Section 56

Table of Contents

Subsection 56(1) - Amounts to be included in income for year

Paragraph 56(1)(a) - Pension benefits, unemployment insurance benefits, etc.

Cases

Woods v. The Queen, 2010 DTC 1095 [at 2996], 2010 TCC 106, aff'd 2011 DTC 5049 [at 5681], 2011 FCA 90

When the taxpayer's brother died, his pension scheme paid her a large lump sum. Boyle J. rejected the taxpayer's position that the payment was in...

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Watts v. The Queen, 2004 DTC 3111, 2004 TCC 535 (Informal Procedure)

Periodic disability payments received by the taxpayer under the Canada Pension Plan were not received in respect of a "disability insurance plan"...

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Words and Phrases
insurance

Subparagraph 56(1)(a)(i)

Cases

Burchill v. Canada, 2010 DTC 5096 [at 6922], 2010 FCA 145

The Court rejected the taxpayer's argument that the reference in s. 56(1)(a)(i) to pension benefits "received" referred to benefits...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Context 101

See Also

Eyckelhoff v. The Queen, 2020 TCC 130 (Informal Procedure)

The taxpayer, a Canadian resident, received periodic payments from a Netherlands insurance company (“Aegon”) which she submitted were exempt...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(f) a taxpayer-funded disability policy can give rise to exempt receipts 132

Rasmussen v. The Queen, 2019 TCC 124 (Informal Procedure)

The taxpayer, an Australian police officer, who then became entitled at the beginning of 2013 to receive a periodic (i.e., every two weeks)...

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Mammone v. The Queen, 2018 TCC 24, rev'd 2019 FCA 45

CRA revocation of a registered pension plan (the “New Plan”) was invalid due to its failure to comply with the 30-day notice requirement in s....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) RPP revocation beyond the normal reassessment period retroactively validated an unsupportable reassessment under s. 56(1)(a)(i) 414
Tax Topics - Income Tax Act - Section 152 - Subsection 152(9) subsequent retroactive deregistration of RPP also retroactively validated an assessment factually made on basis of plan’s invalidity 216
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) subsequent retroactive deregistration of RPP would not establish carelessness in previous return filing 197
Tax Topics - General Concepts - Effective Date subsequent deregistration of RPP retroactively validated reassessment 239
Tax Topics - Income Tax Act - Section 147.1 - Subsection 147.1(12) subsequent deregistration of RPP beyond normal reassessment period nonetheless retroactively validated reassessment 95

Gill v. The Queen, 2012 DTC 1261 [at 3764], 2012 TCC 302

The taxpayer received $75,175 as a redemption of his deceased US-resident sister's individual retirement income account. Hogan J. found that this...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions "including without limitation" is expansive 163

Brilla v. The Queen, 98 DTC 1502 (TCC)

Bowman TCJ. indicated in obiter dicta that capital withdrawals by the taxpayer from a 401(k) plan would not be taxable in Canada.

Walker v. The Queen, 95 DTC 753 (TCC)

In order to give effect to an equalization of net family properties for purposes of the Family Law Act (Ontario), it was agreed that the taxpayer...

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Kaiser v. The Queen, 95 DTC 13, [1994] 2 CTC 2385 (TCC)

In response to a submission that s. 56(1)(a)(i)(C.1) was intended only to prevent a Canadian resident with an IRA in the United States from...

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Administrative Policy

2021 Ruling 2021-0876671R3 - Transfer between US pension plans

Background

Plan A is a U.S. multi-employer defined benefit pension plan under which eligible plan participants accrue retirement benefits, which...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt no constructive receipt to Canadian beneficiaries where the transfer of a portion of the assets and Canadian beneficiaries from an old to a new US pension plan 109
Tax Topics - Treaties - Income Tax Conventions - Article 18 the transfer of a portion of the assets and beneficiaries from an old to a new US pension plan did not result in taxable income under the IRC 183
Tax Topics - Income Tax Act - Section 207.6 - Subsection 207.6(5.1) Reg. 6804 exclusion applied 178

22 December 2020 External T.I. 2020-0849291E5 - Pension Top-up Payments

A collective bargaining agreement provided that where a retired employee had a break in service due to a workplace injury with the employer, that...

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5 October 2020 External T.I. 2020-0852671E5 - Provident fund - Isle of Man

While the taxpayer was a resident in the United Arab Emirates, the taxpayer’s employer established on behalf of the taxpayer an independent...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(g) foreign pension plans are EBPs 209

11 September 2020 External T.I. 2019-0824281E5 - Benefits from a UK retirement plan

A UK resident is a member of a “funded unapproved retirement benefit scheme” (“FURBS”), which is a UK trust to which the taxpayer’s ...

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2019 Ruling 2019-0817751R3 - SERP and Group RRSP

A Canadian public corporation had a group RRSP arrangement under which it approximately matched contributions of employees (“Members”) to the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement SERP that maintains the 18% RRSP contribution amount above the RRSP dollar limit (subject to overall 15% or 10% cap) 547

12 September 2019 External T.I. 2019-0802301E5 - Annuity purchased from foreign pension

An individual who participated in a defined benefit pension plan established in Europe by the U.S. employer for its expatriate employees...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 147.4 - Subsection 147.4(1) s. 147.4(1) permits non-inclusion where annuity is purchased out of RPP 152

2 April 2019 Internal T.I. 2016-0649821I7 F - Unclaimed superannuation or pension benefits

A survivor benefit under a registered pension plan (“RPP”) is paid in a taxation year to the Direction principale des biens non réclamés...

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Words and Phrases
in lieu of
Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt amount received in Year 2 in lieu of pension benefit includes source deductions in Year 1 362

12 April 2018 External T.I. 2016-0640651E5 F - Swiss Pension

The Swiss pension system has three “pillars,” the second of which consists of pension funds (run by investment foundations) to which both...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - superannuation or pension fund or plan Swiss vested benefits policy was a “superannuation or pension fund or plan” 297

10 April 2014 External T.I. 2013-0515681E5 - Death of RPP Member-56(1)(a)

The Manitoba Pension Benefits Act (PBA) provides that notwithstanding any beneficiary designation under a registered pension plan, a deceased RPP...

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19 March 2014 External T.I. 2014-0522671E5 - HK Pension and Tax Treaty

S. 56(1)(a)(i) of the Act extends to benefits from a foreign pension plan that are attributable to services rendered while the individual was not...

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25 June 2012 External T.I. 2011-0398691E5 - Conversion of U.S. Traditional IRA into Roth IRA

An individual who converts a traditional US Individual Retirement Account ("IRA") to a Roth IRA is allowed under the Code to spread the resulting...

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19 June 2012 External T.I. 2011-0407461E5 - Tax on 401(k) Transfer to IRA and IRA Withdrawal

A Canadian-resident taxpayer had contributed, through his US employer, to a 401(k) plan. Because the contributions preceded 1 January 2009, he...

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14 February 2008 Internal T.I. 2007-0256401I7 F - Vente d'un surplus actuariel

Before concluding that the portion of the sale price allocated on the sale of a business division to the actuarial surplus in the pension plan was...

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Words and Phrases
in lieu of

10 January 2005 External T.I. 2004-0095361E5 F - Dommages

Regarding the treatment of damages received pursuant to proceedings against a professional for negligence resulting in loss of a survivor's...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) courts have preferred to tax on the basis of an identified source 96

1 December 2004 Internal T.I. 2004-0065131I7 F - Sécurité sociale des États-Unis

A taxpayer receiving disability benefits under the US Social Security Act, elects to receive retirement benefits at age 62 rather than disability...

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3 March 2004 External T.I. 2003-004715

Upon the death of a U.S. citizen and resident, the Canadian-resident nephew receives a lump sum distribution in the amount of $100,000 in...

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16 January 1996 External T.I. 9529215 - 401(K), DOUBLE TAX IN CANADA

Where a 401(k) plan for a commuter who is resident in Canada and who is employed in the U.S., is funded only by employee contributions,...

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27 October 1994 External T.I. 9427125 - DEFERRAL OF LUMP SUM SEVERANCE PAYMENT

If it is a term of her employment contract that an employee has the option to take a retiring allowance in instalments or in a lump sum and such...

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20 November 1991 T.I. (Tax Window, No. 13, p. 9, ¶1601)

An amount received out of an IRA will represent a "superannuation or pension benefit" taxable under s. 56(1)(a)(i) regardless of the original...

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7 March 1991 T.I. (Tax Window, No. 1, p. 21, ¶1151)

Where the pension entitlement of a spouse under a registered pension plan is divided on the breakdown of marriage under the Family Law Act...

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8 September 89 T.I. (February 1990 Access Letter, ¶1097)

The payment of the portion of a registered pension plan to a non-member spouse pursuant to the laws of a province as a result of a marriage...

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88 C.R. - Q.5

Where a Canadian resident rolls a lump sum payment received out of a U.S. pension fund into an individual retirement account the lump sum received...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 18 50

Clause 56(1)(a)(i)(C.1)

See Also

McKenzie v. The Queen, 2017 TCC 56 (Informal Procedure)

In the course of rejecting a succession of spurious arguments that an amount received by a Canadian resident-U.S. citizen from her deceased...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 6803 an IRA which is a custodial arrangement is included 223

Administrative Policy

S5-F3-C1 - Taxation of a Roth IRA

No deferral of income in Roth IRA in absence of Treaty election

1.3 A Roth IRA does not enjoy the income tax deferral benefits afforded under the...

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29 October 2018 External T.I. 2018-0750411E5 - Transfer from an IRA to a RRSP

A Canadian citizen who was a U.S. long term resident under the U.S. expatriation rules was deemed for Code purposes to receive a taxable...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60.01 a departing U.S. resident who has a deemed inclusion for his IRA cannot then obtain a s. 60(j) deduction for contributing actual IRA withdrawals to his RRSP 310
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(j) failure to qualify for 60(j) deduction where deemed withdrawal from IRA followed by actual withdrawal 157

29 January 2018 External T.I. 2017-0682301E5 - Deemed Distribution and Withdrawal from IRA

The Taxpayer, a Canadian citizen, was considered under the Code to be a U.S. long term resident and to have received a taxable distribution of her...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) deemed Code taxability of IRA on renouncing U.S. citizenship generally would generate an FTC to deemed Cdn-resident recipient 125
Tax Topics - Income Tax Act - Section 56 - Subsection 56(12) deemed ITA inclusion on deemed distribution from IRA on renouncing U.S. citizenship or relinquishing green card 78

14 January 2009 External T.I. 2008-0274271E5 F - Rente de la Suisse

A Canadian resident receiving an old age pension from Switzerland could not avail of the exclusion in s. 56(1)(a)(i)(C.1) given the narrow scope...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 18 exemption under Art. 18(2) of the Canada-Switzerland treaty 59

Subparagraph 56(1)(a)(ii)

Cases

Doyle v. The Queen, 83 DTC 5383, [1983] CTC 339 (FCTD)

After one company was, upon the decision of the taxpayer, wound-up, he occupied substantially the same office at a second company which he...

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Lawson v. The Queen, 82 DTC 6331, [1982] CTC 368 (FCTD)

An amount received in settlement of a claim for dismissal without reasonable notice was received in respect of the termination of employment...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 23

Administrative Policy

7 April 2020 External T.I. 2019-0832241E5 - Deferral of lump sum retiring allowance

Respecting a query as to the tax implications of paying a retiring allowance to a terminated employee in the calendar year following the year of...

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29 April 1991 T.I. (Tax Window, No. 2, p. 21, ¶1217)

A retiring allowance may be paid in one or more instalments over any period of time and it will not be included in the employee's income until...

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Subparagraph 56(1)(a)(iii)

See Also

Scott v. The Queen, 2017 TCC 224

In 1980, Nortel had established a health and welfare trust (the “HWT”) for its employees. Following its insolvency and filing under the CCAA...

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Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 89 - Subsection 89(1) - Paragraph 89(1)(a) trust return not admitted at trial opening where no previous notice and not relied upon by CRA 229
Tax Topics - Income Tax Act - 101-110 - Section 107.1 - Paragraph 107.1(a) s. 107.1(a) in effect produced a rollover on cash distribution of mooted benefits 181
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) a distribution from a health and welfare trust to compensate for lost insurance coverage was not a taxable benefit as it did not come within s. 6(4) 316
Tax Topics - General Concepts - Stare Decisis Supreme Court obiter accorded deference 153
Tax Topics - Income Tax Act - Section 9 - Compensation Payments surrogatum principle references "why the compensatory amount was paid," and not confined to business receipts 207
Tax Topics - Statutory Interpretation - Specific v. General Provisions termination payment that did not come within s. 6(4) should be treated as excluded from s. 6(1)(a) 153
Tax Topics - Income Tax Act - Section 6 - Subsection 6(4) lump sum received as compensation for no longer benefiting from contributions to a group life insurance policy did not come within the terms of s. 6(4) 334

Paragraph 56(1)(b) - Support

Cases

Tossell v. Canada, 2005 DTC 5365, 2005 FCA 223

Even if the separated husband of the taxpayer was obliged to pay the taxpayer child support at a rate of $3,000 per month, rather than the $2000...

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The Queen v. Jasper, 94 DTC 6519, [1994] 2 CTC 309 (FCTD)

An amended written separation agreement between the taxpayer and her former husband providing for the payment by him to her of amounts equal to...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Estoppel 115

The Queen v. Sigglekow, 85 DTC 5471, [1985] 2 CTC 251 (FCTD)

The taxpayer's former husband was required by a court order to pay every week the sum of $20 "tax free" for the maintenance of her son. The...

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The Queen v. Sills, 85 DTC 5096, [1985] 1 CTC 49 (FCA)

Where a separation agreement provides that alimony and maintenance payments are payable on a monthly basis, then the alimony and maintenance paid...

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See Also

Welch v. The Queen, 2012 DTC 1288 [at 3892], 2012 TCC 350 (Informal Procedure)

The taxpayer and her former spouse attempted to arrange their spousal support agreement so that her spouse would not deduct support amounts from...

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Blais v. MNR, 92 DTC 1497 (TCC)

A taxpayer was ordered in 1984 to retain arrears of alimentary allowance that had accumulated from March 1983 onward to be applied against an...

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Words and Phrases
receive
Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt payment references funds transfer 100
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(b) 100

Morley-Clarke v. Jones, [1985] BTC 460 (C.A.)

In 1980 the taxpayer obtained a retrospective consent order providing that a 1969 court order be varied to provide that her former husband should...

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The Queen v. Sills, 85 DTC 5096, [1985] 1 CTC 49 (FCA)

Where a separation agreement provides that alimony and maintenance payments are payable on a monthly basis, then the alimony and maintenance paid...

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Administrative Policy

16 March 2006 External T.I. 2005-0133301E5 F - Arrérages pension alimentaire reçus par succession

Amounts received by an estate in settlement of its claim against the ex-husband of the deceased for arrears of support, were non-taxable to it.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees legal fees to settle an estate are non-deductible 84

Articles

Durnford, Toope, "Spousal Support in Family Law and Alimony in the Law of Taxation", Canadian Tax Journal, 1994, Vol. 42, No. 1, p. 1.

Paragraph 56(1)(c)

Cases

James v. The Queen, 85 DTC 5172, [1985] 1 CTC (FCTD)

Payments were found to be received pursuant to a Court order, "even though often late and sometimes for smaller amounts."

Paragraph 56(1)(d) - Annuity payments

Cases

The Queen v. Rumack, 92 DTC 6142, [1992] 1 CTC 57 (FCA)

The taxpayer won a prize of $1,000 per month for life in a lottery sponsored by the Ontario Association for the Mentally Retarded, which funded...

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Wilder v. Minister of National Revenue, 52 DTC 1014, [1951] CTC 304, [1952] 1 S.C.R. 123

The consideration received by the taxpayer for the sale of his business included an "annuity" during his lifetime of $1,000 per month. The monthly...

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See Also

Short v. The Queen, 99 DTC 1146 (TCC)

The taxpayer was assigned by his father an annuity paying $5,500 of interest annually and with an original term of 20 years. The taxpayer later...

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Administrative Policy

30 March 2017 External T.I. 2015-0609951E5 F - Article 18 of the Canada-Turkey Income Tax Convention

The definition of “annuity” in Art. 18 of the Canada-Turkey Treaty excludes “any annuity the cost of which was deductible for the purposes...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 18 capital portion of s. 56(1)(d) is not excluded as an annuity under Canada-Turkey Treaty/RRSP annuity payments are pensions 428
Tax Topics - Other Legislation/Constitution - Federal - Income Tax Conventions Interpretation Act - Section 5 - Pension RRSP annuity payments to Turkish resident were subject to Pt XIII tax as pension payments 46

20 May 1994 External T.I. 9405045 - STRUCTURED SETTLEMENT UNDER NO FAULT INSURANCE

Provided that all the requirements of the Insurance Act (Ontario) and relevant regulations are complied with, periodic payments made in settlement...

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29 January 1993 T.I. 9200395 (Tax Window, No. 27, p. 1, ¶2360)

Where a casualty insurer acquires an annuity contract to fund a series of periodic payments to compensate an injured party for lost income and...

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22 January 1993 T.I. 9203635 (Tax Window, No. 27, p. 1, ¶2360)

A structured settlement agreement that provides for balloon payments which the injured person can elect in the future to take either as a lump sum...

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29 October 1992 T.I. 922997 (September 1993 Access Letter, p. 414, ¶C56-252)

Discussion of structured settlement by a self-insurer.

21 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 28, ¶1099)

Where an insurance company discharges its obligation to the insured under a disability rider in a life insurance policy by entering into an...

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80 C.R. - Q.26

Where payments for damages that have been awarded by a court or resolved in an out-of-court settlement, in respect of personal injuries or death,...

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Paragraph 56(1)(h) - Registered retirement savings plan, etc.

See Also

Maass-Howard v. The Queen, 2013 DTC 1009 [at 59], 2012 TCC 307, briefly aff'd 2013 DTC 5167 [at 6429], 2013 FCA 234

The taxpayer withdrew $105,000 from her RRSP to treat a herniated disc. Hogan J. affirmed the Minister's decision to impute income on the...

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Paragraph 56(1)(l.1) - Idem [Legal expenses]

Cases

Scharf v. Freure Homes Ltd., 95 DTC 5074 (Ont. Ct. J. (G.D.))

A judgement called for the payment to the plaintiff of $400,000 in damages for wrongful dismissal, and costs of $75,000 plus GST of $5,250. Somers...

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Administrative Policy

8 October 1996 T.I. 962701 (C.T.O. "Loss of Employment, Mental Distress, Damages")

Although reimbursement of legal costs incurred in a wrongful dismissal action are taxable under s. 56(1)(l.1), a contingency fee payable by a...

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Paragraph 56(1)(n) - Scholarships, bursaries, etc.

Cases

Simser v. Canada, 2005 DTC 5001, 2004 FCA 414

Funds received by the taxpayer, who was profoundly deaf and studying to be lawyer, pursuant to the Special Opportunities Grant for Disabled...

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Words and Phrases
bursary

The Queen v. Savage, 83 DTC 5409, [1983] CTC 393, [1983] 2 S.C.R. 428

$300 received by an employee of a life insurance company pursuant to its policy of paying such amounts to all of its employees who passed the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) 85
Tax Topics - Statutory Interpretation - Redundancy/reading in words exclusion in specific provision extended to general provision to avoid redundancy 34

The Queen v. McLaughlin, 78 DTC 6406, [1978] CTC 602 (FCTD)

An award of $10,000 made by a private trust to the Chairman of the Ontario Milk Marketing Board in respect of his contributions to Canadian...

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See Also

Lewis v. The Queen, 2013 DTC 1117 [at 620], 2013 TCC 137 (Informal Procedure)

The taxpayer was unsuccessful in arguing that the March 2010 Budget's amendment to s. 56(1)(n) should not be applied retroactively to 1 January...

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Caropreso v. The Queen, 2012 DTC 1190 [at 3488], 2012 TCC 212 (Informal Procedure)

The taxpayer sought an exemption under s. 56(1)(n) in respect of income from the Ontario Health Research Institute ("OHRI") in connection with a...

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Huang v. The Queen, 2012 DTC 1120 [at 3103], 2012 TCC 81 (Informal Procedure)

The taxpayers were postdoctoral students who received research fellowships in 2009 from Parkinson Society Canada ("PSC") to conduct research under...

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Chabaud c. La Reine, 2012 DTC 1076 [at 2856], 2011 TCC 438 (Informal Procedure)

Archambault J. found that "bursary" amounts that the taxpayer received from the University of Laval in connection with his postdoctoral fellowship...

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Words and Phrases
fellowship bursary

Mbarga v. The Queen, 2005 DTC 1447, 2005 TCC 595 (Informal Procedure)

An amount paid by Alberta Human Resources and Employment directly to the University of Calgary to enable the taxpayer to take a technology program...

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Words and Phrases
receive bursary

Simser v. The Queen, 2003 DTC 617, 2003 TCC 366

A $2,000 bursary received by the taxpayer, who was profoundly deaf, in the form of a "special opportunities grant for students with permanent...

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Administrative Policy

22 February 2012 External T.I. 2011-0424601E5 F - Scholarships and bursaries paid by a firm

Does s. 6 or 56(1)(n) apply to a student, who has been hired by a professional firm for the summer, and then is provided with a $2,500 bursary by...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) employer-reimbursed tuition not considered for its training benefit if incurred before employment commenced 393

S1-F2-C2 - Tuition Tax Credit

Where a student receives free tuition or a reduction in tuition fees from an educational institution, the difference between the pre-determined...

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28 June 2010 External T.I. 2010-0362391E5 F - Revenus de récompenses

Must a music student include awards received for entries in various music competitions? CRA responded:

Since the awards described in the...

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6 May 2009 External T.I. 2008-0295581E5 F - Bourses et aide financière aux médecins

Under various programs designed to encourage physicians to settle in remote areas of Quebec, some health and social services agencies in Quebec...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) s. 12(1)(x) inclusion of assistance to foreign doctors to become licensed so that they will practise in a remote area 70

25 July 2008 External T.I. 2008-0284861E5 F - Bourse post-doctorale

Before concluding that the taxpayer was required to include a post-doctoral fellowship under s 56(1)(n), CRA stated:

[A] bursary, scholarship or...

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11 August 2006 External T.I. 2006-0195781E5 F - Bourses de perfectionnement

The Natural Sciences and Engineering Research Council of Canada ("NSERC") paid fellowships to hos organizations to cover $30,000 of the minimum...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) changed tests for distinguishing employment following Sagaz and Wolf 293

9 May 2006 Internal T.I. 2006-0176371I7 F - Bourses d'études ou d'entretien

After stating that “bursaries are grants given to students who need financial assistance to continue their education,” CRA found that...

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Words and Phrases
bursary
Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt bursaries “received” by students even though required to be applied directly to their loans 119

28 February 2005 Internal T.I. 2004-0103991I7 F - Remboursement de frais de scolarité

The taxpayer, who had been employed as a temporary lecturer at a University Department, was hired to work as a professor at the Department upon...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) payment of tuition fees conditional on a return to extended employment was not a taxable benefit 207

20 June 1994 Internal T.I. 9409396 - SCHOLARSHIP PAID OUT OF A TRUST

Payments out of the net income of a trust to a university to be distributed as scholarships for students selected by the university, will be...

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3 December 1993 9326586 - Allowances Paid by CIDA to Foreign Students and Trainees

Amounts paid to individuals from developing countries in order to come to Canada to attend school full-time (usually for a period of 1 - 3 years)...

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20 August 1992, T.I. (Tax Window, No. 23, p. 22, ¶2160)

A grant made to enable an artist to undertake a specific artistic project will be included in income. However, a prize prescribed in Regulation...

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6 April 1992 T.I. 920399 (March 1993 Access Letter, p. 69, ¶C56-215; Tax Window, No. 18, p. 22, ¶1859)

Amounts paid to students under Pacific Rim Educational Initiatives constitute scholarships or bursaries pursuant to s. 56(1)(n).

84 C.R. - Q.22

An employee will qualify for the $500 exemption only if the prize is awarded for the successful completion of a course of studies or for an...

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Articles

Mark Dumalski, Dimitri Sarabalos, "Are Payments to Research Assistants Tax-Free?", Canadian Tax Focus, Vol. 3, No. 2, May 2013, p. 11

The CRA's view is that an award involving a research component should be classified as follows:

1) if the primary purpose of the award is to...

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Jack Bernstein, "Scholarships: The Enhanced Employee Incentive", CCH Tax Topics, No. 1909, 9 October, 2008

Paragraph 56(1)(o) - Research grants

Cases

Ghali v. Canada, 2005 DTC 5472, 2004 FCA 60

The taxpayer, an associate professor at the University of Laval, received a subsidy from the University during his sabbatical year (which was...

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Words and Phrases
research grant

See Also

Huang v. The Queen, 2012 DTC 1120 [at 3103], 2012 TCC 81 (Informal Procedure)

See the summary of this decision under s. 56(1)(n).

Chabaud c. La Reine, 2012 DTC 1076 [at 2856], 2011 TCC 438 (Informal Procedure)

Archambault J. found that "bursary" amounts that the taxpayer received from the University of Laval in connection with his postdoctoral fellowship...

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Words and Phrases
research grant

Administrative Policy

31 July 2014 External T.I. 2013-0509291E5 - Research grants

A faculty member will forgo salary and instead receive a research grant to undertake a specific research project. The research activity may be a...

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24 June 2011 External T.I. 2011-0409741E5 F - Déductions d'impôt sur une bourse de recherche

A Chinese student worked at the organization’s premises on a doctoral thesis and who was not enrolled in a Canadian university received a...

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Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 20 assistance received by unenrolled Chinese student towards Ph.D. thesis research assistance was Treaty-exempt 120

23 March 2011 External T.I. 2010-0382351E5 F - Bourses d'études ou subventions de recherche

Can an individual who received various scholarships in the course of pursuing a doctorate at a university, deduct the costs of acquiring a...

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Words and Phrases
scholarship

Paragraph 56(1)(r) - Financial assistance

Administrative Policy

9 July 2020 Internal T.I. 2020-0854701I7 - Withholdings from CERB/CSB payments

The Directorate found that the source deduction requirements (including graduated rates) under Reg. 102(1) applied to Canada emergency response...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 102 - Subsection 102(1) CERB and CESB payments are deemed remuneration for source deduction purposes 125
Tax Topics - Income Tax Regulations - Regulation 100 - Subsection 100(4) there is a deemed establishment of a deemed employer of a deemed employee where s. 56(1)(r) government assistance is paid 185

17 July 2015 External T.I. 2014-0517091E5 - Wage Subsidies

Under a wage subsidy program, the delivery organization will provide wage subsidies to employers to assist with wage costs of hiring "barriered"...

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17 July 2015 External T.I. 2014-0517081E5 - Assistance for individuals with disabilities

Amounts received by individuals with disabilities under a program to replace the employment programs and services funded under Part II of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(u) federal assistance to those with disabilities 147

4 March 2015 Internal T.I. 2014-0527751I7 F - Soutien de revenu accordé aux individus

After describing the active employment measures of Emploi-Québec and referencing the tests in s. 56(1)(r)(iii), CRA stated:

[W]e are of the view...

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12 February 2007 External T.I. 2006-0205981E5 F - DAS programme de soutien financier pour handicapés

A not-for-profit organization ("NPO") receives funds from the federal Opportunities Fund for Persons with Disabilities program of Human Resources...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 100 - Subsection 100(1) - Remuneration - Paragraph (h) assistance paid to those with disabilities to assisting taking up employment was “remuneration” subject to source deductions 94

Subparagraph 56(1)(r)(iv)

Administrative Policy

2 January 2008 External T.I. 2007-0228241E5 F - Programme canadien d'options familles agricoles

Regarding payments made under the Canadian Farm Families Options Program (Options Program) to provide farmers and their families with immediate...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Computation of Profit payments under the Canadian Farm Families Options Program were business income to those with a farming source of income 97
Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Earned Income payments under the Canadian Farm Families Options Program to those without a farming source of income would be excluded from earned income 130

Paragraph 56(1)(u) - Social assistance payments

Cases

Simser v. Canada, 2005 DTC 5001, 2004 FCA 414

A Special Opportunities Grant for Disabled Students With Permanent Disabilities received by the taxpayer, who was permanently deaf and applied the...

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Administrative Policy

21 February 2006 Internal T.I. 2006-0169341I7 F - Montants reçus sous le programme "Devenir"

The "Devenir" program, targets employment assistance recipients in the most difficult economic and social situations who are not employable, who...

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Words and Phrases
social assistance

4 October 2019 External T.I. 2019-0825431E5 - Tenant relocation assistance

The City required a developer to pay tenants, whose units in a residential complex were to be replaced or renovated, (at their option) lump sums...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 compensation received by residential tenants from a developer to compensate them for their dislocation costs was non-taxable 181

17 July 2015 External T.I. 2014-0517081E5 - Assistance for individuals with disabilities

Amounts received by individuals with disabilities under a program to replace the employment programs and services funded under Part II of the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(r) federal assistance to those with disabilities 148

29 July 2015 External T.I. 2015-0575631E5 - social assistance

A social assistance organization may purchase items such as cookware, cutlery, furniture and food cards to assist its clients. Funds may also be...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 payments in kind by social assistance organization 87
Tax Topics - Income Tax Regulations - Regulation 233 - Subsection 233(2) potential exclusion of payments in kind 259

14 February 2014 Internal T.I. 2013-0495661I7 - Taxability of payment from US charitable trust

Monthly allowances received by a former employee of a US charitable trust is not income to him given that they are "financial assistance is based...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(b) financial assistance to former charity employee 88

2 September 2011 Internal T.I. 2011-0419111I7 F - Programme de compensation du MESS

After noting that payments made by Ministère de l'Emploi et de la Solidarité sociale (the "MESS") to individuals, who were homeless and...

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2 February 2010 Internal T.I. 2009-0345741I7 F - Programme d'aide financière d'urgence ("PAFU")

After referencing the fact that under the current Quebec PAFU [Emergency Financial Assistance Program] regulatory framework, the financial...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 233 - Subsection 233(2) - Paragraph 233(2)(g) lump sum emergency assistance under Quebec program would not be required to be included in income because no information slip required 183

18 March 2008 External T.I. 2008-0265861E5 F - Programme d'aide financière d'urgence ("PAFU")

Regarding the treatment exemption under s. 56(1)(u) of amounts paid under the Programme d'aide financière d'urgence (PAFU) by the Ministry of...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - French and English Version English version of s. 56(1)(u), as the broader of the two, was to be preferred 59
Tax Topics - Income Tax Act - Section 153 - Subsection 153(1) no source deductions from social assistance payments 35

20 July 2007 Internal T.I. 2007-0230451I7 F - Aide financière aux mineures enceintes

A program under the Individual and Family Assistance Act (Quebec) , provided temporary financial assistance to pregnant women under the age of 18,...

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3 October 2006 Internal T.I. 2006-0208161I7 F - Projet pilote - Alternative jeunesse

Regarding assistance payments under the program "Alternative jeunesse" ["Youth Alternative" program] of the Ministère de l'emploi et de la...

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11 December 1995 Internal T.I. 95056370 - Traitement fiscal - versement particulier - indien

Are benefits paid to a Status Indian by the Cree Hunters and Trappers Income Security Board to be included in computing the recipient’s income...

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Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 benefits paid to Crees to support their traditional hunter lifestyle were social assistance 285

13 January 1992 T.I. (Tax Window, No. 15, p. 21, ¶1696)

Grants made under the Home Adaptions for Seniors Independence Program are includible under s. 56(1)(u).

16 August 1991 T.I. (Tax Window, No. 7, p. 16, ¶1394)

There is no provision in the Act which permits a deduction for the repayment of social assistance payments.

7 September 89 Memorandum (February 1990 Access Letter, ¶1121)

Payments by the Quebec government to low-income workers pursuant to the Parental Wage Assistance program constitute social assistance payments....

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Paragraph 56(1)(v) - Workers’ compensation

Cases

Canada v. Whitney, 2002 DTC 7145, 2002 FCA 266

Amounts received by the taxpayer from her employer (the New Brunswick government) for a work-related injury, as required by a clause in the...

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Administrative Policy

22 February 2012 External T.I. 2011-0421671E5 F - Loss of retirement income benefit - death

A lump sum received by the estate of a deceased injured worker from the Ontario Workplace Safety and Insurance Board would be included in income...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 110 - Subsection 110(1) - Paragraph 110(1)(f) - Subparagraph 110(1)(f)(ii) deduction for WSIB compensation paid to estate of deceased injured worker 158

23 November 2009 Internal T.I. 2009-0324731I7 F - Demande d'exemption administrative

An individual incurred legal fees to recover in excess of $80,000 in Quebec workers’ compensation (CSST) payments. After finding that the legal...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(b) legal fees to recover lump sum worker’s compensation payment were non-deductible 50

25 January 2007 External T.I. 2006-0213961E5 F - Rémunération, assurance salaire, indemnité CSST

In Year 1, pending the employee’s application for worker’s compensation from the CSST for a disability (which ceased later in the year), the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(f) - Subparagraph 6(1)(f)(iii) wage maintenance amount paid in advance of workers’ compensation was reportable as s. 6(1)(f)(iii) income, with s. 8(1)(n) deduction when repaid after receipt under s. 56(1)(v) 396

18 December 2006 Internal T.I. 2006-0208611I7 F - Indemnités pour lésions professionnelles

A bank, wishes to establish a compensation plan for its Ontario-resident employees, who suffer work-related injuries or illnesses, pursuant to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 232 - Subsection 232(4) Reg. 232(4) exclusions are broader than those listed 140

4 December 2006 Internal T.I. 2006-0211061I7 F - Rentes pour incapacité et stabilisation sociale

Commission de la santé et de la sécurité du travail du Québec (the "CSST") pays monthly pensions for disability of workers as well as monthly...

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IT-202R2 "Employees' or Workers' Compensation

13 November 1992 T.I. 922953 (September 1993 Access Letter, p. 414, ¶C56-253)

Where parents providing services as trustees or attendants receive disability payments on behalf of a disabled worker, such amounts will be...

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Paragraph 56(1)(x) - Retirement compensation arrangement

Administrative Policy

24 January 2005 External T.I. 2004-0099471E5 F - Convention de retraite pour un actionnaire-employé

Are contributions by a corporation to an RCA deductible in computing its income where the contributions relate to services rendered by a...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(r) no deduction regarding pre-incorporation services, and longstanding CRA position re shareholder-manager compensation 129
Tax Topics - Income Tax Act - Section 67 81 Roundtable position on shareholder-manager compensation also applies to RCA contributions 109
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement a significant reduction in bonus or salary matched by an RCA contribution likely suggests it instead is an SDA 244

8 June 1993 Memorandum (Tax Window, No. 32, p. 17, ¶2614)

Discussion of the options available in respect of the receipt of a lump sum from a U.S. pension plan.

6 August 1991 T.I. (Tax Window, No. 8, p. 7, ¶1421)

Where funds in a foreign pension plan are transferred directly to a registered pension plan in a lump sum, the transfer will not be taxable if the...

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Subsection 56(2) - Indirect payments

Cases

4431472 Canada Inc. v. Canada (Attorney General), 2021 FC 812

A Canadian corporation (“443 Inc”) filed its tax returns on the basis that distributions received by it from a trust were distributions of fee...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 164 - Subsection 164(1) reversal of CRA decision not to reassess on the basis that it was unclear whether it was a final decision 585

Ludmer v. Attorney General of Canada, 2018 QCCS 3381, aff'd 2020 QCCA 697

Two of the taxpayers (“Ludmer” and Steinberg”) were invested along with family, friends and acquaintances (all resident in Canada) in a BVI...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) nature of the legal advice relied upon was unclear 417
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) improper advancing of “settlement” elements that were not sustainable 45
Tax Topics - Income Tax Act - Section 94.1 - Subsection 94.1(1) equity-linked notes held in BVI company were portfolio investments held with a tax avoidance purpose, but were not subject to 7000(2)(d) interest accrual 576
Tax Topics - Income Tax Regulations - Regulation 7000 - Subsection 7000(2) - Paragraph 7000(2)(d) mere possibility of locking in value accretion each year did not crystallize the maximum amount of interest respecting the year 484
Tax Topics - General Concepts - Negligence, Fiduciary Duty and Fault damages awarded against CRA for inter alia making unreasonable reassessments 260
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit recurring fee reduction amounts received for no work were income from a source 313

Lambert v. Canada, 2005 DTC 5499, 2004 FCA 389

A taxable benefit was earned by the taxpayer when a corporation partly owned by him funded the costs of installing a new engine in an aircraft of...

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James v. Canada, 2001 DTC 5075 (FCA)

Amounts that had been earned for work done by the taxpayer (James) for a corporation ("K.C.R. Investments") and that were paid by K.C.R....

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Neuman v. M.N.R., 98 DTC 6297, [1998] 1 S.C.R. 770, [1998] 3 CTC 177

The taxpayer transferred his shares of a commercial real estate company to a newly-incorporated company ("Melru") in consideration for 1,285.714...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Provincial Law 55

Jones v. The Queen, 96 DTC 6016 (FCA)

The sale of a property by a corporation ("Ascot") owned by the taxpayer to the taxpayer's father for less than the property's fair market value...

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Words and Phrases
desire
Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Resolving Ambiguity 77

Smith v. The Queen, 93 DTC 5351, [1993] 2 CTC 257 (FCA)

At a time that the taxpayer was an officer, director, and 49% shareholder of an incorporated Ford dealership ("Holiday 77"), Holiday 77...

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Dixon v. Deputy Attorney General of Canada, 91 DTC 5584 (Ont HCJ.)

An allegation of the Crown that a corporation had knowingly sold land at a substantial undervalue to a corporation half-owned by its president, if...

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The Queen v. Fairey, 91 DTC 5230 (FCTD)

The taxpayer's employer, the Cancer Control Agency of British Columbia, was required by statute to deduct an amount from the taxpayer's monthly...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 72

Mcclurg v. Canada, 91 DTC 5001, [1990] 3 S.C.R. 1020

Mr. McClurg and Mr. Ellis each owned 400 voting and participating Class A shares and 37,500 Class C non-voting preference shares in a trucking...

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Winter v. The Queen, 90 DTC 6681 (FCA)

An individual ("Outerbridge") had a company controlled by him ("Littlefield") sell shares of another corporation ("Harvey") to his son-in-law for...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) s. 56(2) applied to taxpayer rather than 15(1) to son-in-law as de minimis shareholder 74
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) specific provisions applied before GAAR 104

R. v. Century 21 Ramos Realty Inc., 87 DTC 5158, [1987] 1 CTC 340 (Ont.C.A.)

S.56(2) applied when a mortgage owing to a company owned by the individual accused ("Ramos") was discharged and replaced by a mortgage owing to a...

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Boardman v. The Queen, 85 DTC 5628, [1986] 1 CTC 103 (FCTD)

The Saskatchewan Court of Queen's Bench pursuant to s. 22 of the Married Women's Property Act (Sask.) directed the Registrar of Land Titles to...

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The Queen v. Hoffman, 85 DTC 5508, [1985] 2 CTC 347 (FCTD)

The defendant's Canadian employer deducted amounts from his salary and remitted them to its U.S. parent pursuant to an agreement between the...

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De Groote v. The Queen, 85 DTC 5008, [1985] 1 CTC 687, [1984] CTC 687 (FCTD)

S.56(2) did not apply to a payment of dividends since the payor corporation, instead of paying the dividends to the beneficial owner of shares...

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The Queen v. Chrapko, 84 DTC 6544, [1984] CTC 594 (FCTD), rev'd 88 DTC 6487, [1988] 2 CTC 342 (FCA)

The Ontario Jockey Club deducted from each pay cheque that it paid to a race track cashier the amount of cash shortages due to errors made by him....

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Barbeau v. The Queen, 81 DTC 5379, 84 DTC 6148, [1981] CTC 496 (FCTD)

Commissions paid by a company to a "technical and financial advis[ory]" company owned by the taxpayer's family were taxable to him. The...

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Champ v. The Queen, 83 DTC 5029, [1983] CTC 1 (FCTD)

The Class "A" voting shares of a company, which shares were owned by the taxpayer, had the same rights attached to them as the Class "B" voting...

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Cox v. The Queen, 82 DTC 6287, [1982] CTC 322 (FCTD)

Where executors of an estate conveyed land to the taxpayer and his wife jointly in satisfaction of a quantum meruit claim which the taxpayer had...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Compensation Payments 86

Fraser Companies, Ltd. v. The Queen, 81 DTC 5051, [1981] CTC 61 (FCTD)

Substantial interest-free loans were made by a New Brunswick pulp company to a subsidiary that was exempt from taxation by virtue of its status as...

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Murphy v. The Queen, 80 DTC 6314, [1980] CTC 386 (FCTD)

S.56(2), unlike S.74(1) does not refer to property being transferred "either directly or indirectly by means of a trust or by any other means...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property included right to be included in class of discretionary beneficiaries 46
Tax Topics - Income Tax Act - Section 74.1 - Subsection 74.1(1) 95

McClain Industries of Canada Inc. v. The Queen, 78 DTC 6356, [1978] CTC 511 (FCTD)

When the vendor shareholders of a company agreed to assign unpaid accrued management commissions to the purchaser, the amounts of the commissions...

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Perrault v. The Queen, 78 DTC 6272, [1978] CTC 395 (FCA)

It was indicated, obiter, that it was doubtful that s. 56(2) could be applied to the payment of a dividend which was included in the income of the...

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Nelson v. The Queen, 74 DTC 6266, [1974] CTC 360 (FCA)

Although it was the intention of the four related shareholders of a company that father hold 100 voting participating shares and each of his three...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date 187

The Queen v. Quinn, 73 DTC 5215, [1973] CTC 258 (FCTD)

Under a contract with the Canadian Scholarship Trust Fund it was agreed that interest on funds deposited by the taxpayer would be transferred to...

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See Also

Fournier v. Agence du revenu du Québec, 2018 QCCQ 786

The ARQ assessed the taxpayer and his wife for taxable benefits for a period of approximately 2 ½ years on the alleged basis that during that...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Rectification & Rescission taxpayer could reverse an assessment for a taxable benefit by subsequently engaging in self-help rectification 390

Gainor v. The Queen, 2011 DTC 1317 [at 1798], 2011 TCC 442

The taxpayer had been a director of corporation ("Canam") which had been struck from the corporate registry. Unaware of Canam's dissolution, CIBC...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Nature of Income 172

Delso Restoration Ltd. v. The Queen, 2011 DTC 1315 [at 1786], 2011 TCC 435 (Informal Procedure)

The corporate taxpayer was held entirely by the two individual taxpayers, who were alleged by the Minister to have had it pay for renovations on...

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D'Andrea v. The Queen, 2011 DTC 1234 [at 1356], 2011 TCC 298

The taxpayer was a manager of a corporation, which held real estate. He arranged to sell the property to a corporation ("Newco") that was owned...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) fraud conviction did not establish neglectful reporting 193

Sochatsky v. The Queen, 2011 DTC 1065 [at 346], 2011 TCC 41, 2012 TCC 65

The taxpayer was a director, shareholder and employee of a corporation. He resigned from his directorship and employment in 2001. In that year,...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt bonus booked as loan back/constructive receipt 131
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) amount booked as loaned-back bonus was remuneration 186

GlaxoSmithKline Inc. v. The Queen, 2008 DTC 3957, 2008 TCC 324

The taxpayer purchased the active pharmaceutical ingredient of a drug that was marketed by it in Canada from an affiliated non-resident...

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Laflamme v. The Queen, 2008 DTC 482, 2008 TCC 255

In the context of estate freeze transactions, a trust that the taxpayer had established for the benefit of his children transferred a portion of...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Shares 202

Ceco Operations Ltd. v. The Queen, 2006 DTC 3006, 2006 TCC 256

The taxpayer transferred assets of a business to a partnership in what was intended to be an s. 97(2) rollover transactions in consideration for...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Substance 99
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) 270
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) partnership subscription for taxpayer affiliate pref shares not boot 263

Speer v. The Queen, 99 DTC 157 (TCC)

S.56(2) did not apply to an arrangement under which fees earned by companies as a result of a tax plan concocted by tax partners at Coopers &...

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Ferrel v. The Queen, 97 DTC 1565, [1998] 1 CTC 2269 (TCC)

The taxpayer was the sole trustee of the family trust that, by utilizing his services, provided management services to corporations in which the...

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Gilvesy v. The Queen, 96 DTC 1417, [1996] 3 CTC 2056 (TCC)

After facing bank pressure to have a corporation owned by him ("Enterprises") sell a property, the taxpayer arranged to have Enterprises sell the...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Other 53

Paxton v. The Queen, 95 DTC 179 (TCC), rev'd 97 DTC 5012 (FCA)

S.56(2) did not apply to transactions whereby the taxpayer, after agreeing with a third party to transfer his shares, or cause his shares to be...

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Placements T.S. Inc. v. The Queen, 94 DTC 1302, [1994] 1 CTC 2464 (TCC)

A property over which the taxpayer had a right of first refusal was purchased for $500,000 from the arm's length owner by companies with whom the...

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Pierre Béliveau v. Minister of National Revenue, 91 DTC 669, [1991] 1 CTC 2683 (TCC)

When a corporation in which the taxpayer and his brother each had a 25% shareholding ("Brasserie") had its operating permit cancelled by the local...

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Simon-Carves of Canada Ltd. v. MNR, 89 DTC 98, [1989] 1 CTC 2149 (TCC)

The direction by the U.K. shareholder of the taxpayer to pay off the liabilities of a U.S. affiliate of such shareholder gave rise to Part XIII...

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Administrative Policy

1 June 2021 External T.I. 2020-0865201E5 F - Sale of property for POD less than FMV

Messrs. X and Y (unrelated individuals), who each wholly-owned operating corporations ("ACo" and "BCo"), also equally owned XYZCo, which built 12...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) sale of 2 properties by 50-50 corp at a knowing undervalue to the respective shareholders’ own corporations likely was non-arm’s length 212

8 June 2018 Internal T.I. 2017-0683021I7 - Assignment of capital interest in a trust

As a discretionary irrevocable personal family trust, which had non-resident beneficiaries (Y and Y’s spouse (Z)), was approaching the 21-year...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) purported drop-down of trust interests to an excluded beneficiary resulted in s. 104(13) inclusions to transferors 343
Tax Topics - Income Tax Act - 101-110 - Section 107 - Subsection 107(5) purported drop down of trust interests by non-resident beneficiaries to ULC was ineffective so that s. 107(2.1) applied to subsequent purported asset distribution to ULC 192
Tax Topics - Income Tax Act - 101-110 - Section 105 - Subsection 105(1) potential application of s. 105(1) to income distribution to non-qualifying transferee of trust interest 273
Tax Topics - Income Tax Act - Section 248 - Subsection 248(25) - Paragraph 248(25)(a) para. (a) refers to beneficiary in ordinary sense - and does not include assignee 62

28 October 2016 External T.I. 2016-0654331E5 F - Transfer of rights to income

Upon a sale by A of leased land to a non-arm’s length corporation (Corporation A) in which A did not hold any shares, A and Corporation A...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Nature of Income where rental lands purchased subject to obligation to pay the rents to vendor, rents did not have quality of income to purchaser under s. 9 165
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense where rental lands purchased subject to obligation to pay the rents to vendor, no income inclusion and deduction of the rents by the purchaser under ss. 9 and 18(1)(a) 89
Tax Topics - Income Tax Act - Section 56 - Subsection 56(4) where rental lands purchased subject to obligation to pay the rents to NAL vendor, s. 56(4) trumps s. 9 to include rents in purchaser’s income 169

6 December 2016 External T.I. 2016-0666841E5 F - Sale of property for POD less than FMV

Opco’s shares are held as to 40%, 40% and 20% by Holdco A, Holdco B and Holdco C, which are wholly owned by three individual shareholders (A, B...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1.4) - Paragraph 15(1.4)(c) application to Holdco shareholder of Opco where Opco conferrred a benefit on child of Holdco's shareholder 210
Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) s. 246(1) applicable to indirect shareholder benefit if direct shareholder influenced the benefit conferral 205

14 March 2016 External T.I. 2016-0626781E5 - Neuman Type Situation

The only issued and outstanding share of Opco (which has retained earnings of $500,000) is 1 Class A common share, with a fair market value of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) s. 15(1) might apply where spouse subscribes nominal consideration for Opco shares and receives a large discretionary dividend 226
Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) Kieboom treated as entailing disposition of right to receive dividends 340
Tax Topics - Income Tax Act - Section 73 - Subsection 73(1) spousal rollover for Kieboom disposition of economic interest 82

24 June 2015 External T.I. 2015-0575911E5 F - Benefit to shareholder or conferred on a person

Corporation A, is wholly owned by Holdco, which has equal unrelated Shareholders 1, 2, 3 and 4. Corporation A disposes of a capital property to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1.4) - Paragraph 15(1.4)(c) benefit only conferred on one shareholder (the husband) if wife of one of four sibling shareholders receives benefit 333
Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) benefit conferred on spouse of individual shareholder of parent 153

S2-F3-C1 - Payments from Employer to Employee

1.8 A payment from an employer that is deemed [by s. 6(3)] to be employment income is included in an employee's income…[when] the amount is...

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10 April 2014 External T.I. 2013-0514321E5 - Donated vacation

Employees, who are otherwise entitled to convert their vacation leave to cash, may donate a portion of their annual vacation entitlements for use...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) donated vacation/no double taxation 170

13 March 2014 External T.I. 2013-0510791E5 - Non-cash long-service award and cash donation

Will an employee realize a taxable benefit upon foregoing the receipt of a non-cash gift valued over $500 in recognition of long service and...

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11 March 2014 Internal T.I. 2013-0513221I7 F - Stock options

Publico determined to grant stock options to its directors and consultants, as a result of which a private corporation ("Corporation") was...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) double income inclusion under s. 56(2) or (4) to consulting corporation, and under s. 15(1) to its shareholder, where consultant's options issued directly by client to shareholder 113
Tax Topics - Income Tax Act - Section 56 - Subsection 56(4) implicit transfer by corporation when stock options earned by it were issued directly by its client to its shareholder 175
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) s. 248(28) does not prevent a double income inclusion to corporation under s. 56 and shareholder under s. 15 226
Tax Topics - Income Tax Act - Section 9 - Timing no s. 9(1) income inclusion from consultant being granted stock options until exercise 226
Tax Topics - General Concepts - Fair Market Value - Options stock options with no in-the-money value could have nil FMV 134
Tax Topics - Income Tax Act - Section 52 - Subsection 52(1) s. 15 benefit due to shareholder receipt of stock options earned by corporation added to the ACB of the exercised shares 165

27 February 2014 External T.I. 2013-0506401E5 - Loan from a partnership to an individual

A partnership between Holdco1 as the 99.9% LP and Holdco2 as the 0.1% GP (owned by an arm's length individual) makes a $2 million...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(2) partnership to partner shareholder loan 89

15 November 2013 Internal T.I. 2013-0478621I7 F - Transfer of intangibles - TP adjustments

Pursuant to a sales agreement between Canco, its immediate non-resident parent (Parent) and the ultimate U.S. parent of Canco (Pubco), as vendors,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) group sale with Canco not charging for intangibles should engage s. 247(2) 149
Tax Topics - Income Tax Act - Section 69 - Subsection 69(4) s. 69(4) inapplicable where grandchild Canco undercharges for asset sale, enhancing sales proceeds received by ultimate U.S. parent 176

19 August 2013 External T.I. 2013-0488011E5 - Real Estate Referral Fees

If a real estate agent directed the real estate brokerage to pay a portion of the commission to the home purchaser as a referral fee, how would...

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14 February 2013 Internal T.I. 2011-0424341I7 F - Amounts forwarded to trustee/beneficiary

The financial advisor of Mother settled a discretionary trust of which Mother and her friend (Y) were the trustees (with decisions to be made...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) s. 75(2) not applicable to dividends on common shares issued to discretionary family trust on estate freeze 237
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) income was received by children beneficiaries as agent for their mother 263
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(6) - Paragraph 104(6)(b) Quebec discretionary trust with two named trustees but, in fact, only one trustee, would not be entitled to s. 104(6)(b) deductions 155

9 January 2013 External T.I. 2010-0384221E5 F - Paiements indirects

In finding that where a company was required under a collective agreement respecting self-employed workers which required it to pay certain fees...

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6 December 2012 External T.I. 2012-0461711E5 F - Paiements indirects / Indirect payments

A producer who retains the services of an incorporated performing artist is required to pay a percentage of the fees otherwise payable by it to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 200 - Subsection 200(1) no T4A slip to be issued by producer paying mandatory contributions to the fund for the union of the artist whose corporation receives fees from the producer 197

30 October 2012 Ontario CTF Roundtable, 2012-0462891C6 - Application of 56(2) to discretionary trust

In response to a query as to whether, in the context of a fully discretionary trust where the sole trustee is also a discretionary beneficiary of...

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20 November 2012 Internal T.I. 2011-0416761I7 - Non-Resident, Part XIII Tax

Although the facts are unclear, a possible approximation is that a partnership with Canadian partners, of which USco was the controlling...

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25 September 2012 BC Tax Conference Roundtable, 2012-0457551C6 - Application of 56(2) to discretionary trust

CRA concluded that it could not "confirm, as requested, that subsection 56(2) will not apply in every case where the sole trustee (who is also a...

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14 April 2009 External T.I. 2007-0238221E5 F - Rights of musician-Transfer

As part of a general response respecting the transfer of rights by a musician to a corporation, CRA stated:

As illustrated by … IT-335R2 [para....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(4) s. 56(4) generally will apply where royalty is transferred without assignment of copyright, with exception of SOCAN royalty 165
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) right to royalties from SOCAN constituted eligible property 109
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business royalty income generated from an active business is itself active business income 122

16 December 2008 External T.I. 2008-0279741E5 F - Renonciation au capital d'une fiducie

CRA indicated that the renunciation of a capital interest in a discretionary family trust would not give rise to the application of s. 56(2),...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) settlor’s valid renunciation of capital interest (but not income interest) prior to trustees’ exercise of discretion to distribute a capital gain would avoid application of s. 75(2)(a)(i) 199
Tax Topics - Income Tax Act - Section 248 - Subsection 248(9) - Disclaimer legally impossible for a beneficiary of a discretionary trust to partially renounce income from a specific trust property 262
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (i) non-disposition distribution of non-taxable portion of trust capital gains avoids a gain under s. 107(2.1) 375
Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition settlor’s renunciation of capital interest (but not income interest) prior to trustees’ exercise of discretion to distribute a capital gain would generate nil proceeds and not engage s. 56(2) or (4) 194
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) s. 69(1) does not apply to a renunciation of trust capital interest since no disposition "to" any person 44
Tax Topics - Income Tax Act - Section 56 - Subsection 56(4) s. 56(4) inapplicable to disclaimer of capital interest in a trust 43

4 January 2006 Internal T.I. 2005-0115801I7 F - Convention de retraite

A closely-held corporation that was dividending out all the profits of its business also established a purported retirement compensation...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retirement Compensation Arrangement arrangement was not an RCA because the benefits were not reasonable 110
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(r) excessive benefits would have resulted in denial under ss. 18(1)(o.2) and 20(1)(r) had the arrangement qualified as an RCA 206
Tax Topics - Income Tax Act - Section 67 Petro-Canada applied re determining reasonableness 264
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement contributions to a purported RCA that contemplated excessive benefits also were not in relation to an SDA because the contributions instead were indirect shareholder appropriations 108

1998 Strategy Institute Round Table, No. 981310

S.56(2) will not apply where: the freezor exchanges common shares of an investment holding company ("Holdco") under s. 86(1) for redeemable...

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29 October 1996 External T.I. 9630325 - TRUSTEE DIRECTING PAYMENT OR RIGHT TO INCOME

With respect to a testamentary trust with four trustees who are siblings and who are beneficiaries along with their spouses and children, RC found...

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30 October 1995 Internal T.I. 9516317 F - VALIDITÉ DES DIVIDENDES DISCRÉTIONNAIRES

Discretionary dividends were found to be valid in light of the McClurg and Neuman decisions.

2 June 1995 External T.I. 9503755 - CHARITABLE GIFT ANNUITY IN RRSP

Discussion of application of ss.56(2) and 146(8) where an annuitant wishes to use some or all of the property in his RRSP to purchase a charitable...

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2 November 1994 Internal T.I. 9420446 - REDIRECTION OF SALARY DURING A STRIKE

Where the union and management negotiate an agreement whereby the union will supply a certain number of essential workers during a strike, with...

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28 October 1994 External T.I. 9402465 - NON-CAP. LOSSES AND CORP. DEBT

In response to a question respecting intercorporate debt between related corporations designed to permit them to utilize non-capital losses within...

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17 May 1993 Memorandum (Tax Window, No. 32, p. 2, ¶2592)

Pension income equally divided between two spouses as a result of a marriage breakdown would be subject to s. 56(2) in Alberta, but not in B.C.

11 May 1994 Memorandum 932735 (C.T.O. "IAAC Payments Applied to a Loan after Bankrupt Discharged")

In the case of a wrap-around IAAC where the taxpayer does not actually receive the funds, the annuity payments would ordinarily be included in the...

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92 C.R. - Q.22

RC's position that s. 56(2) ordinarily will be applicable if a waiver of dividends in a closely held corporation is undertaken for the purpose of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) 27

92 C.R. - Q.22

RC will continue to assess a benefit in situations where a shareholder receiving a dividend on a discretionary share did not make adequate...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) 54

24 February 1992 Memorandum (Tax Window, No. 13, p. 12, ¶1628)

Generally, s. 56(2) will not be applied in the case of a waived or discretionary dividend where the shareholders deal at arm's length with one...

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13 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 9, ¶1044)

Ss.56(2) and (4.1) will apply to a family mortgage plan under which a parent purchases a GIC from a financial institution at less than the going...

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23 March 1990 T.I. (August 1990 Access Letter)

In response to a suggestion that a corporation could be purged of non-qualifying assets in order to qualify as a qualified small business...

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14 July 1989 Inter-Divisional Memorandum (Dec. 89 Access Letter, ¶1045)

In a situation similar to McClurg, where both the husbands and the wives held shares of the corporation and the corporation declared dividends...

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87 C.R. - Q.72

S.56(2) applies where the board has the discretion to pay dividends on one or more classes of shares at its discretion. McClurg is being appealed.

86 C.R. -Q.40

It would be "unlikely" that s. 56(2) would apply to an income-splitting to which s. 74.4 doesn't apply by virtue of the small business corporation...

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86 C.R. - Q.41

It is not possible to state that it is ever possible to waive dividends in favour of related shareholders without the application of s. 56(2).

85 C.R. - Q.6

Where the taxpayer is assessed under s. 56(2), the recipient's income (particularly where not statute-barred) will be reduced.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) 13

84 C.R. - Q.24

S.56(2) will ordinarily be applicable if the waiver of dividends in a closely held corporation is undertaken for the purpose of transferring...

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84 C.R. - Q.82

RC will accept the payment of large discretionary dividends as a special recompense to the active shareholders, provided that the non-active...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 67 54

81 C.R. - Q.26

s. 56(2) would ordinarily be applicable if the waiver of dividends in a closely held corporation is undertaken for the purpose of transferring...

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79 C.R. - Q.19

Where a waiver of dividends in a closely-held corporation is undertaken for the purpose of transferring income to the other shareholders...

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IT-468R "Management or Administration Fees Paid to Non-Residents"

The portion of a management or administration fee paid to a non-resident affiliate that is in excess of a reasonable amount may be treated as a...

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IT335R2 "Indirect Payments" 12 July 2004

13. An amount to which subsection 56(2) applies could be included in the income of both the taxpayer and the person who receives the payment or...

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Articles

Bowman, "New Wine in Old Bottles - Using Personal Trusts as Business Vehicles", Business Vehicles, Vol. III, No. 1, 1996, p. 114

"Trust-partnership structures may permit greater flexibility than a single corporation ... since management of the business can be left in the...

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Beam, Laiken, "Recent Developments on Subsection 56(2): Indirect Payments", 1995 Canadian Tax Journal, Vol. 43, No. 2, p. 447.

Subsection 56(3) - Exemption for scholarships, fellowships, bursaries and prizes

See Also

Huang v. The Queen, 2012 DTC 1120 [at 3103], 2012 TCC 81 (Informal Procedure)

The taxpayers were postdoctoral students. Woods J. found that amounts received in 2009 under a research fellowship from Parkinson Society Canada...

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Words and Phrases
student

Administrative Policy

7 July 2006 External T.I. 2006-0190701E5 F - Bourses d'études et de perfectionnement

CRA noted that the2006 federal budget proposal to make all scholarship and bursary payments to students tax-free had not yet been enacted, and it...

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26 November 2010 External T.I. 2008-0299301E5 F - Sommes reçues par des médecins résidents

CRA found that medical residents were employees of the medical facility notwithstanding their trainee role, so that fellowships were employment...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) medical residents were employees notwithstanding trainee role, so that fellowships were employment income 199

Paragraph 56(3)(a)

Subparagraph 56(3)(a)(ii)

Administrative Policy

6 October 2010 External T.I. 2008-0302951E5 F - Stagiaires postdoctoraux

In finding that scholarships awarded to postdoctoral fellows are ineligible for the full tax exemption for scholarships and fellowships, as they...

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Paragraph 56(3)(b)

Subsection 56(3.1) - Limitations of scholarship exemption

Paragraph 56(3.1)(b)

Administrative Policy

20 August 2014 External T.I. 2014-0529481E5 - Scholarship exemption

In response to a general inquiry, CRA noted:

[I]n the Department of Finance technical notes… example, an individual receives a bursary which...

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31 July 2013 External T.I. 2012-0452591E5 F - Matériel lié à un programme d'études

What is the meaning of “materials related to the program”? CRA responded:

As described in … S1-F2-C3 … 3.94 … materials related to the...

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Subsection 56(4) - Transfer of rights to income

Cases

Shaw v. The Queen, 89 DTC 5194, [1989] 1 CTC 386 (FCTD), aff'd 93 DTC 5213 (FCA)

The taxpayer and her husband had operated a service station in partnership and then transferred pursuant to s. 85(2) the assets of the business...

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Words and Phrases
rent

De Groote v. The Queen, 85 DTC 5008, [1985] 1 CTC 687, [1984] CTC 687 (FCTD)

The taxpayer sold shares to, and executed a declaration of trust in favour of, a company controlled by him and then, while still retaining the...

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Fraser Companies, Ltd. v. The Queen, 81 DTC 5051, [1981] CTC 61 (FCTD)

S.56(4) relates to the transfer or assignment of a right to an amount, not to the loaning of an amount.

The Queen v. Canadian-American Loan and Investment Corp. Ltd., 74 DTC 6104, [1974] CTC 101 (FCTD)

The taxpayer sublet 1/4 of the premises which were used by it in its marina business to an affiliated company ("Georgia") with accumulated losses,...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt receipt of sums collected by affiliate 153

The Queen v. Burns, 73 DTC 5219, [1973] CTC 264 (FCTD)

Cheques received by an employee which were endorsed by him to a company owned by him were included in his income pursuant to s. 56(4).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 62

See Also

Howard v. Commissioner of Taxation, [2014] HCA 21

The taxpayer and four others formed a joint venture to acquire, lease and sell a golf course. The taxpayer attempted to have a corporation of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(2) damages not received as constructive trustee as not received qua director 191
Tax Topics - Income Tax Act - Section 9 - Compensation Payments damages not corporate income as not received qua director 191
Tax Topics - Income Tax Act - Section 9 - Nature of Income agreement assigned rights to proceeds of law suit rather than entitlement under law suit 344

Boutilier v. The Queen, 2007 DTC 479, 2007 TCC 96

The taxpayer was found to have transferred the right to receive trailer fee income to a family corporation, but to have continued to earn the...

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MFC Bancorp Ltd. v. The Queen, 99 DTC 905 (TCC)

Before going on to find that s. 56(4) did not apply to royalty income derived from the taxpayer's interest as lessor in mining concessions and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) largely overlapping boards of directors and substantial minority interest 80

Ferrel v. The Queen, 97 DTC 1565, [1998] 1 CTC 2269 (TCC)

The taxpayer who was the sole trustee of the family trust that, by utilizing his services, provided management services to corporations in which...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) 136

Placements T.S. Inc. v. The Queen, 94 DTC 1302, [1994] 1 CTC 2464 (TCC)

A property over which the taxpayer had a right of first refusal was purchased for $500,000 from the arm's length owner by companies with whom the...

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Sazio v. MNR, 69 DTC 5001 (Ex Ct)

The taxpayer, who succeeded to the position of head coach at a football club, resigned from that position, became an employee of a company owned...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 148

Administrative Policy

28 October 2016 External T.I. 2016-0654331E5 F - Transfer of rights to income

Upon a sale by A of leased land to a non-arm’s length corporation (Corporation A) in which A did not hold any shares, A and Corporation A...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Nature of Income where rental lands purchased subject to obligation to pay the rents to vendor, rents did not have quality of income to purchaser under s. 9 165
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense where rental lands purchased subject to obligation to pay the rents to vendor, no income inclusion and deduction of the rents by the purchaser under ss. 9 and 18(1)(a) 89
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) s. 56(2) could apply to shareholder of purchaser of lands if vendor did not pay FMV consideration for retaining rights to rents 168

11 March 2014 Internal T.I. 2013-0513221I7 F - Stock options

Publico determined to grant stock options to its directors and consultants, as a result of which a private corporation ("Corporation") was...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) double income inclusion under s. 56(2) or (4) to consulting corporation, and under s. 15(1) to its shareholder, where consultant's options issued directly by client to shareholder 113
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) s. 56(2) benefit where corporation implicitly consented to consultant's options being issued by client directly to its shareholder 170
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) s. 248(28) does not prevent a double income inclusion to corporation under s. 56 and shareholder under s. 15 226
Tax Topics - Income Tax Act - Section 9 - Timing no s. 9(1) income inclusion from consultant being granted stock options until exercise 226
Tax Topics - General Concepts - Fair Market Value - Options stock options with no in-the-money value could have nil FMV 134
Tax Topics - Income Tax Act - Section 52 - Subsection 52(1) s. 15 benefit due to shareholder receipt of stock options earned by corporation added to the ACB of the exercised shares 165

10 July 2013 Internal T.I. 2013-0475501I7 F - Amounts returned to trustee/beneficiary

Father and Y were the trustees of a Quebec family trust, whose beneficiaries included father and his three children. Distributions made by the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13) family trust income distributed to children but repaid as reimbursement to father for family expenses was income to him, not them 221
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(24) distributions to children immediately paid to father 184
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(6) distributions to children immediately paid to father were deductible even though received by children as his agents 179
Tax Topics - Income Tax Act - 101-110 - Section 105 - Subsection 105(1) payment of income distributions by children to father not a benefit under the trust 232

14 April 2009 External T.I. 2007-0238221E5 F - Rights of musician-Transfer

As part of a general response respecting the transfer of rights by a musician to a corporation, CRA stated:

[I]n … F2002-0149781R3, the CRA took...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) s. 56(2) not applicable where copyright or royalty interests transferred at FMV 75
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) right to royalties from SOCAN constituted eligible property 109
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Specified Investment Business royalty income generated from an active business is itself active business income 122

16 December 2008 External T.I. 2008-0279741E5 F - Renonciation au capital d'une fiducie

CRA indicated that the renunciation of a capital interest in a discretionary family trust would not give rise to the application of s. 56(4),...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) settlor’s valid renunciation of capital interest (but not income interest) prior to trustees’ exercise of discretion to distribute a capital gain would avoid application of s. 75(2)(a)(i) 199
Tax Topics - Income Tax Act - Section 248 - Subsection 248(9) - Disclaimer legally impossible for a beneficiary of a discretionary trust to partially renounce income from a specific trust property 262
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (i) non-disposition distribution of non-taxable portion of trust capital gains avoids a gain under s. 107(2.1) 375
Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition settlor’s renunciation of capital interest (but not income interest) prior to trustees’ exercise of discretion to distribute a capital gain would generate nil proceeds and not engage s. 56(2) or (4) 194
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) s. 69(1) does not apply to a renunciation of trust capital interest since no disposition "to" any person 44
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) s. 56(2) inapplicable to renunciation of capital interest in a trust 45

29 April 2003 External T.I. 2003-00646

Allocations made to the spouse of a retired partner pursuant to s. 96(1.1) would, depending on the circumstances, also be included in the income...

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8 September 1997 External T.I. 9707155 - INCORPORATION OF B.C. REAL ESTATE SALESPEOPLE?

Where self-employed BC real estate sales people purportedly incorporate their proprietorships, with the Superintendent of real estate allowing the...

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3 February 1994 External T.I. 5-923647

Although s. 56(4) could apply in some circumstances to a contractor transferring unapproved billings and unapproved holdbacks to a controlled...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) 21

3 December 1993 External T.I. 9200995 - TRANSFER OF FARM INVENTORY TO A CORPORATION

Where a farmer, who is guaranteed under the Gross Revenue Insurance Program ("GRIP") to receive a price of $4 per bushel of wheat, transfers his...

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Subsection 56(4.1) - Interest free or low interest loans

Administrative Policy

25 March 2009 External T.I. 2008-0300401E5 F - Fiducie en faveur de soi-même - prêt sans intérêt

Mr. X makes a non-interest bearing loan to an alter ego trust that was established for him. The terms of the loan were established independently...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) Howson applied to find that non-interest bearing loan by individual to his alter ego trust not subject to s. 75(2)/no contribution if individual pays trust taxes following a s. 104(13.1) election 181
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13.1) s. 104(13.1) election generally available where no s. 75(2) application, which is not engaged by the individual’s payment of trust-level taxes 357
Tax Topics - General Concepts - Payment & Receipt individual pays trust taxes when he receives trust distributions net of such taxes 34

92 C.R. - Q.7

Re application of s. 56(4.1) to "immigrant's trust".

91 C.R. - Q.5

s. 56(4.1) will apply to any income derived by a non-resident trust established for the benefit of an immigrant where the non-resident trust is...

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8 May 1990 T.I. (October 1990 Access Letter, ¶1461)

Where an individual makes an interest-free loan to his son-in-law who invests the money in a private corporation controlled by him by way of loan...

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89 C.R. - Q.47

"The provisions of subsection 56(4.1) will not normally apply where there is a bona fide sale of property (instead of property being loaned) by...

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88 C.R. - "Finance and Leasing" - "Interest" - "Loans to Non-Arm's Length Parties"

A loan by a parent to an adult child on an interest-free basis to assist the child in acquiring a home to be used as a principal residence...

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Articles

Joseph Frankovic, "Income Splitting and Attribution", Tax Topics, Wolters Kluwer, No. 2250, April 23, 2015

Although the attribution rules do not apply to transfers of property to adult family members other than a spouse, subsection 56(4.1) can apply...

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Emes, "Planning for Immigration to Canada from Countries other than the United States", 1993 Corporate Management Tax Conference Report, c. 13.

Discussion of immigrant trusts.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 74.4 - Subsection 74.4(2) 4

Brahmst, "Subsection 56(4.1) - An Update", Canadian Current Tax, January 1992, p. P47.

Subsection 56(6)

Administrative Policy

14 May 2013 External T.I. 2013-0484971E5 F - PUGE - décès du conjoint

A taxpayer ("Ms. A") died on October 1 of Year 1. Mr. A, her surviving spouse, did not have a new spouse at the end of the year. Ms. A and Mr. A...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(9.1) deceased’s income did not include income on her rights and things return 64

Subsection 56(9.1)

Administrative Policy

14 May 2013 External T.I. 2013-0484971E5 F - PUGE - décès du conjoint

A taxpayer ("Ms. A") died on October 1 of Year 1. Mr. A, her surviving spouse, did not have a new spouse at the end of the year. A separate rights...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(6) deceased had spouse at the end of her terminal year 138

Subsection 56(12) - Foreign retirement arrangement

Cases

Serra v. Canada, 98 DTC 6602 (FCA)

Marceau J.A. stated (at pp. 6603-4) that "the argument of counsel for the applicants, which in a nutshell would insert the adjective 'absolute'...

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The Queen v. Arsenault, 96 DTC 6131 (FCA)

The taxpayer met the requirements of s. 60(b) where, notwithstanding the requirements of a separation agreement stipulating that he was to pay...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(b) 60

Administrative Policy

29 January 2018 External T.I. 2017-0682301E5 - Deemed Distribution and Withdrawal from IRA

Where a U.S. long-term resident relinquishes her green card (or a U.S. citizen renounced citizenship) after having become a Canadian resident,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(i) - Clause 56(1)(a)(i)(C.1) the deemed U.S. income inclusion from an IRA on renouncing U.S. citizenship or relinquishing a green card also is recognized for ITA purposes 365
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) deemed Code taxability of IRA on renouncing U.S. citizenship generally would generate an FTC to deemed Cdn-resident recipient 125