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CRA stated: If the partnership pays the foreign tax on behalf of the partner or the foreign tax is withheld on behalf of the partner in accordance with foreign law from the foreign income paid to the partnership, such amount would be considered [for purposes of s. 53(2)(c)(v)] to be received by the partner on account or in lieu of payment of, or in satisfaction of, a distribution of the partner’s share of the partnership profits or partnership capital. ...

After also noting that the L.C. was issued pursuant to the agreement for the supply of aluminum to Sural and for invoicing Sural therefor, he concluded that the US$16 million should be considered as a partial payment of the unpaid Sural invoices, so that the ARQ position was confirmed. ...

21 October 2024- 12:12am CRA indicates that Foix established that s. 84(2) should be construed broadly Email this Content When asked to comment on the Federal Court of Appeal decision in Foix, which found that s. 84(2) applied to a particular hybrid sale transaction, CRA stated: According to the broad interpretation of subsection 84(2) adopted by the Court, “transactions leading to an alleged distribution or appropriation of funds or property are to be considered as a whole in a way that is temporally flexible”. ...

Would a new group (A, B and C) be considered to have acquired control of Opco, or would CRA consider that the group formed by A and B still controlled the corporation? ...

CRA also indicated, if the loan was not bona fide, the applicability of s. 56(2) should also be considered. ...

CRA indicated that Foreign Parent (regarded as NR1) would be required to report pursuant to s. 237.4(4)(a) because it would be considered to be a person to whom a tax benefit results; and Foreign Opco (regarded as NR2) and Canco would be required to report under s. 237.4(4)(b) because they entered into the transaction for the benefit of Foreign Parent. ...

Before so concluding, CRA referred to the Ensite test of whether property was used or held by a corporation in the course of carrying on a business, under which the “property had to be employed and risked in the business to fulfil a requirement which had to be met in order to do business” and that “[i]f the withdrawal of the property would have a decidedly destabilizing effect on the corporate operations, the property would generally be considered to be used in the course of carrying on a business.” ...

He went on to find that, even if there had been a misrepresentation, there was no neglect or carelessness, given that the taxpayers had “thoughtfully and carefully considered the nature of the Dog Activities, and, in consultation with their accountants, concluded that those activities were a business” – although there was carelessness in deducting those of the expenses which clearly were personal. ...

That CRA adopt the position that a non-resident vendor can pay the actual amount of tax owing (rather than 25% of the gain) in order to receive a s. 116 certificate (the vendor’s payment of the actual amount of Canadian tax owing should be considered to be acceptable security respecting the disposition). ...

In this regard, CRA ruled that, for the purposes of s. 55(3.1)(b)(i)(A)(II), in determining whether 10% or more of the FMV of the Foreign Spinco common shares is derived from shares of TC or DC “any indebtedness of Foreign Spinco that is not a secured debt and that is not a debt related to a particular property will be considered to reduce the FMV of each property of Foreign Spinco pro rata in proportion to the relative FMV of all property of Foreign Spinco.” ...