Income Tax Severed Letters - 2024-02-28

Technical Interpretation - External

27 February 2024 External T.I. 2024-1006681E5 - Arrangements subject to trust reporting

Unedited CRA Tags
150(1)(c); 150(1.1); 150(1.2); 150(1.3); 104(1)
Summary Under
Tax Topics - Income Tax Act - Section 150 - Subsection 150(1.3)
an agent not acting in relation to a trust has no trust reporting obligations

Principal Issues: Whether an arrangement under which a person can reasonably be considered to act as agent for another person with respect to all dealings with certain property, without the arrangement being a trust or giving rise to the creation of a trust under the applicable private law, is considered to be a trust for the purposes of section 150 for taxation years ending after December 30, 2023.

Position: No, provided the arrangement is not otherwise deemed to be a trust for the purposes of the Act.

Reasons: In order for an arrangement to be one described in subsections 104(1) and 150(1.3), it must be reasonable to consider that a trust acts as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust's property. An arrangement that is not a trust and does not create a trust under the applicable private law, and that is not otherwise deemed to be a trust for the purposes of the Act, is not deemed to be a trust by the sole effect of subsections 104(1) and 150(1.3).

27 February 2024 External T.I. 2024-1006721E5 F - Arrangements - déclaration des fiducies

Unedited CRA Tags
150(1)(c); 150(1.1); 150(1.2); 150(1.3); 104(1)

Principales Questions: Whether an arrangement under which a person can reasonably be considered to act as agent for another person with respect to all dealings with certain property, without the arrangement being a trust or giving rise to the creation of a trust under the applicable private law, is considered to be a trust for the purposes of section 150 for taxation years ending after December 30, 2023.

Position Adoptée: No, provided the arrangement is not otherwise deemed to be a trust for the purposes of the Act.

Raisons: In order for an arrangement to be one described in subsections 104(1) and 150(1.3), it must be reasonable to consider that a trust acts as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust's property. An arrangement that is not a trust and does not create a trust under the applicable private law, and that is not otherwise deemed to be a trust for the purposes of the Act, is not deemed to be a trust by the sole effect of subsections 104(1) and 150(1.3).

14 December 2023 External T.I. 2019-0820291E5 - Meaning of "Capital"

Unedited CRA Tags
Article 10 of the Canada-Israel Income Tax Convention; 84(3); 212(2)
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 10
capital for purposes of determining a Canadian Treaty-reduced dividend withholding rate of 5% references stated capital
Words and Phrases
capital

Principal Issues: What is the meaning of the word “capital” for the purposes of subparagraph 2(a) of Article 10 of the Canada-Israel Tax Convention?

Position: “Capital” for the purposes of subparagraph 2(a) of Article 10 of the Canada-Israel Income Tax Convention generally refers to the amount of capital based on the relevant corporate law, which is generally the stated capital of the shares.

Reasons: OECD Commentary on the meaning of the word “capital”.

30 August 2023 External T.I. 2022-0953121E5 - Taxable subsidiary of a 149(1)(l)

Unedited CRA Tags
149(1)(l)

Principal Issues: Would an organization that otherwise qualified for the tax exemption under paragraph 149(1)(l) of the Income Tax Act continue to qualify if it transferred some of its assets to a taxable subsidiary that it incorporated in Canada ?

Position: Not likely.

Reasons: Based on the information provided, the organization would not be operated exclusively for any purpose other than profit.

Technical Interpretation - Internal

23 August 2023 Internal T.I. 2021-0882371I7 - Dividend payment and 94.1(1)(g)

Unedited CRA Tags
94.1(1); 91(1); 95(1) "foreign accrual property income".
Summary Under
Tax Topics - Income Tax Act - Section 94.1 - Subsection 94.1(1) - Paragraph 94.1(1)(g)
there is no reduction under s. 94.1(1)(g) for dividends paid by the CFA/ consolidation provided of FAPI – C and s. 94.1(1)(g) language
Summary Under
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Accrual Property Income - C
the quantum of offshore investment fund property income earned through a CFA is unaffected by dividends paid by that CFA

Principal Issues: Whether a dividend paid by a controlled foreign affiliate is an amount described in paragraph 94.1(1)(g).

Position: No.

Reasons: The dividend is not an amount that is income from an offshore investment fund property.

21 October 2021 Internal T.I. 2020-0872281I7 - S.219 and Article X(6) of the Canada-US Treaty

Unedited CRA Tags
s.219(1), Reg. 808, Article X(6) and Article XXIX(1) of the Canada-US Treaty
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 10
different treatment of losses under Pt. XIV and Art. X(6) of the Canada-US Treaty and of investment allowance
Summary Under
Tax Topics - Income Tax Act - Section 219 - Subsection 219(1)
effect on Pt. XIV tax computation of Art. X(6) branch profits limitation

Principal Issues: (1) Whether the position in 9408985 is still valid; (2) Whether the fact that a corporation applied a loss carry back under the Act to compute the amount of tax under Part XIV in any year affect its "earnings" under Article X(6) of the Treaty; (3) whether the Allowance for Investment Property in Canada claimed in the prior tax year constitutes "earnings" for the current year under Article X(6) of the Treaty.

Position: (1) Yes; (2) No; (3) No.

Reasons: (1) In accordance with the general principles of double tax conventions; (2) See response below (3) "Earnings" are computed on a cumulative basis and therefor Allowance for Investment Property in Canada claimed in the prior year would not be added back in the current year "earnings" computation.