Income Tax Severed Letters - 2023-08-16

Ruling

2022 Ruling 2022-0949231R3 - Loss Consolidation Ruling

Unedited CRA Tags
20(1)(c), 112, 80, 245

Principal Issues: Whether a particular loss consolidation arrangement is acceptable. In this arrangement, Lossco obtains a daylight loan from a third party and uses the proceeds to make an interest bearing loan to NewLossco. NewLossco uses the proceeds to invest in preferred shares of Newco. The main issues are whether Lossco would be entitled to apply existing non-capital losses against the interest income received on the loan; and whether NewLossco would be entitled to deduct the interest expense paid on the loan and the dividends received on the Newco Preferred Shares.

Position: Yes.

Reasons: The proposed transactions conform to our requirements for these types of loss consolidation rulings, in this case on the basis that the entities involved are related and affiliated. The proposed transactions would be legally effective and commercially plausible.

Technical Interpretation - External

1 May 2023 External T.I. 2023-0965631E5 - Mental functions & home accessibility tax credit

Unedited CRA Tags
118.041

Principal Issues: 1. Whether expenses incurred to undertake certain renovations would be eligible for the home accessibility tax credit (HATC) in a given situation where the renovations are carried out to create a safe play and therapy area in one's basement for a child with a severe and prolonged impairment in mental functions. 2. Whether occupational therapy equipment that is mounted to the basement wall would be eligible for the HATC.

Position: 1. Question of fact - depending on whether the renovation or alteration is of an enduring nature and integral to the eligible dwelling, the expenses are qualifying expenditures, and all the other requirements under section 118.041 of the Act are met. Examples of qualifying renovations are given in the context of impairments in mental functions. 2. No.

Reasons: 1. The requirements in section 118.041 .of the Act. 2. Paragraph (a) of the definition of “qualifying expenditure” in subsection 118.041(1) excludes an outlay or expense to acquire property that can be used independently of the qualifying renovation.

23 March 2023 External T.I. 2023-0967391E5 - Incentive for nurses to go back to practice

Unedited CRA Tags
5(1); 56(1)(r)(i)
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(r) - Subparagraph 56(1)(r)(i)
s. 56(1)(r)(i) applies to an incentive paid to a prospective hospital employee by the government
Summary Under
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1)
s. 56(1)(r)(i) rather than s. 5(1) applies to inducement payments made by the government directly to a prospective employee of a hospital

Principal Issues: What is the tax treatment of amounts paid to eligible nurses under the Ontario Community Commitment Program for Nurses (CCPN) in a particular situation where employers are responsible for flowing these amounts directly to nurses?

Position: Amounts paid to nurses under the CCPN are considered to be employment income under subsection 5(1).

Reasons: This position is consistent with previous position regarding the tax treatment of top-up payments when paid by the employer. Incentives or earnings supplements provided under a project sponsored by a government or government agency in Canada to encourage individuals to obtain or keep employment are taxed under subparagraph 56(1)(r)(i) when they are not paid through the employer.

10 August 2022 External T.I. 2022-0935261E5 - Mineral Resource Cert - XXXXXXXXXX Project

Unedited CRA Tags
Definition of "mineral resource" in subsection 248(1)

Principal Issues: Whether NRCan can certify that the principal mineral to be extracted from the spodumene lithium deposits of the taxpayer will be an industrial mineral extracted from a non-bedded deposit.

Position: Yes.

Reasons: Positive Opinion provided by NRCan.