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14 September 2022- 11:10pm CRA requires proof that a Barbados remittance-based resident has borne tax on Canadian dividend income before providing the Treaty rate reduction Email this Content Dividends sourced from a Canadian corporation and received by a beneficiary of a resident trust (“NR-Beneficiary”) that was resident, but not domiciled, in Barbados and which was deemed to have received the dividends pursuant to a s. 104(19), was considered by CRA to qualify as a Treaty resident (i.e., under the Crown Forest test, it was “subject to the most comprehensive form of taxation” existing in Barbados) even though it was subject to tax on its income from non-Barbados sources only to the extent that such income was remitted to Barbados. ... The Directorate then stated: If a person who is subject to remittance basis taxation in Barbados files a return of income in Barbados contrary to the application of the law in force in Barbados, it is our view that the income reported on that return (the “Income”) would not be considered “taxed” in Barbados for the purposes of Article XXX(5) such that the benefits of the Treaty would not apply to the Income. ...

In the (unlikely) event that such carryback reduction occurred, CRA considered that it would be authorized to make a consequential reassessment to reduce the Part III.1 tax that had been initially assessed “since the reassessment could be considered to be required to be made pursuant to subsection 152(6)” (which explicitly required the acceptance of the initial timely carryback requests). ...

25 May 2023- 11:20pm CRA discusses whether a USco can be subject to Part I tax as a result of Canadian home offices of employees Email this Content Regarding whether USco (a US C-Corp and a “qualifying person” for purposes of the Canada-US Treaty) would be considered to be carrying on business in Canada by virtue only of some of its employees being Canadian residents who worked from their homes for two or three days a week and, if so, whether USco would be considered to be earning income through a permanent establishment (PE) in Canada, CRA indicated: Internal support activities such as those of an accountant or an HR professional providing services only to USco would generally not constitute USco carrying on business in Canada. ...

(a) of the “resident portion” definition, the amount of the loan owing by the beneficiary would be considered as a contribution by the beneficiary (viewed in this regard as a resident contributor) and would be included in the resident portion of the trust. The repayment of the loan would be considered to be a contribution to the trust by the resident beneficiary so that the cash repayment proceeds would be added to the resident portion. ...

In finding that there were no reasonable grounds for interfering with this decision, Woods JA applied the Vavilov principle that in order for the Minister’s decision to be reasonable “the outcome should be considered in light of the underlying rationale to ensure that the decision as a whole is transparent, intelligible and justified”- and concluded that the decision satisfied those requirements. She also stated: The fact that the Minister did not discuss the harshness of the tax result does not mean that it was not considered and does not render the decision unreasonable. ...

30 November 2023- 10:17pm CRA indicates that an RSU award as signing bonus or inducement to move, or as an award for a current performance accomplishment. might not engage the SDA rules Email this Content 2020-0864831I7 found that full-value restricted share units (“RSUs”) granted early in the calendar taxation year of the employer (the “Grant Year”) were considered to be in respect of services in the previous year, so that such award came within the salary deferral arrangement (SDA) definition, and would not be excluded under para. ... However, CRA acknowledged that, notwithstanding this presumption, a grant of full-value RSUs could be considered to be solely in respect of services rendered after the grant date (i.e., only for future services), giving as potential examples, a signing bonus, and a bonus for a current employee agreeing to an overseas assignment. ...

The Directorate stated: [W]here an OEO Rebate is paid by an OEO Dealer to a unitholder in a trust, in the [above] circumstances … it is likely that the OEO Rebate would be considered to be in respect of the activities of the trust or in respect of an expense of the trust. In the result, subsection 12(2.1) would likely be considered to apply and the amount of the OEO Rebate included in the income of the trust pursuant to paragraph 12(1)(x). ...

Bocock J indicated that s. 95(2)(b)(i) “is unclear whether only the R&D services paid for by the taxpayer are to be considered or whether all services provided between the foreign affiliate and the taxpayer should be considered.” ...

CRA indicated that: a direction of title change is considered to be a supply of real property or an interest in real property and that, generally, there are no exemptions that apply for newly constructed real property; the assignment by the purchaser of the agreement is normally considered to be a sale of that first purchaser's interest in the new unit which, pursuant to s. 192.1, would be deemed to be a taxable supply; and pursuant to s. 155, there would be deemed FMV consideration for such taxable supplies if the recipient in each case was not a registrant who acquired the property for consumption, use or supply exclusively in the course of commercial activities. ...

Accordingly, where a person earns compensation that is determined based on an estimate of potential mining payments and the amounts are not adjusted to the actual mining payments, the person may not be considered to share in the mining payments. For example, where a person is paid by the mining pool operator for the contribution of computing resources by the person and the payment is based on the expected value of the number of blocks validated, calculated based on the expected block subsidy (or the expected block subsidy and expected transactions fees), regardless of whether the activity gives rise to an actual block subsidy or transaction fee, the person is considered to bear no risk in the success of earning the block subsidy and transaction fees so that inter alia its services to the operator generally are taxable supplies rather than being deemed under s. 188.2 not to be supplies. ...