Subsection 139.1(1) - Definitions
Mutual Holding Corporation
Administrative Policy
25 September 2014 External T.I. 2012-0451411E5 F - Mutual Holding Corporation
Respecting a submission that the definition of "mutual holding corporation" (the "Definition") provided for both direct and indirect holdings of shares of insurance corporations in the context of presented situations that are not repeated in the CRA letter, CRA stated:
With respect to the meaning of "holding" in the Definition, we are of the view that the legislator contemplated the direct holding and not an indirect holding of shares of the capital stock of the insurance corporation. …
However, [as] it is a question of fact whether the mutual company in the other situations [presented] was set up for the purpose of directly holding shares of an insurance corporation…we would be prepared to review all the transactions surrounding the situations you described in a request for an advance ruling.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 139.1 - Subsection 139.1(1) - Mutual Holding Corporation | "holding" must be direct holding | 59 |
25 September 2014 External T.I. 2012-0451411E5 F - Mutual Holding Corporation
Does a mutual corporation qualify as a mutual holding corporation if it holds shares of the insurance corporation indirectly? After quoting from the mutual holding corporation definition, CRA stated (TaxInterpretations translation):
[T]he legislator contemplated the direct holding and not an indirect holding of shares of the capital stock of the insurance corporation.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 139.1 - Subsection 139.1(1) - Mutual Holding Corporation | “holding” refers to direct holding/this purpose is a question of fact | 137 |
Subsection 139.1(15)
Administrative Policy
22 May 2001 External T.I. 2000-0021095 F - DEMUTULISATION NON-RESIDENT
After discussing the application of s. 139.1(16) (where it elected) to a non-resident corporation, not carrying on business in Canada, which was the policyholder of a group life insurance policy for the employees of its Canadian subsidiary, and s. 139.1(15) as it could apply to premiums paid by that corporation, CCRA stated:
Where the conditions of subsection 139.1(15) are satisfied, the premiums paid by a non-resident corporation would be deemed to be paid by the insured employees, but only for the purposes of paragraph 6(1)(f) and regulations made for the purposes of subsection 6(4), and the premiums would not be deductible. However, notwithstanding the application of subsection 139.1(15), paragraph 139.1(4)(f) would have the effect of treating the stakeholder as if the stakeholder had received a dividend to which Part XIII tax would apply.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 139.1 - Subsection 139.1(16) | non-resident interest person needs to make the election for s. 139.1(16) to apply – if so, per s. 139.1(16)(k), no Part XIII tax applicable to individual re the cash payment | 208 |
Subsection 139.1(16)
Administrative Policy
22 May 2001 External T.I. 2000-0021095 F - DEMUTULISATION NON-RESIDENT
Regarding the application of s. 139.1 to a non-resident corporation, not carrying on business in Canada, which is the policyholder of a group life insurance policy for the employees of its Canadian subsidiary, CCRA reviewed s. 139.1(16) and stated:
[A] non-resident corporation that does not carry on any business in Canada is generally not a person whose taxable income is exempt from tax under Part I … . Consequently, a non-resident interested person would have to make an election in order for subsection 139.1(16) to apply. In addition, the fact that a conversion benefit is received in respect of an employer-sponsored plan or an employee-sponsored plan does not prevent subsection 139.1(16) from applying.
To the extent that the other conditions of subsection 139.1(16) are met, where a person that is a non-resident corporation elects for that subsection to apply to a cash payment to employees of its Canadian subsidiary, the rules in paragraphs 139.1(16)(g) to (k) would apply. As provided in paragraph 139.1(16)(k), the portion of the relevant taxable conversion benefit in respect of which the payment was made would be deemed not to have been received by the individual. Consequently, the tax under Part XIII would not apply to the individual in respect of that amount.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 139.1 - Subsection 139.1(15) | potential application of Pt. XIII tax to premiums paid by non-resident corporation | 134 |