Income Tax Severed Letters - 2017-09-13

Ruling

2016 Ruling 2015-0617101R3 - 99(1) and timing of ACB adjustment

Unedited CRA Tags
85(1), 98(5), 99(1), 96(1), 96(1.01), 53(1)(e)(i), 53(2)(c)(i)
Summary Under
Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(i)
ACB of limited partner’s and GP’s interest increased by YTD income on s. 98(6) wind-up arising on GP’s s. 85 purchase of limited partner’s interest
Summary Under
Tax Topics - Income Tax Act - Section 98 - Subsection 98(5)
on a s. 98(5) wind-up, the ACB of the transferor partner’s interest is bumped by YTD income
Summary Under
Tax Topics - Income Tax Act - Section 99 - Subsection 99(1)
year ending with termination was final partnership year

Principal Issues: Will subsection 99(1) apply so that, pursuant to subparagraph 53(1)(e)(i) or 53(2)(c)(i), the partner’s share of the partnership’s income or loss for its final fiscal period will be included in the determination of the ACB of the partnership interest immediately prior to its disposition?

Position: Yes.

Reasons: Wording of the provisions.

2016 Ruling 2016-0677751R3 F - Post-mortem planning - Pipeline

Unedited CRA Tags
84(2); 84.1; 245(2)

Principal Issues: Pipeline structure.

Position: Favourable rulings given.

Reasons: In accordance with the Act and our published positions.

Technical Interpretation - External

28 July 2017 External T.I. 2017-0685961E5 - Taxation of Settlement Amounts

Unedited CRA Tags
5(1); 6(1)(a); 6(3); 56(1)(a)(ii); 248(1) “retiring allowance”
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retiring Allowance
settlement amount (re post-retirement benefits reduction) also paid to current employees likely not retiring allowance
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(3) - Paragraph 6(3)(b)
settlement amounts paid after repudiation of post-retirement health benefits were deemed employment income
Summary Under
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1)
amounts received in settlement of employment grievances to be s. 5 income on general principles

Principal Issues: The tax treatment of a lump-sum amount paid pursuant to a settlement agreement.

Position: Question of fact.

Reasons: Generally, the tax treatment of a settlement amount should be the same as the amount it is intended to replace.

31 May 2017 External T.I. 2016-0642621E5 - Donation to private foundation

Unedited CRA Tags
ITA 38(a.1), 69(1), 69(4)
Summary Under
Tax Topics - Income Tax Act - Section 38 - Paragraph 38(a.1)
s. 38(a.1) prevails over s. 69(4)
Summary Under
Tax Topics - Income Tax Act - Section 69 - Subsection 69(4)
implicit finding that s. 69(4) could apply to a gift

Principal Issues: Can a transfer of property by a corporation to its sole shareholder that is a private foundation be a gift for purposes of paragraph 38(a.1)?

Position: It depends on whether the transfer of property constitutes a gift at law.

Reasons: Legal meaning of "gift".

Technical Interpretation - Internal

21 July 2017 Internal T.I. 2017-0714931I7 F - Retiring allowance - Sick Leave

Unedited CRA Tags
248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retiring Allowance
payout of accumulated (non-excess) sick leave credits on termination of employment was a retiring allowance
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Death Benefit
includes payout on death of accumulated (non-excess) sick leave credits
Summary Under
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1)
payout on termination of accumulated sick leave credit is employment income to extent otherwise would have been paid at year end

Principales Questions: Whether a payment for accumulated sick leave credits which includes sick leave credits that are payable yearly is considered to be a retirement allowance?

Position Adoptée: Only the portion of the payment that relates to the accumulated sick leave that is not payable annually could be considered a retiring allowance.

Raisons: Previous positions.