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CRA considered that there was a requirement to recognize deemed interest income on the notes under Reg. 7000(2)(d) given that, in contrast to the usual equity-linked notes that were available to investors at the time, these notes had “internal puts,” i.e., SLT had the right to terminate the notes at any time, on 367 days’ notice, at the market value of the reference assets. On this basis, it considered that the “the maximum amount of interest thereon that could be payable thereunder in respect of that year” was the difference between the maximum value of the reference assets at the end of the year and the maximum value in the prior years, and assessed accordingly, to treat such annual increase as foreign accrual property income of SLT under element C of the s. 95(1) FAPI definition. Hamilton JCS rejected the taxpayers’ submissions that it was unreasonable of CRA to assess on the basis that the notes were “portfolio investments” within the meaning of s. 94.1 (given that they were held by SLT as passive investments and they tracked portfolio investments) and also considered it reasonable to consider that tax motivation figured significantly in the structure – but then went on to find that these assessments were unreasonable, given that in its previous published positions, CRA had “never suggested that the [mere] possibility of locking-in the bonus means that an amount can be accrued based on the highest value of the index in the year.” ...

31 May 2017- 1:25am Green – Federal Court of Appeal states that an upper-tier partnership should not compute its income Email this Content CRA considered that business losses incurred by lower-tier partnerships (the PSLPs) were deemed to be limited partnership losses of an upper-tier LP (MLP) – which meant that they were effectively trapped in MLP given that s. 111 (and, thus, the ability to deduct limited partnership losses under s. 111(1)(e)) was only available to a taxpayer and not to a partnership such as MLP. Webb JA rejected this interpretation and considered that the PSLP business losses were also business losses rather than limited partnership losses in the hands of MLP, so that such losses could be allocated to the MLP partners in the same manner as if they had been generated in a single-tier LP. ...

Both Teitelbaum and the ARQ considered that Lewin’s right to $1.4 million under a retirement compensation arrangement was a right or thing at his death. However, the ARQ considered that this amount had become property of Teitelbaum, and thus had been distributed to Teitelbaum, directly on Lewin’s death by virtue of the quoted designation in Lewin’s will. ...

On an expansive interpretation of the ETA definition of a permanent establishment, it could be considered that, in fact, 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, given that essentially all the activities of the ILP will be considered to be carried on through its general partner and, thus, through the Canadian office of the general partner (viewed as a permanent establishment of the ILP). ...

CRA however also states (perhaps somewhat in contradiction to the above): Generally, applications by corporations with gross revenue in excess of $250 million in at least two of their last five taxation years, and any related entities, will be considered under the Limited Program. CRA has added a statement (perhaps to demonstrate flexibility- see Stemijon / Elfe Juvenile) that “If [VDP] relief is denied... relief of arrears interest and any penalties payable may be requested and considered in accordance with the taxpayer relief provisions as described in IC 07-1R1.... ...

As for their separate legal personality (like corporations, but also like Scottish partnerships), s. 35 of the Interpretation Act provides that the word "corporation" "does not include a partnership that is considered to be separate legal entity under provincial law. ... Further, the phrase "a partnership which is considered to be a separate legal entity under provincial law" does not necessarily limit the application of the IA definition to partnerships governed by provincial law. ...

In the published response, CRA noted that the particular SLP was a “Fonds Professionnel Spécialisé” – established as a “société en commandite simple” (“SECS”- usually translated simply as a "limited partnership," or sometimes as a "standard limited partnership") – and stated that: A SECS is considered to be a “société commerciale” under French law, as is also the case for a “société en nom collectif”, “société à responsabilité limitée” and a “société par actions”. ... The above reference in the same breath to (French) SENCs as to SECSs likely is not a concern given French SENCs' apparent lack of legal personality, whereas the French limited partnership was considered by CRA to have separate legal personality. ...

CRA did not discuss what would be required for purchases, and rentals or sales, to be considered to be made by the nominee on behalf of the other co-owner(s). When asked to confirm the questioner’s understanding that CRA will be publishing its position that where an agreement is a joint venture at law, it is a joint venture for purposes of the s. 273 JV election,” notwithstanding any provision in the particular agreements governing the joint venture which may state otherwise,” CRA stated: [W]e will confirm the position that a joint venture at law is considered to be a joint venture for purposes of the joint venture election under section 273 in a planned publication. ...

A, $0.1M of the amount would not be derived from such a business), CRA stated: The portion of the FMV of the distributed stock portfolio that represents the initial investment of the dividends paid by Opco to Investco would be considered to be derived, directly or indirectly, from the related business of Opco in respect of Mrs. ... However, gains earned by Investco as a result of the investment of those dividends would not be considered to be derived, directly or indirectly, from the related business of Opco in respect of Mrs. ...

Because the right to receive Pan American shares under the CVRs is not absolute, the CVRs are considered to represent “boot” rather than share consideration for s. 85 election purposes. The cost of a Pan American share received under a CVR is considered to be equal to the FMV of a CVR received under the Plan of Arrangement. ...