Income Tax Severed Letters - 2016-10-26

Ministerial Correspondence

29 July 2016 Ministerial Correspondence 2016-0649601M4 - Indian Tax Exemption - Employment Income

Unedited CRA Tags
81(1)(a)

Principal Issues: Whether the employment income of Indian employees of remote northern airports would be exempt from tax under section 87 of the Indian Act and paragraph 81(1)(a) of the ITA.

Position: Depends.

Reasons: We need more information.

Technical Interpretation - External

13 October 2016 External T.I. 2016-0651181E5 - Life insurance policies "issued before 2017"

Unedited CRA Tags
s. 148, Reg 1401, Reg 1403, Part III of the Regulations

Principal Issues: Whether the phrase "issued before 2017" with respect to life insurance policies could be clarified.

Position: Provided general comments and guidelines.

Reasons: The phrase "issued before 2017" is not defined in the Act.

13 September 2016 External T.I. 2016-0661001E5 - repayment of a loan

Unedited CRA Tags
40(1)(a)(i)

Principal Issues: Is an amount incurred on the disposition of a property deductible in computing the capital gain?

Position: Question of fact. Maybe.

Reasons: See below.

13 September 2016 External T.I. 2016-0651831E5 - Small Business Deduction

Unedited CRA Tags
125(1); 125(2); 125(3); 125(7); 129(6); 256(1)

Principal Issues: Subject to the allocation of the BL in subsection 125(3) of the Act, is Landco able to claim SBD on 100% of its deemed active business income received from Opco even though Holdco only owns 51% of the shares of Opco?

Position: Question of fact, but appears yes in this case

Reasons: See below

8 September 2016 External T.I. 2016-0642401E5 - Approved Status as SR&ED Entity

Unedited CRA Tags
37(1)(a)(ii)(B); 248(1)

Principal Issues: Can the Institute obtain status of approved research institute for purposes of clause 37(1)(a)(ii)(B) of the Act?

Position: No. Withdrawal of request.

Reasons: See below.

24 August 2016 External T.I. 2016-0645471E5 - RCA transfer of property with accrued gain

Unedited CRA Tags
207.6(7)

Principal Issues: What is the “amount” for purposes of subsection 207.6(7), where the property transferred by an RCA to another RCA consists of shares with an unrealized accrued gain?

Position: The amount is the fair market value of the shares being transferred from the transferor RCA to the transferee RCA.

Reasons: The wording of subsection 207.6(7) and the definition of “amount” in subsection 248(1).

Technical Interpretation - Internal

27 July 2016 Internal T.I. 2016-0645031I7 - 149(1)(c) - Indian Act Bands

Unedited CRA Tags
149(1)(c)

Principal Issues: Policy on whether all Indian Act Bands qualify as public bodies performing a function of government in Canada for purposes of paragraph 149(1)(c).

Position: Yes they do.

Reasons: See comments.

31 May 2016 Internal T.I. 2016-0638241I7 - interest deductibility

Unedited CRA Tags
20(1)(c)(i), 20(1)(c)(ii)
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii)
Penn Ventilator affirmed

Principal Issues: Whether the A.P. Toldo decision has caused Rulings to narrow its view of the application of the Penn Ventilator decision.

Position: No.

Reasons: Insufficient basis for a change of position.