Income Tax Severed Letters - 2023-06-07

Ruling

2021 Ruling 2020-0848061R3 - Sequential Butterfly

Principal Issues: Did the proposed sequential butterfly qualify for the exemption in paragraph 55(3)(b)?

Position: Yes.

Reasons: Meets the statutory requirements and our prior positions and rulings on butterfly reorganizations.

Technical Interpretation - External

15 February 2023 External T.I. 2022-0934821E5 F - Paragraphes 1103(1) et 1101(5b.1)

Unedited CRA Tags
RIR : 1103(1); 1101(5b.1)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1103 - Subsection 1103(1)
Reg. 1103(1) election by partnership cannot extend to property included in a separate class under Reg. 1101(5b.1) election
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1101 - Subsection 1101(5b.1)
Reg. 1101(5b.1) separate class status cannot be overridden by Reg. 1103(1) election

Principal Issues:
Est-ce que l’exercice du choix prévu au paragraphe 1103(1) par un contribuable aura pour effet d’inclure dans la catégorie 1 de l’annexe II les biens visées par le choix du paragraphe 1101(5b.1)? / Whether an election under subsection 1103(1) filed by a taxpayer for a property for which a previous election under subsection 1101(5b.1) was filed, will result in the said property to be included in Class 1 of Schedule II?

Position: NON/NO.

Reasons: Le choix du paragraphe 1103(1) n’a pas préséance sur un choix effectué en vertu du paragraphe 1101(5b.1). /Subsection 1103(1) does not supersede subsection 1101(5b.1).

12 September 2022 External T.I. 2021-0886441E5 - Restricted Stock Unit Plan – Adjusted Cost Base

Unedited CRA Tags
Subsection 5(1), paragraph 6(1)(a), section 7, subsection 7(1.3), subsection 7(1.31), subsection 40(1), paragraph 40(2)(g), subsection 47(1), subsection 47(3), paragraph 53(1)(f)
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.31)
example of application of s. 7(1.31) to acquisition and immediate sale of shares pursuant to RSUs
Summary Under
Tax Topics - Income Tax Act - Section 47 - Subsection 47(3)
application of ss. 7(1.31) and 47(3) to the acquisition and immediate sale of RSU shares

Principal Issues: How to calculate the adjusted cost base to an employee, and the corresponding capital gain resulting from a partial disposition, of shares acquired on the settlement of vested restricted stock units where the employee already owns identical shares.

Position: It depends on whether the conditions of subsection 7(1.31) are met. If the conditions are not met, then the adjusted cost base to the employee of the shares will be averaged.

Reasons: Subsection 47(1) and 47(3).

26 May 2022 External T.I. 2019-0813761E5 - Taxable Canadian property-solar and wind projects

Unedited CRA Tags
248(1) "taxable Canadian property"; 116.
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxable Canadian Property - Paragraph (a)
commercial solar equipment and wind turbines were Canadian real estate and, thus, TCP
Summary Under
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Real Property - Paragraph (a)
solar equipment assembly was a fixture under the common law tests
Words and Phrases
fixture

Principal Issues: 1. For the purpose of determining the extent to which assets are TCP, should Solar Projects and Wind Projects be considered as a whole or as an aggregation of separate parts? 2. Are the components of the Solar Equipment TCP? 3. Are the components of Wind Turbines TCP? 3. Are the contractual rights granted under power purchase agreements TCP?

Position: 1. Question of fact; likely should be considered as a whole. 2. Yes. 3. Yes. 4. Question of fact; possibly yes.

Reasons: 1. Where Solar Projects and Wind Projects are in the nature of power plants, they may be considered property used or held in a business carried on in Canada and meet paragraph (b) of the definition of TCP in subsection 248(1). 2. Components of Solar Equipment are fixtures and meet paragraph (a) of the definition of TCP in subsection 248(1). 3. Wind Turbines are fixtures and meet paragraph (a) of the definition of TCP in subsection 248(1). 4. Contractual rights may meet paragraph (b) of the definition of TCP in subsection 248(1).