Words and Phrases - "designation"
St. Benedict Catholic Secondary School Trust v. Canada, 2022 FCA 125
The taxpayer (the “Trust”) had losses for its 1997 to 2003 taxation years as a result of CCA claimed on its principal asset (a Class 13 asset). In 2017, it disposed of that asset for nominal proceeds, and claimed a terminal loss for that year on the basis that the asset’s undepreciated capital cost should be increased to reflect reduced CCA claims for its 1997 to 2003 taxation years (being such claims as would reduce the claimed losses to nil).
In finding that such CCA claims could not be treated as having been revised, Webb JA noted (at para. 36) that “Nassau Walnut … drew a distinction between an election and a designation” and found (at para. 41) that “the comments in Nassau Walnut with respect to an election, and the inability of a taxpayer to change an election absent a specific provision in the Act permitting such a change, are applicable in this case.” He further stated (at paras. 38, 49):
The choice made by the Trust in deciding what amount of CCA to claim in each year is akin to an election as described above by this Court. … If the Trust would have had sufficient income within the relevant time period to use the non-capital losses, then it would have benefited from carrying these non-capital losses forward to the year of profitability. In effect, the Trust would have been entitled to use several years of CCA to reduce its income, rather than only the CCA for the year in which it had a profit. …
If the Trust is permitted to revise its earlier claims for CCA, this would defeat the purpose chosen by Parliament of having non-capital losses only available for a particular period of time. Having chosen to claim the amounts of CCA as it did in each of the years, the Trust must accept the consequences that flow from having made those choices. The Trust is attempting to revive non-capital losses that it cannot otherwise claim by converting these non-capital losses into a terminal loss in 2017.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(a) - Revising Claims | taxpayer was precluded from changing previous CCA claims | 301 |
16 June 2014 STEP Roundtable, 2014-0522991C6 - Safe Income
A corporation has insufficient safe income in respect of its shares and, rather than making a s. 55(5)(f) designation, self-assesses itself for a capital gain to the extent of the insufficient safe income on hand? Is it permissible for it to self-assess the dividend received by it as proceeds of disposition?
CRA referred to Nassau Walnut, which found that a s. 55(5)(f) designation is not an election (and "is, in some respects, no different than the deduction provided under subsection 112(1)") and, more generally, referred to Brelco, Lamont and Kruco for the principle "that the safe income of a corporation should not be subject to double taxation when distributed as a dividend to another corporation." CRA then stated:
CRA's long standing practice is to apply subsection 55(2) only to the excess of the taxable dividend paid on a share over the safe income on hand attributable to that share, when issuing an assessment based on subsection 55(2).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(f) | s. 55(5)(f) designations are unnecessary | 96 |
Her Majesty the Queen, Appellant v. Nassau Walnut Investments Inc., Respondent, 97 DTC 5051, [1998] 1 CTC 33 (FCA)
Although it had been planned that the portion of deemed dividends received by the taxpayer (arising on the redemption of shares held by it) that did not come out of safe income would be subject to a designation under s. 55(5)(f), all of such amounts were reported by the taxpayer in its return as deemed dividends due to an error by a subsequently-appointed accounting firm. In finding that the taxpayer was entitled to make a designation under s. 55(5)(f) after being reassessed by the Minister under s. 55(2), Robertson J.A. characterized the making of a late designation as being in the nature of seeking an amendment to an income tax return, rather than seeking to file a late election, and found that such a late amendment was not objectionable where it arose as a result of a subsequent reassessment by the Minister under s. 55(2) (it being clear that s. 55(5)(f) related directly to the issues surrounding the applicability of s. 55(2)).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) | late s. 55(5)(f) designation available | 194 |
| Tax Topics - Statutory Interpretation - Expressio Unius est Exclusio Alterius | express limited relief does not imply no other relief | 74 |
| Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) | taxpayer can amend return on objection in respects relevant to issues surrounding the reassessment | 112 |