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Joint Committee, "Summary of Feedback on Various Technical Issues", 14 April 2025 Joint Committee Submission-- summary under Paragraph (c) Summary Under Tax Topics- Income Tax Act- Section 18.2- Subsection 18.2(1)- Tax-Indifferent- Paragraph (c) REIT as tax-indifferent (pp. 4-5) The definition of “tax-indifferent” includes a trust resident in Canada if more than 50% of the fair market value of all interests as beneficiaries under the trust can be reasonably considered to be held directly or indirectly through one or more trusts or partnerships by any combination of tax exempts under s. 149 and non-resident persons. ...

Similarly, Canadian residents investing through an LLC are not considered domestic taxpayers from a Canadian outbound tax perspective. ... Rationale for different treatment of S Corps (than LLCs) (p. 10) [C]ontrarily to LLCs, S Corps are considered residents of the U.S. by the CRA for purposes of the Treaty and can benefit from the 5% withholding rate on dividends. ... Trusts that qualify as RRSP for the purposes of the ITA, which include deemed trusts in accordance to subsection 248(3) of the ITA, should not be considered as being transparent since they are exempt from tax under a system which we perceive to be integrated. ...

Furthermore, where an option is cancelled or replaced (including under s. 7(1.4) or 110(1.7)), the securities which were to be issued under such option should be considered to be options not described in Element D(ii). ...

Quaere whether CanCo will be entitled to a foreign accrual tax deduction under s. 91(4) for the s. 212(3.1) withholding tax which is factually applicable to the interest received by Treaty Co but which may be considered to be payable by Non-Treaty Co under s. 212(1)(b). ...

Belgian and Italian notional interest deduction regimes are generally considered not to be vulnerable. ...

The amounts contributed to the plan would be considered to be deferred income, taxable immediately to the employee in the taxation year in which the contributions are made by the employer. ...

No deduction for unreasonable contributions (pp. 487-8) The CRA has stated that the provision allowing the deduction of employee contributions is not intended to provide a deduction for contributions that are considered unreasonable if paid in full by the employer. ...

This means that to the extent subsection 143.4(4) applies but the subsequent contingent amount is ultimately paid (or, assuming section 143.4 is considered to extend to amounts that have been paid and an amount is paid up-front, the right to reduce ceases to exist without any amount being recovered by the taxpayer), it will be necessary to establish recognition for the payment elsewhere in the Act. ...

To put it differently, the only way no proceeds could be considered attributable to a restrictive covenant would be if the restrictive covenant had no value…. ...

Michael Coburn, "Practical Strategies for Dealing with the Restrictive Covenant Provisions", 2014 Conference Report (Canadian Tax Foundation), 8:1-29-- summary under Paragraph 68(c) Summary Under Tax Topics- Income Tax Act- Section 68- Paragraph 68(c) Burden on CRA of establishing unreasonableness/reasonableness of nil allocation (pp.17-19) Effectively, the courts have created a test where the CRA will be considered to have failed to meet the reasonable tests in section 68 if the CRA cannot demonstrate that the taxpayer made an unreasonable allocation…. ...