resident in Canada. On this view, essentially all the activities of the ILP would be considered to be carried on through its general partner, so that essentially all the activities of the ILP would be considered to be carried on through the Canadian office of the general partner (viewed as a permanent establishment of the ILP), with the result that draft s. 132(6) could not apply to deem the ILP to be a non-resident of Canada. ...

For example, charitable givings or tax or regulatory filings by a mutual fund trust would not by themselves be an activity of investing funds, but would generally be considered to be part and parcel of its undertaking of investing. ... There is a concern that an activity that is thereby deemed to be a business could consequently be considered to represent an undertaking that was separate from a (more passive) investment undertaking. ... Directors of subsidiaries Although CRA has not stated that a unit trust through its trustees will be considered to be engaged in the non-qualifying undertaking of a corporate subsidiary where its trustees are identical to the directors of that subsidiary, it has required in the context of various rulings that a majority of the directors of the subsidiary not be trustees of the trust (see e.g., Income Tax Technical News No. 34 and 2013-0492731R3). ...

S. 212.3(19) provides that the exceptions in ss. 212.3(16) and 212.3(18)(b) and (d) to the application of s. 212.3(2) do not apply to a CRIC's acquisition of shares of a subject corporation if the shares may not be reasonably considered to fully participate in the profits of the subject corporation and any appreciation in its value. ... Accordingly, if the subsidiary wholly-owned corporation exception is satisfied, the CRIC would be considered to have a fully participating interest in any preferred shares of the subject corporation that the CRIC acquires. ... In this light, it presumably is intended that shares can be considered to be fully participating in the profits of a subject corporation and appreciations in its value even if the current policy of the subject corporation is to not pay dividends and there are no asset sales resulting in the current receipt of the shareholders of appreciation in the subject corporation's assets. ...

This requirement will be considered to be satisfied where one or more provincial statutes require that certain services be performed by a member of the body to which the dues in question are paid (Montgomery). ...

As discussed above, if the non-resident purchaser is considered to have purchased the CRIC because of such previous investments of the CRIC, such purchase may be considered to be part of the same series of transactions as the investments by the CRIC under the Copthorne test. ... Avoidance of control/reverse takeovers A non-resident corporation will be considered to control a CRIC even if that corporation is merely a device for pooling the investment funds of unrelated non-resident investors, such as private equity funds. ... However, this result potentially may not obtain if it might be considered that the share attributes of Parent's shares' of the CRIC do not give it the right to elect a majority of the CRIC board. ...