Search - considered

15 June 2021 STEP Roundtable Q. 9, 2021-0883161C6- Safe Income Unedited CRA Tags 55(1), (2.1) and (5) Principal Issues: What non-deductible expenses will reduce the safe income that can reasonably be considered to contribute to the capital gain on a share Position: A general description of non-deductible expenses that the CRA considers will reduce the safe income that can reasonably be considered to contribute to the capital gain on a share is provided. Reasons: For the purposes of paragraph 55(2.1)(c) safe income is adjusted to take into account only the portion of safe income that can reasonably be considered to contribute to the capital gain on a share. 2021 STEP CRA Roundtable – June 15, 2021 QUESTION 9. ... CRA Response In this response “safe income” will be used to describe the income earned or realized after 1971 and before the applicable safe income determination time (as determined under paragraphs 55(5)(b) and (c) of the Act) and “safe income on hand” will be used to describe safe income that can reasonably be considered to contribute to the capital gain on a share. ...

Director’s fees received by corporate board members are considered employment income; however, they are not the type of employment income to which the Guidelines apply. ... Income, including director’s fees, is considered personal property and therefore, the tax exemption of the director’s fees depends on whether the fees are situated on a reserve. ...

A corporation's business will be considered to have been carried on in Canada if at least 50% of its employees are engaged in the business in Canada or at least 50% of its salaries or wages are paid for services provided in Canada in respect of the business. If the corporation is part of a group of related corporations, the combined services of their employees and the combined salaries and wages paid must be considered in making this determination. ... Due to the detail and complexity of the Regulations regarding these issues, the foregoing comments are meant only to provide an overview of the relevant provisions and under no circumstances are they to be considered to be either comprehensive or all inclusive. ...

You have requested our comments related to the following questions: 1)     Will the shares of Holdco be considered to be shares of a small business corporation as defined in subsection 248(1) of the Act and as such be considered to be QSBCS's in the above situation? ... The partnership interest and the loan to the partnership will both be considered to be "assets that were used in an active business carried on primarily in Canada by the particular corporation". As such, provided the other requirements in the definition of QSBCS in subsection 110.6(1) are met, the shares of Holdco will be considered to be QSBCS's. 2)     Our policy as stated in the answer to question 51 of the 1986 Conference Report Round Table remains in effect. ...

A corporation's business will be considered to have been carried on in Canada if at least 50% of its employees are engaged in the business in Canada or at least 50% of its salaries or wages are paid for services provided in Canada in respect of the business.  If the corporation is part of a group of related corporations, the combined services of their employees and the combined salaries and wages paid must be considered in making this determination. ... Due to the detail and complexity of the Regulations regarding these issues, the foregoing comments are meant only to provide an overview of the relevant provisions and under no circumstances are they to be considered to be either comprehensive or all inclusive.  ...

We have been asked whether a settlement arrangement will still be considered a structured settlement, as contemplated in IT-365R2, if the annuity contracts referred to above were commutable after the death of the claimant. ... Accordingly, under such an arrangement, the payments remaining under the guarantee period must not be capable of commutation in the event of the death of the claimant during such guarantee period in order for the arrangement to be considered a structured settlement as contemplated in IT-365R2. With respect to the annuity contract to fund the care element under a settlement arrangement, such contract must be non-commutable during the life of the claimant in order for the arrangement to be considered a structured settlement as contemplated in IT-365R2. ...

A specified investment business is, in essence, a business the principal purpose of which is to derive its income from property and it would, were it not for one of the exceptions set out in paragraph 125(7)(e), probably be considered to be a "specified investment business".  However, such a business is considered to be an active business rather than a specified investment business where the corporation employs in the business throughout the taxation year more than five full-time employees. ... It is our view, however, that where for instance cash that is temporarily surplus to the needs of a business is invested in short-term income producing investments, those investments may be considered to be used in the business.  ...

DufourFacilitation Unit, Excise October 5, 1990 Dear Sirs: This is in reply to your letter of September 6, 1990 requesting our opinion as to whether or not for purposes of section 251 of the Income Tax Act (the "Act") 24(1) and its individual members considered to be "related persons", and consequently, whether or not they are considered to deal with each other at arm's length. 24(1) Section 251 of the Act refers to two classes of persons in determining whether or not persons deal with each other at arm's length. ... In the absence of a better definition, a transaction at arm's length could be considered to be a transaction between persons between whom there are no bonds of dependence, control or the sense that neither of the two co-contracting parties has available any moral or psychological leverage sufficient to diminish or possibly influence the free decision-making of the other. ... Different interests are considered to exist when each party has completely independent interests from the other parties to a transaction, notwithstanding the fact that each party may have the same purpose of economic gain. ...

A corporation's business will be considered to have been carried on in Canada if at least 50% of its employees are engaged in the business in Canada or at least 50% of its salaries or wages are paid for services provided in Canada in respect of the business.  If the corporation is part of a group of related corporations, the combined services of their employees and the combined salaries and wages paid must bc considered in making this determination. ... Due to the detail and complexity of the Regulations regarding these issues, the foregoing comments are meant only to provide an overview of the relevant provisions and under no circumstances are they to be considered to be either comprehensive or all inclusive. ...

For instance, if the transfer of the asset were undertaken to avoid a specific rule, such as a rule designed to preclude the deduction of losses after the acquisition of control of a corporation by an arm's length person, such a transfer would be considered a misuse of the provisions of the Act and be subject to subsection 245(2). ... In our opinion, while arranging the timing of the asset sale to realize the gain in 1989 might constitute an "avoidance transaction", it would ordinarily not, in and by itself, be considered to result in a misuse of any provision of the Act or an abuse having regard to the provisions of the Act read as a whole.  However, as indicated above, each transaction must be considered in light of all the facts and circumstances relating to the particular transaction in order to determine whether subsection 245(2) is applicable. ...