Search - considered

One must then consider whether Company A carries on those activities and has the “use of space” for a sufficient length of time so as to be considered as having a “fixed place of business” in the provinces concerned. While carrying on activities at a customer’s location for less than one month might not be considered as being a sufficient period of time, a longer period, in Revenue Canada’s view, would be indicative of Company A having a fixed place of business. Company A may also be considered to have a fixed place of business where the facts indicate that it entered into a series of short term visits to those locations under the same contract. ...

While the foreign currency borrowing and the forward contract are two separate transactions, the Department generally considers that the use to which funds borrowed in a foreign currency have been put will be a factor in determining of the nature of any gain or loss incurred or realized with respect to a forward contract used to hedge any exchange exposure relative to that borrowing. 2.In IT-95R, paragraph 3 states that where borrowed funds are used in the ordinary course of a taxpayer's business, any foreign exchange gain/loss is considered to be on income account. ... Department's Position There are no specific criteria under which funds borrowed in a foreign currency would be considered to be fixed or permanent capital and each case must be reviewed and determined on its own facts. ... Either a three year or a five year loan denominated in a foreign currency could be considered as part of the fixed or permanent capital of a corporation depending upon the facts of a particular situation. ...

The Department's concern has been whether or not these security arrangements could also be considered as funding for the RCA. We have however generally stated that if specific assets are not specifically set aside for the RCA and can be used for other purposes or to satisfy other creditors, they would likely not be considered as separate contributions to the RCA. ... In addition to the above, a contractual obligation by the company to prepay the amount of the LOC to the bank on demand would not constitute a contribution to the RCA in and of itself; however, any payment to or under the RCA by the bank under the terms of the LOC to the trust is considered a contribution to the RCA subject to the RCA tax since such a payment is made on behalf of, and is repayable by the employer. ...

Specifically, can the CRA confirm that the dividend income received by Spouse will be considered an “excluded amount” pursuant to subparagraph (e)(ii) of that definition found in subsection 120.4(1) of the Income Tax Act (Canada) (the “Act”) by virtue of the fact that paragraph (a) of the “excluded business” exception will apply because Spouse works at least 20 hours a week as a part-time receptionist for XCo? ... The more an individual is involved in the management and/or current activities of the business, the more likely it is that the individual will be considered to participate in the business on a regular, continuous and substantial basis. ... As such, the dividend income received by Spouse would be considered an “excluded amount” because the exception in subparagraph (e)(ii) of that definition in subsection 120.4(1) for an amount derived from an excluded business is met. ...

Since neither spouse works more than 4 hours in any business carried on by any of the particular corporations they own, the requirements of the bright line test in paragraph 120.4(1.1)(a) would not be met and, as such, it remains a question of fact as to whether either spouse would otherwise be considered to be actively engaged on a regular, continuous and substantial basis in the activities of each such business on the basis of the limited number of hours worked. ... As such, it is not possible to conclusively determine whether, on the basis of an evaluation of such relevant factors, each spouse could otherwise be considered as being actively engaged on a regular, continuous and substantial basis in the activities of each of the businesses carried on by their various corporations for a particular taxation year. ... In particular, in the fact situation set out in Question 3 of the 2019 STEP Conference, we indicated that a husband and wife could both be considered to be actively engaged in the activities of a particular business carried on by their corporation on a regular, continuous and substantial basis for a particular year where the particular business did not require any other workers and only required them to spend on average 5 hours each per week in that business. ...

However, if the corporation is considered to be carrying on an investment business that is a related business, if the conditions of excluded business are not satisfied with respect to that investment business then TOSI would apply unless another excluded amount exception applies. ... However, assuming the corporation is considered to be carrying on an investment business that is a related business then the excluded business exception would not apply to husband and/or wife if such individual is not considered to be actively engaged in that investment business on a regular, continuous and substantial basis either during the particular taxation year or in any five prior taxation years. ...

Accordingly, any unrealized foreign exchange gain or loss resulting from a re-evaluation or translation of a balance sheet account would not be considered qualifying revenue. ... However, in order to be considered qualifying revenue, an inflow of cash, receivables or other consideration must also arise in the course of an entity’s ordinary activities in Canada, generally from the sale of goods, the rendering of services and the use by others of resources of the entity. ... While the question does not provide enough information to make a determination, depending on the facts of the situation, a realized foreign exchange gain or loss arising from an entity’s ordinary activities in Canada, that is determined in accordance with the entity’s normal accounting practice, may be considered qualifying revenue for the entity. ...

CALU Roundtable – May 2022 Question 8 – Employee Benefits and Life Insurance Background The CRA has previously considered the situation where a corporation owns a policy on the life of a shareholder, with the shareholder’s estate, spouse or a related party designated as beneficiary under the policy. The CRA expressed the view in document 2004-0081901I7 that the premiums paid by the corporation would be considered a shareholder benefit under subsection 15(1) of the Income Tax Act (the “Act”) (this position has been confirmed in Reakes Enterprises Ltd. v. ... Similarly, pursuant to document 2009-0312171E5, if an employer pays the premiums under a policy owned by an employee, such premiums will be considered an employee benefit under paragraph 6(1)(a) of the Act. ...

As an example, a U.S. limited liability limited partnership or U.S. limited liability company is considered to be a corporation for Canadian tax purposes but is considered as fiscally transparent or as a partnership by default under U.S. tax law. Distributions from these entities are not considered dividends for U.S. purposes and not shown on the financial statements of the foreign affiliate as dividends. ...

The CRA's position with respect to what is considered a genuine loan was originally set out in cancelled IT-260, Transfer of Property to a Minor. ... If, in addition, there is evidence that the borrower has given security for the loan, that interest on the loan has been paid, or that actual repayment has been made, the loan will be considered to be genuine. ... If the loan is not considered a genuine loan, subsection 75(2) of the Act will apply in the same manner as for any other transfer of property. ...