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In such a case, the interest may be considered a capital property, and accordingly, an eligible property under paragraph 85(1.1)(a) of the Act for purposes of subsection 85(1) of the Act. ...

CRA noted that the corporation’s investment activities might be a new business that is a related business, and stated that, in such case: [T]he 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. ...

CRA noted that the corporation’s investment activities might be a new business that is a related business, and stated that, in such case: [T]he 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. ...

It applies where the corporations are related to each other, one corporation (directly or indirectly) transfers assets to the other corporation and one of the reasons for the transfer can reasonably be considered to be to reduce the amount of the adjusted aggregate investment income of the associated group for the purposes of the passive income reduction rule in paragraph 125(5.1)(b). ...

However, CRA indicated that it considered that s. 116 can be interpreted such that, in determining the amount of the s. 116(5) liability, the purchase price is only the portion that is attributable to the interest sold by the non-residents, such that the certificate limit and the purchase price would line up, and there would be no resulting s. 116(5) liability. ...

Furthermore … if it were the case that certain reorganizations or conversions of shares carried out through a transaction, or as part of a series of transactions, one of the main purposes of which is to enable shareholders to receive capital dividends, then the application of subsection 83(2.1) should be considered. ...

Before intimating that s. 83(2.1) likely would not apply to the streaming of the CDA to DCO because it was one of the original shareholders, CRA stated: For the purposes of applying subsection 83(2.1), the CRA has traditionally considered that it is the main purpose of the original acquisition of the shares that must be taken into account when they are exchanged for shares of another class upon reclassification of the capital stock of the corporation. ...

7 October 2020 APFF Roundtable Q. 13, 2020-0852251C6 F- Small Business Deduction-- summary under Adjusted Aggregate Investment Income Summary Under Tax Topics- Income Tax Act- Section 125- Subsection 125(7)- Adjusted Aggregate Investment Income s. 55(2) gain from a share can qualify as a gain from an active asset for AAII purposes In indicating that a deemed capital gain resulting from the application of s. 55(2)(b) or 55(2)(c) can be considered to be a gain from the disposition of an active asset for purposes of s. 125(5.1) and the definition of "adjusted aggregate investment income" in s. 125(7) where, in fact, the shares were active assets, CRA stated: [T[he term "capital property" in paragraph 55(2)(c) includes a share and that a deemed gain under paragraph 55(2)(c) could represent a capital gain from the disposition of property that would, at the time of payment of the dividend (footnote 1), be an active asset of the corporation receiving the dividend for the purposes of the definition of "adjusted aggregate investment income" and paragraph (b) of the definition of "active asset" in subsection 125(7), if all of the conditions in paragraph (b) of the definition "active asset" in subsection 125(7) are otherwise satisfied in respect of the share on which the taxable dividend subject to subsection 55(2) was paid. ...

CRA indicated that if a trust is created by the contribution of jointly owned property by an individual and that individual’s spouse or common-law partner, and no other person, the trust would be considered to be created by both individuals for the purpose of s. 73(1.01). ...

(k) of the “specified foreign property” definition in s. 233.3(1)), it will not be considered to be holding debt of a “foreign affiliate,” so that such debt will be required to be disclosed on the T1135 form. ...