2 November 2023 APFF Roundtable
Email this ContentThis page contains our summaries of questions posed at the 2 November 2023 APFF Federal Roundtable held in Quebec City together with our translations of the full text of the Income Tax Ruling Directorate’s provisional written answers (which were orally presented by Rachel Jacques-Mignault, Sophie Larochelle and Jean Lafrenière). We use our own titles. Footnotes are incorporated in the main text of the answers.
The 3 November 2023 APFF Financial Strategies and Instruments Roundtable is provided on a separate page.
Q.1 Trade debt forgiveness
IT-293R, para. 25 appears to indicate that where the forgiveness of a trade debt occurs in a taxation year subsequent to that in which it was incurred, any portion of the forgiven debt that did not relate to inventory of merchandise on hand at the beginning of that taxation year of forgiveness will not be included in computing income pursuant to s. 9 and instead will be subject to the statutory debt-forgiveness rules summarized in para. 1 of the Bulletin. Is this position (supported by the British Mexican, 16 TC 570 decision) still held by CRA?
CRA Response
That position is no longer valid.
The CRA is now of the view that the nature of a trade debt (a "trade debt" as defined in Interpretation Bulletin IT-293R, i.e., a debt incurred in respect of an expense that is deductible in computing income) of a debtor or a gain of a debtor from the settlement or extinguishment of a trade debt does not automatically change by reason only of the passage of time in a taxation year or taxation years. Furthermore, the time (in and of itself) at which a trade debt is settled or extinguished does not convert the nature of a debt forgiveness transaction from income to capital.
In our view, Parliament's intention is that debtors' gains on income account from the settlement or extinguishment of trade debts should be included in computing the debtors' profit or loss from a business or property pursuant to section 9 (for the purpose of determining taxpayers' income from a business or property).
Where a taxpayer realizes a gain on income account on the settlement or extinguishment of a trade debt, the gain must be included in computing the taxpayer's profit from a business or property pursuant to section 9, because this provides a truer picture of the taxpayer's profit or loss (as required by the Supreme Court of Canada's analytical framework in Canderel Limited v. Canada [footnote: 98 DTC 6100 (SCC), [1998] 1 S.C.R. 147, par. 53]).
There is no established principle (or rule of law) in Canadian jurisprudence that provides that the nature of a debtor's trade debt or of a debtor's gain from the forgiveness of a trade debt changes automatically merely because of the passage of time in a taxation year or a number of taxation years.
The decision of the House of Lords in British Mexican has been distinguished in a number of subsequent Canadian decisions, including Alco Dispensing Canada Ltd. v. The Queen,[footnote: 96 DTC 1586 (T.C.C.), affirmed by the Federal Court of Appeal in 97 DTC 5463 (F.C.A.), substantially for the reasons offered in the T.C.C. judgment ("Alco Dispensing")], M.N.R. v. Enjay Chemical Co. Limited [footnote: 71 DTC 5293 (FCTD)] and Oxford Motors Limited v. M.N.R.[footnote: 59 DTC 1119 (S.C.C.)].
For example, in Alco Dispensing, the issue was whether former paragraphs 80(1)(a) and 80(1)(b) or section 9 and former paragraph 80(1)(f) were applicable by virtue of the taxpayer's cancellation in its 1987 taxation year of its obligation to pay bonuses that had been incurred and deducted in computing its income for its 1986 taxation year. Justice Bonner of the Tax Court of Canada concluded that the bonus release transaction had to be reflected in the taxpayer's income in the taxation year of the release. Justice Bonner distinguished the Alco Dispensing case from the British Mexican case on the basis that the purpose of the debt forgiveness was not to shore up the shaky financial structure of the taxpayer. The Justice stated in particular that the release of the liability to pay the bonuses could not be treated as having changed the character of the liability, that the assertion that the forgiveness of the bonus was a capital transaction was clearly illogical, and it was contrary to common sense (a common sense commercial view of the matter should be taken) to assert that the passage of a year end effects some sort of a magical conversion of executive compensation operations from current account transactions to capital account transactions.
The change in position is applicable to debts settled or extinguished on or after November 2, 2023.
Official Response
2 November 2023 APFF Roundtable Q. 1, 2023-0975421C6 F - Paragraph 25 of IT-293R (Archived)
Q.2 Excluded asset dividend and s. 55(2.1)
A corporation resident in Canada ("Parent") owning 100% of "Target" accepts an offer from an unrelated third party ("Purchaser") to purchase all of the Target shares for $3 million (the "Sale") but specifying that assets which Purchaser does not wish to acquire ("Excluded Assets") are assigned a value of zero. The ACB of the Target shares is $3 million and the safe income attributable to them is nil.
Immediately prior to its sale to Purchaser, Target pays a dividend in kind of $250,000 (the "Dividend") to Parent by transferring an Excluded Asset to Parent.
(a) Here, whether or not the Dividend was paid, the value of the Target shares would be $3 million, and the capital gain would be nil, so that apparently s. 55 does not apply. Does CRA agree?
(b) It might be claimed that another purchaser could have been interested in the Excluded Asset, so that the value of the Target shares before the dividend was $3.25 million. Should one consider that s. 55(2.1) is to be read in terms of a "hypothetical" situation and not in terms of the actual situation with the actual purchaser?
CRA Response
We have assumed that Parent is resident in Canada. We have also assumed that the Dividend qualifies as a taxable dividend and that Parent is entitled to deduct the amount of the Dividend in computing its taxable income pursuant to subsection 112(1). Finally, we have assumed that the amount of the Dividend is not subject to Part IV tax. Considering that the amount of the Dividend exceeds the Safe Income, subsection 55(2) will apply to the amount of the Dividend if one of the purpose tests provided for in subparagraphs 55(2.1)(b)(i) and 55(2.1)(b)(ii) (the "Purpose Tests") is satisfied.
In such a context, Parent will have the burden of establishing, on the basis of a full review of all the facts, that none of the objects of the payment or receipt of the Dividend was to significantly:
- decrease the portion of the capital gain that, but for the Dividend, would have been realized on a disposition of a share of the capital stock of Target at FMV immediately before the Dividend;
- decrease the FMV of any share (including a share of the capital stock of Target), or
- to increase the cost of property held by Parent based on comparing the total cost amount of the property held by Parent immediately before and immediately after the Dividend.
For purposes of applying subparagraph 55(2.1)(b)(i) and clause 55(2.1)(b)(ii)(A) to the facts of this issue, the motivations behind the payment or receipt of the Dividend will need to be considered if the payment of the Dividend results in a significant decrease in the FMV of a share of the capital stock of Target.
Applicable approach
As established in Ludco Enterprises Ltd. v. Canada, [footnote: 2001 SCC 62] and Symes v. The Queen, [footnote: [1993] 4 S.C.R. 695] the purpose of a dividend is to be determined objectively on the basis of objective and subjective manifestations of the purpose behind the payment or receipt of the Dividend.
Although the payment of a dividend generally results in a decrease in the FMV of a share, we are of the view that such a result is not, in and of itself, determinative for the purposes of applying the Purpose Tests. Rather, it is necessary to consider the collective motivations behind the payment or receipt of the Dividend.
Considering that the FMV of shares in the capital stock of Target would be reduced as a result of the payment of the Dividend, it is necessary to determine whether one of the purposes for which the Dividend was paid was to significantly decrease the FMV of a share in the capital stock of Target, in light of, among other things, the answers that would be given to the following questions:
- What does Parent intend to accomplish by decreasing the value of shares in the capital stock of Target?
- How does the reduction in the value of the shares of the capital stock of Target benefit Parent?
- What actions has Parent taken in connection with the reduction in value of the shares of the capital stock of Target?
In addition, the CRA generally considers that the Purpose Tests could apply to a dividend paid by an operating company to its corporate shareholder in order to dispose of surplus assets for the purpose of the purification and subsequent sale of the shares of its capital stock [footnote: CANADA REVENUE AGENCY, Technical Interpretation 2017-0724021C6, November 21, 2017].
In the current situation, we are of the view that the payment of the Dividend and the Sale are part of the same series of transactions and events. In light of the parameters established by the CRA and the applicable approach for purposes of applying the Purpose Tests, it seems difficult to argue that none of the purposes of the payment or receipt of the Dividend is to significantly decrease the FMV of the shares of the capital stock of Target.
Consequently, subsection 55(2) should likely apply to recharacterize the amount of the Dividend received by Parent.
Official Response
2 November 2023 APFF Roundtable Q. 2, 2023-0982751C6 - Meaning of purpose tests in paragraph 55(2.1)
Q.3 QSBCS taint of purification dividend
An individual holds the common shares of Holdco having an FMV of $1 million and nominal ACB and PUC, and Holdco holds, as its only asset, the common shares of Opco, also with an FMV of $1 million and nominal ACB and PUC. $700.000 of Opco’s assets are used principally in its active business carried on primarily in Canada and $300,000 are excess cash. Thus, the para. (d) rule in the qualified small business corporation share (QSBCS) definition would not be engaged because 100% of Holdco’s assets were qualified assets, being shares of Opco which satisfied the 50% asset test.
Suppose, however, that, under a “purification” transaction, Opco pays a cash dividend of $150,000 to Holdco, which immediately pays a dividend in the same amount to the individual. At the instant in time in which Holdco held such cash, more than 10% of its assets would not be the qualifying assets listed in para. (d), which would apparently mean (depending on the interpretation of "all or substantially all") that Opco at the relevant times would now be required to satisfy a 90% rather than 50% asset test, which would not be met because its excess cash assets were $150,000/$850,000, or 18%. However, the QSBC test would be met if the dividend was greater than $230,000 or less than $100,000.
(a) Would such holding of the $150,000 in cash by Holdco for an instant in time “contaminate” it and require a fresh 24-month period to restart?
(b) If instead Holdco declared and paid a $150,000 dividend, payable to its shareholder by a note, and Opco declared a dividend payable through discharging the note, with no new asset thereby being recorded on Holdco's balance sheet, would the result be the same?
CRA Response to Q.3(a)
Since the requested question seeks comments on the concept of "all or substantially all" for the purposes of the definition of "qualified small business corporation share" ("QSBCS") in subsection 110.6(1), the CRA will not comment on the other conditions for a share of the capital stock of a corporation to qualify as a QSBCS in the situation described.
The concept of "all or substantially all" is found in paragraph (d) of the definition of QSBCS in subsection 110.6(1). The CRA's longstanding position is that the expression "all or substantially all" generally means 90% or more. However, the CRA recognizes that the "all or substantially all" test could be met even if the 90% threshold is not satisfied, depending on the circumstances and context. Where 90% or more of the FMV of a corporation's assets is not attributable to qualifying assets for purposes of the definition of QSBCS in subsection 110.6(1), the CRA must consider each case on its own merits and determine whether a threshold of less than 90% can be considered to satisfy the "all or substantially all" threshold. Consequently, the CRA cannot take a position on this issue with respect to a hypothetical situation.
That said, it is important to note that the asset tests described in the definition of QSBCS in subsection 110.6(1) (more than 50% or all or substantially all) must be satisfied at all times during the relevant period. Thus, as soon as one of those tests is not met during the relevant period, even for a short period, a share of the capital stock of a corporation will not qualify as a QSBCS.
CRA Response to Q.3(b)
The CRA understands from the scenario described in Question 3(b) that Opco effectively repays the note owed by Holdco to its shareholder that Opco assumed when declaring the dividend in favour of Holdco. Thus, the CRA understands that the dividend declared by Opco in favour of Holdco eliminates the debt owed by Holdco to its shareholder.
As previously stated, the asset tests described in paragraphs (c) and (d) of the definition of QSBCS in subsection 110.6(1) must be satisfied at all times by Holdco during the 24-month period preceding the particular time. The question is therefore whether the dividend declared in favour of Holdco constitutes an asset of Holdco, even if the amount of the dividend does not flow directly through Holdco.
The statement in this question indicates that the transactions described in Question 3(b) would not result in any new assets being recorded on Holdco's balance sheet. The CRA's longstanding position is that all assets of a corporation, whether or not recorded on a corporation's balance sheet, must be considered for purposes of applying the definition of QSBCS in subsection 110.6(1) I.T.A.
Since the term "asset" is not defined in the Income Tax Act, its ordinary meaning must be examined. The Petit Robert de la langue française defines the term "actif" [“asset”] as “l’ensemble des biens ou droits constituant le patrimoine “ ["all the property or rights constituting the patrimony"]. Black's Law Dictionary defines "assets" as follows: "An item that is owned and has value. The entries on a balance sheet."
The “Dictionnaire de la comptabilité et de la gestion financière” [The Dictionary of Accounting and Financial Management] provides a specialized definition of "actif" ["asset"] and "éléments d’actifs" ["asset items"] as follows:
"A component of the balance sheet that describes the economic resources over which entities have control as a result of past transactions or events, and which are expected to provide future economic benefits to the entity. Assets have three essential characteristics:
(1) they represent a future benefit in that they will be able, alone or with others, to contribute directly or indirectly to future cash flows;
(2) The entity is able to control (by virtue of an enforceable right or by any other means) access to that benefit;
(3) The transaction or event giving rise to the entity's right to, or control over, the benefit has already occurred."
[TaxInterpretations translation]
Some Canadian court decisions have examined the meaning of the term "assets" in different contexts. Generally, the scope of this term is quite broad and varies depending on the context in which it is used. For example, in a labour law case, King Seagrave Ltd v. Canada Permanent Trust Co.,[footnote: 1985 9 CCEL 31, 51 O.R. (2nd) 567.] it is stated:
"The word “assets” generally means everything available : see Black’s Legal Dictionary ... the search for its meaning must not end with a glance at the dictionary. I accept the submission that it should be given a purposive construction. Considered contextually I think the word “asset” was used in an all-embracing sense..."
In the scenario described in Question 3(b), the CRA is of the view that Holdco has an interest in the dividend declared by Opco and that the interest in such a dividend is an "asset" for the purposes of the definition of QSBCS, regardless of whether it is recorded on the corporation's balance sheet. In particular, Holdco benefits from the dividend declared by Opco even if the amount of the dividend does not pass through Holdco because it allows Holdco to have its liabilities reduced following the payment made by Opco.
Official Response
Q.4 S. 51 re partly identical share exchange
2004-0092561E5 indicated that an exchange of 100 common shares for 500,000 preferred shares and 100 common shares of the same corporation (with the same attributes), followed by the cancellation of the “old” common shares, would not constitute a disposition of the 100 common shares so that the s. 85(1) election would not be available. Would s. 51(1) apply to the exchange?
CRA Response
Section 51 is part of subdivision c of Division B of Part I of the Income Tax Act applicable to the treatment of taxable capital gains and allowable capital losses. In general, the purpose of section 51 is to allow the transfer of property on a tax-deferred basis where a taxpayer acquires from a corporation a share of the capital stock of the corporation in exchange for "convertible property" within the meaning of subsection 51(1), which share must be the only consideration received in exchange for the property. The convertible property must also constitute capital property to the taxpayer for subsection 51(1) to apply.
Subsection 51(1) applies automatically where the conditions are satisfied. However, by virtue of subsection 51(4), subsection 51(1) will not apply to an exchange to which subsection 85(1) or 85(2), or section 86 applies.
Pursuant to paragraph 51(1)(a), except for the purposes of subsections 20(21), 44.1(6) and 44.1(7), and paragraph 94(2)(m), the exchange is deemed not to be a disposition of the convertible property.
The CRA is of the view that section 51 should apply only where the exchange results in a disposition of the convertible property.
Furthermore, an exchange of shares that does not result in a disposition of the convertible property would not result in a capital gain or loss to the taxpayer.
Official Response
2 November 2023 APFF Roundtable Q. 4, 2023-0982781C6 F - Section 51 Share Exchange
Q.5 Reg. 1100(12) principal business test
Aco carries on a business of renting its own real estate - as well as holding shares of various operating companies on which it regularly receives dividends and also earning interest income on loans to related companies. The latter two “passive” investing activities require very little time and effort of Aco's management.
For purposes of s. 1100(12) of the Income Tax Regulations ("I.T.R."), does CRA consider Aco's principal business to be the “leasing, rental, development, or sale, or any combination thereof” of real property owned by it if the income from and the capital invested in the two passive activities represent more than 50% of Aco's total income and invested capital?
CRA Response
Subsection 1100(11) I.T.R. restricts the capital cost allowance that a taxpayer may deduct in computing income for a taxation year in respect of property of a prescribed class that includes rental property owned by the taxpayer.
Subsection 1100(12) I.T.R. provides, however, that this restriction does not apply in respect of a taxation year of a taxpayer that was, throughout the year, inter alia, a corporation whose principal business was the leasing, rental, development or sale, or any combination thereof, of real property owned by it.
The Income Tax Act and the Income Tax Regulations do not define "principal business". The CRA's longstanding position on this issue is set out in Interpretation Bulletin IT-371 [footnote: CANADA REVENUE AGENCY, Interpretation Bulletin IT-371 (archived), Rental Property - Meaning of “Principal Business", April 25, 1977].
As stated in paragraph 5 of Interpretation Bulletin IT-371, the determination of a taxpayer's principal business for the purposes of subsection 1100(12) I.T.R. is a matter of significance only where the taxpayer carried on more than one business in the taxation year.
In fact, as stated in paragraph 9 of Interpretation Bulletin IT-371, a corporation which derives income from rentals and whose only business is a rental business satisfies the requirements of subsection 1100(12) I.T.R. Where the corporation carries on other businesses, but the rental business is its principal business, it will also satisfy the requirements of subsection 1100(12) I.T.R.
Whether a taxpayer carries on one or more businesses during a taxation year is, however, a question of fact. Since the statement of the question only briefly describes a given hypothetical situation, the CRA cannot definitively pronounce on the question of whether the taxpayer carries on one or more businesses during a taxation year.
As indicated in paragraph 2 of Interpretation Bulletin IT-206R, [footnote: CANADA REVENUE AGENCY, Interpretation Bulletin IT-206R (archived), "Separate businesses", October 29, 1979] the question of whether the carrying on of two or more simultaneous business operations by a taxpayer is the same business is dependent upon, among other things, the degree of interconnection, interlacing or interdependence existing between the business operations. The factors to be considered in making this determination are set out in paragraph 3 of Interpretation Bulletin IT-206R.
Finally, the question of what is the principal business of a taxpayer that is a corporation within the meaning of subsection 1100(12) I.T.R. is a question of fact and each situation can only be resolved after an examination of all the relevant facts.
As stated in paragraph 7 of Interpretation Bulletin IT-371, there are no established criteria. The CRA is of the view that the following factors are among those that may be relevant:
(a) the profits realized by each of the businesses;
(b) the volume and the value of the gross sales or transactions of each business;
(c) the value of the assets of each business;
(d) the capital employed in each business; and
(e) the time, attention and effort expended by the employees, agents or officers in each business.
While the revenue or profit criteria may be important, they will not necessarily be determinative. Since the statement of the question only briefly describes a hypothetical situation, the CRA cannot make a definitive statement as to what is the taxpayer's principal business.
Official Response
Q.6 Scope of CAE
CAE raises the concern that loans, the principal of which must be repaid by corporations, have been granted by various government entities on favourable terms, they may be considered as government assistance for the purposes of ss. 127(18) and 12(1)(x). For example, a loan at no interest or at a below-market rate may be granted to start-up companies or corporations to encourage specific projects. Another example would be a loan that bears interest, but no principal is due for five years. In these situations, the loan remains an obligation of the company and must be repaid in full. There is no term in the loan agreement, meaning that it does not have to be repaid. It is only the absence of interest or the obligation to repay the principal that is a form of government assistance to the company receiving it. The loan itself is not government assistance.
What is the scope of CAE having regard, in particular, to the above examples?
CRA Response
First, it should be noted that the rights and obligations of the parties under the financial contribution agreement at issue in CAE Inc. differed substantially from those that normally characterize a lender-borrower relationship, regardless of the specific terms and conditions of repayment of the contributions. In the context of agreements of this nature, it seems to us that it is appropriate to use the "ordinary business arrangement" test developed in the jurisprudence (notably in Immunovaccine Technologies Inc. v. Canada [footnote: 2014 FCA 196.]) to determine whether the amount received constitutes government assistance for purposes of paragraph 12(1)(x).
Whether the amount received constitutes a form of assistance described in paragraph 12(1)(x) is a question of fact that requires an analysis of all the facts and circumstances relating to a particular situation, including the intention of the parties.
Official Response
2 November 2023 APFF Roundtable Q. 6, 2023-0982831C6 - Paragraph 12(1)(x)
Q.7 Compensating for temporary displacement from rental property
An individual owns a duplex. He lives in one of the units and rents the other unit to a third party. The income from the rental of this unit is a source of income to the individual and is declared annually by him.
Major work is planned on the rental property, some of it of a capital nature (to improve the existing property) and some of it of a routine nature (due to repairs required as a result of normal use of the property over time).
In order that the housing unit can be vacated for the estimated one-month duration of the work, the landlord pays $5,000 in compensation directly to the tenant, which will be used inter alia to pay for the storage of some of the tenant's furniture, to pay for the move and temporary accommodation for that month, and to compensate the tenant for inconveniences.
a) Is the compensation paid by the landlord to the tenant deductible in full in the year it is paid, regardless of the nature of the work performed?
b) Instead of paying compensation to the tenant, if the landlord paid the costs of storage, temporary move and temporary housing directly to third parties, would all of those amounts be deductible in the year in which they are paid, regardless of the nature of the work performed?An individual owning a duplex with one unit occupied personally and the other rented out by him as a source of income, undertakes major work on the rental unit of a capital nature and also of a deductible nature (to repair normal wear and tear). In order that the dwelling can be vacated for the estimated one-month duration of the work, the individual pays $5,000 to the tenant to compensate for the storage of some of the tenant's furniture, moving costs and the costs of temporary accommodation and for the inconvenience.
CRA Response to Q.7(a)
For the purposes of this response, we have assumed that the lease entered into between the individual owner ("landlord") and the third party ("tenant") with respect to the housing unit has not been terminated. We have also taken into account the fact that the Civil Code of Quebec[footnote: RLRQ] imposes various obligations on a landlord. Among other things, a landlord may not make non-emergency improvements or major repairs requiring the temporary evacuation of the housing unit without offering the tenant compensation equal to the reasonable expenses the tenant will have to incur as a result of the evacuation.
Generally, a taxpayer may deduct in computing rental income expenses incurred to renovate or maintain a housing unit rented to a third party if such expenses are not restricted by the application of, among other things, paragraphs 18(1)(a), 18(1)(b) and 18(1)(h) and section 67. In other words, in this case, the landlord could deduct the compensation it pays to its tenant if the expense was incurred or made for the purpose of earning income, was not a capital expenditure, was reasonable in the circumstances, and did not constitute personal or living expenses.
Consequently, in the situation described, one of the questions that must be answered is whether the compensation paid to the tenant by the landlord is a capital expenditure or, conversely, a current expense. The Income Tax Act does not define either of those terms. However, certain criteria derived from the jurisprudence allow us to distinguish one from the other.
They are listed in paragraphs 1.4 to 1.12 of Income Tax Folio S3-F4-C1 [footnote: CANADA REVENUE AGENCY, Income Tax Folio S3-F4-C1, "General Discussion of Capital Cost Allowance", February 27, 2019]. Among other things, we must consider whether the expenditure was made to create an enduring benefit or whether it was incurred to maintain or improve an asset.
That said, no single criterion is determinative. These criteria must be considered in relation to each other, and not as separate criteria. In essence, consideration of all the facts and circumstances surrounding a particular situation must be taken into account in determining, from a practical and business point of view, what the payments in question were intended to accomplish.
In our view, the nature and context in which the work is carried out are certainly elements to be considered in this case. For example, if the purpose of the work was to improve the housing unit for the purpose of the resale of the duplex, that purpose in itself could be considered a dominant factor that would lead to the conclusion that the payment of the compensation was a capital expenditure.
However, in a context where the landlord pays compensation to his tenant because of his obligations under the Civil Code of Québec, this element could then be considered dominant and the compensation could be considered a current expense.
As is evident, we cannot provide a conclusion in a hypothetical situation such as that presented. The character of current expenses and capital expenditures remains a question of fact.
CRA Response to Q.7(b)
The preceding comments also apply to this question. As in the answer to question (a), the nature and context of the work carried out are certainly criteria to be considered in determining whether an expense is current or capital in nature.
Official Response
Q.8 Retroactive CCA amendments
St. Benedict Catholic Secondary School Trust v. Canada creates uncertainty respecting the comments made by the CRA in Information Circular 84-1, regarding paragraph 10 "Revisions requested in non-taxable Years".
We wish to know the CRA's current interpretation of the potential for a taxpayer to request a revision of capital cost allowance ("CCA") for a taxation year for which the CRA has issued a notice stating that no tax is payable (for example, a non-capital loss in that year).
Situation 1
A taxpayer has incurred operating losses since 2003 and has claimed CCA for each of those years. The CRA has issued a notice stating that no tax is payable for each of those years. The expiry date for some of the losses is approaching.
Situation 2
A taxpayer has incurred operating losses since 2010 and has not claimed CCA for each of those years. The CRA has issued a notice stating that no tax is payable for each of these years. The taxpayer will soon begin realizing trading profits.
Questions to the CRA
a) In Situation 1, would the CRA agree to process a request from the taxpayer to amend the CCA claimed since 2003 so that the taxpayer can reduce its loss in the various years in favour of a higher undepreciated capital cost balance, assuming that despite the CCA deduction, the years since 2003 continue to show a loss? Is the CRA's position different if the period for utilizing certain losses has already expired?
b) In Situation 2, would the CRA agree to process a request from the taxpayer to increase the amount of CCA claimed since 2010 in order to increase the balance of losses available for use in 2023?
CRA Response
IC84-1 sets out the CRA's administrative position regarding requests for revision of CCA claims and other allowable deductions in respect of prior taxation years, including statute-barred taxation years. More specifically, as noted in the question, paragraph 10 of IC84-1 sets out the CRA's administrative position regarding requests for revision of CCA claims in respect of non-taxable years. Although IC84-1 is currently under revision, our position with respect to its application remains unchanged following the Federal Court of Appeal's decision in St. Benedict Catholic Secondary School Trust.
Since IC84-1 sets out an administrative position, the CRA exercises some discretion in determining whether or not to allow a taxpayer's request. IC84-1 applies within the context and legislative framework of the Income Tax Act. Thus, when considering a request to revise claims for CCA or other allowable deductions, the CRA will consider all of the relevant provisions of the Income Tax Act and whether granting the request would produce an inappropriate result. Also, the decision to grant a request for revision of CCA claims will be based on all the facts and circumstances of the situation. With respect to revisions for loss years, this could include, but is not limited to, whether the loss has expired, whether the loss has been applied to other years, whether the revision would result in a change in the tax assessment for the year or any other year, and whether a Notice of Determination has been issued in respect of the loss. Under no circumstances will the CRA accept a request from a taxpayer if it would result in an inappropriate result, if it is part of a tax avoidance scheme, or if it would result in a change in the tax assessment for the year or any other year, including a statute-barred year, for which the time for filing a notice of objection has expired.
While to some extent IC84-1 sets out situations where the CRA will consider requests for revision in circumstances that could constitute retroactive tax planning, in recent years the CRA has noted more situations that, in its view, lead to an inappropriate result. Thus, the CRA pays particular attention to requests for revision of CCA and other allowable deductions in respect of prior taxation years and evaluates them on a case-by-case basis to ensure that the administrative position contained in IC84-1 is used by taxpayers in a manner consistent with its purpose and the Income Tax Act, and that it is applied consistently by the CRA. Since each decision is based on the facts and circumstances of each case, we are not in a position to confirm whether the requests for revision described in the two scenarios submitted in the question would be accepted by the CRA.
Official Response
2 November 2023 APFF Roundtable Q. 8, 2023-0982881C6 - Revision of Capital Cost Allowance Claims
Q.9 Bitcoin loss
Madame Y made a cash purchase of a bitcoin on a central exchange platform in order that she could ultimately pay for items online. Subsequently, in 2023, the exchange platform was the victim of fraud and Madame Y lost access to her bitcoin. What is the tax treatment of her loss, and when can it be claimed?
CRA Response
Where a taxpayer holds a cryptocurrency through a centralized exchange platform and the platform is the victim of fraud or theft that results in a taxpayer losing access to the cryptocurrency, the tax consequences to the taxpayer resulting from the fraud or theft will depend on several factors. First, it may be necessary to determine whether the taxpayer held the cryptocurrency in the course of a business or as a capital investment. In addition, it will generally be necessary to characterize the existing contractual relationship between the exchange platform and the taxpayer. The circumstances and contractual arrangement between the exchange platform and the taxpayer will generally determine the ownership of the cryptocurrency that was the subject of the fraud or theft and the platform's liability to the taxpayer as a result of the fraud or theft. Those issues can only be determined by analyzing the terms and conditions of use of the exchange platform, or similar documents, and the facts of each situation.
For example, if the exchange acts as custodian of the cryptocurrency on behalf of the taxpayer, the loss suffered as a result of the fraud or theft will generally be attributed to the taxpayer. Conversely, if it is established that, under the arrangement between the taxpayer and the exchange platform, the latter is the owner of the cryptocurrency that was the subject of the fraud or theft, it will be necessary to determine the nature of the taxpayer's rights under her contractual relationship with the exchange platform and her potential loss in order to determine whether that loss is deductible.
It should be noted that the mere holding of cryptocurrency for future use, i.e., for the purchase of products online, does not make the cryptocurrency personal-use property.
A loss realized as a result of fraud or theft is usually taken into account in computing income in the year in which the loss is recognized. However, where the taxpayer has received compensation for capital property unlawfully taken, the specific rules of subsection 44(2) apply to determine the time of disposition.
Official Response
Q.10 Disposition on bitcoin transfer to platform
A taxpayer holds bitcoins in a cryptocurrency wallet for which he alone controls the private key.
To earn a return on his bitcoins, the taxpayer transfers them to an account offered by a centralized cryptoasset exchange and lending platform. In return for depositing the bitcoins with the platform, the latter offers the taxpayer a variable return of approximately 4% per annum, payable in bitcoin.
The terms of the contract applicable to the account held with the platform provide that the latter may hold the bitcoins in its own name and pledge, sell, lend or otherwise transfer or use the bitcoins deposited in the account in its discretion without informing the taxpayer. The profit derived from the use of the bitcoins by the platform is its property and not of the taxpayer. The taxpayer also is entitled to withdraw up to an equivalent of the bitcoin account balance at any time. The bitcoins to be surrendered at that time may be paid from a cryptocurrency wallet in which the bitcoins received from the platform's various customers are collectively deposited.
Is there a disposition on the bitcoin transfer to the platform?
CRA Response
The term "disposition" is defined in subsection 248(1) I.T.A. This definition provides for various types of transactions that may or may not result in a disposition for purposes of the Income Tax Act.
Generally, the determination of whether or not an event, transaction or transfer related to cryptocurrencies constitutes a disposition must be made in light of all the facts, the relevant clauses of the contract and the applicable private law.
In this case, based solely on the few facts submitted, we are of the view that it is likely that ownership of the bitcoins initially belonging to the taxpayer was transferred to the platform. In fact, according to the facts mentioned, the platform acquired the right to use the assets, to make profits from them and to dispose of them at its discretion.
We are therefore of the view that it is likely that the taxpayer's deposit of his bitcoins with the platform constitutes a disposition for the purposes of the Income Tax Act.
Official Response
Q.11 Time of receipt of tax credit
Regarding when a tax credit is considered to be received for purposes of s. 12(1)(x), 13(7.1) or 53(2)(k), in Income Tax Technical News No. 29, CRA indicated that a tax credit which is not applied against the taxpayer’s instalments is considered to be received at the earliest of:
- when it reduces the tax payable for a taxation year, or
- when it is paid, if it allows for or increases a tax refund
In its interpretation letter 22-060083-001 regarding the tax treatment of the synergy tax credit for Québec businesses ("CSEQ") provided under ss. 776.1.38 et seq. of the Taxation Act, the ARQ stated:
[W]hen, pursuant to section 776.1.38 of the T.A., an eligible investor attaches to its tax return that it must file for a taxation year the prescribed form to claim an CSEQ amount, and the amount of this tax credit is less than the balance of tax payable for the taxation year, we consider that the tax credit is received or is entitled to be received on the due date of the balance applicable to it for that taxation year.
For a particular taxation year, the amount that can be deducted as CSEQ cannot exceed the tax that would otherwise be payable by the eligible investor for the taxation year. The unused portion of an eligible investor's CSEQ for a given taxation year is therefore the amount by which the maximum amount that the eligible investor could deduct as a CSEQ for the taxation year exceeds the tax that would otherwise be payable by the eligible investor for the taxation year.
Does CRA generally agree with the ARQ's position regarding the imposition of the CSEQ, namely that:
- If this tax credit is less than the balance of tax payable for the taxation year, it is received or is entitled to be received on the due date of the balance applicable to that taxation year;
- If this tax credit is carried back or forward to a previous or subsequent year, the taxpayer will be deemed to be entitled to receive the amount on the date of filing of the carryover request.
CRA Response
Section 776.1.38 of the T.A. provides that a qualified investor for a taxation year that, on or before the day that is twelve months after the qualified investor’s filing-due date for that year, encloses the documents described in the second paragraph of section 776.1.38 of the I.T.A. with its tax return that it is required to file for the year, may deduct from its tax payable for that year, determined before the application of that section and the second paragraph of section 776.1.39, an amount equal to 30% of the lesser of $750,000 and the aggregate of all amounts each of which is its eligible investment for the year in a corporation in relation to an authorized investment certificate.
The amount of the CSEQ that a qualified investor may deduct cannot exceed the amount of tax otherwise payable under the Taxation Act. The unused portion of a qualified investor's CSEQ for a taxation year may be carried forward for the 20 taxation years following that taxation year or carried back to the three taxation years preceding the particular year in accordance with section 776.1.39 of the T.A.
Assuming that the shares of the capital stock of a corporation acquired by a qualified investor as part of an eligible investment are capital property to the investor, we are of the view that the tax treatment of the CSEQ granted to the qualified investor for purposes of the Income Tax Act would generally be determined in accordance with paragraph 53(2)(k) of the I.T.A.. This paragraph generally provides that the amount, if any, by which the total of all amounts of government assistance received or receivable by the qualified investor in respect of the property or for its acquisition exceeds the amount, if any, of government assistance repaid by the qualified investor before that time pursuant to an obligation to repay all or any part of that assistance, is to be deducted in respect of the property.
According to the CRA's longstanding position, a tax credit or reduction in the calculation of tax - which is not applied to reduce instalments payable by the taxpayer [footnote: i.e., it is credited to the taxpayer's account as an instalment by the tax authority] - is considered to have been received, where all the conditions for obtaining it have been satisfied, at the earliest of the following times:
- when it reduces the tax payable for a taxation year;
- at the time it is paid if it allows for or increases a tax refund.
In view of the foregoing, where, in accordance with section 776.1.38 of the T.A., a qualified investor attaches the prescribed Documents to the tax return that must be filed for a taxation year pursuant to section 1000 of the T.A. in order to claim an amount in respect of the CSEQ, and the amount of the tax credit is less than the balance of tax payable for the year, the CRA is of the view that the CSEQ is received or is entitled to be received on the date of filing of the tax return. The deduction provided for in paragraph 53(1)(k) must therefore be made on that date.
Furthermore, like the ARQ, the CRA is of the view that the qualified investor will be entitled to receive the unused portion of the CSEQ, as that term is defined in section 776.1.36 of the T.A., when the qualified investor files a carryover request, on the date the carryover request is filed. Consequently, the deduction provided for in paragraph 53(1)(k) will have to be made on that date.
Official Response
Q.12 Documenting cryptocurrency losses
A major cryptocurrency exchange platform went bankrupt following a major multi-billion dollar fraud. For several months, a taxpayer had held an account to which money in US dollars was deposited. This account was used for the purchases and sale, various times on each day, of cryptocurrencies in order to profit from the volatility of different cryptocurrencies. The taxpayer's account on the platform was in a cash position at all times at the end of the day.
The taxpayer's account was subject to the fraud, so that the taxpayer’s account was completely emptied and the platform was put into bankruptcy as soon as the fraud was announced.
All documentation relating to the daily transactions was on the platform. As a result of the bankruptcy, the taxpayer no longer has access to information on the various transactions. Only a few months elapsed between the time the taxpayer opened an account on the platform and the bankruptcy. The taxpayer is able to prove that the money was deposited in the platform account, but cannot demonstrate all the different transactions carried out on a daily basis.
Can CRA provide guidelines applicable to this type of situation where, due to circumstances beyond the taxpayer's control and in a short period of time, it is difficult, if not impossible, to obtain the documentation necessary to claim the loss arising from an adventure in the nature of trade?
CRA Response
A taxpayer who trades in cryptocurrencies must ensure that adequate records are kept. In order to do so, it is important that the taxpayer record and save, on a regular basis, the relevant documents and information regarding his cryptocurrency transactions as described on the CRA's webpage "Keeping a record of your cryptocurrency transactions"[footnote: Extract from the Government of Canada's website: CANADA REVENUE AGENCY (online: Keeping a record of your cryptocurrency transactions - Canada.ca.)].
It is important to note that the tax consequences where a taxpayer is the victim of a fraud or scam can only be determined after a full review of all the facts and circumstances relevant to each situation.
In general, if an exchange ceases operations and the taxpayer is no longer able to access the necessary documentation and information, other documentation may help to demonstrate that the taxpayer had an account with the exchange, had a balance at the time the exchange ceased operations and/or suffered a loss. Although not an exhaustive list, those additional documents may include the following:
- Publicly available information regarding the fraud and/or bankruptcy of the exchange platform, such as articles in the media.
- Documents confirming the activation of the taxpayer's account with the exchange platform, such as "Know Your Client" documentation and any correspondence with the platform confirming account activation.
- Any contract signed between the taxpayer and the exchange platform.
- Documents supporting the commencement of the relationship between the taxpayer and the exchange platform, such as electronic transfers from the taxpayer's financial institution to the exchange platform (this includes bank statements to support the transfer of currency for use on the exchange platform).
- A copy of the claim for the amounts due filed with the exchange platform's trustee and any communication with the trustee acknowledging receipt of the claim and/or confirmation of the amounts due.
- Any proceedings initiated by the taxpayer to recover the amounts due, such as police reports and/or correspondence and documents showing that the taxpayer has initiated legal proceedings to recover the amounts due.
- In the event that the taxpayer carries on a business, documents demonstrating that any income and losses related to cryptocurrency transactions have already been declared for tax purposes.
- Documents demonstrating that the cryptocurrency held has not already been disposed of, such as tax return schedules showing that no capital gains or losses, or part thereof, have already been declared.
- Working papers demonstrating a precise calculation of the amount of the loss claimed.
- Any documentation relating to the recovery of amounts due or compensation to be received.
- Proof that the taxpayer has not sold his credit position to the exchange syndicate.
It is important to note that a document alone may not be sufficient to demonstrate that a taxpayer has suffered a loss.
Official Response
Q.13 Bankruptcy court approval of assessments
Trustee of Girard, 2014 QCCA 1922, stated, in connection with the Bankruptcy and Insolvency Act ("B.I.A.") and CRA notices of assessment:
[68] In conclusion, if the CRA files a claim with the trustee, it may follow it up with a notice of assessment. However, since this notice of assessment constitutes a procedure for the collection of a provable claim, it will not have the legal effects conferred on it by the ITA, unless the CRA obtains the authorization of the court. In other words, if the CRA wishes the ITA's procedure for contesting a notice of assessment to apply, particularly as regards the time limit for contesting it, it must apply to the court and obtain the court's consent, in accordance with section 69.4 of the BIA.
Regarding notices of reassessment issued in the context of a bankruptcy or proposal under the B.I.A.:
a) Does CRA consider that it must, in all cases, apply to the court, in accordance with section 69.4 of the B.I.A., to issue a notice of reassessment following a bankruptcy or the filing of a proposal?
b) Does it consider that notices of assessment issued despite the suspension of collection procedures provided for in section 69 are legally valid?
CRA Response to Q.13(a)
The CRA does not consider that it must apply to the court in all cases where it issues a notice of assessment following a bankruptcy or the filing of a proposal for a tax debt relating to a taxation year ending on a day preceding the date of the bankruptcy or proposal, in order to ensure sound administration and reasonable use of judicial resources.
For example, the CRA will not seek court authorization where the trustee does not contest its proof of claim. Similarly, the CRA will not seek leave where the debtor (in a proposal) or the trustee (in a bankruptcy) does not intend to object to the assessment.
Where the particular context of a case so requires, in applying Girard, the CRA will seek leave of the court under section 69.4 B.I.A. to lift the stay of proceedings.
CRA Response to Q.13(b)
The CRA considers such notices of assessment to be legally valid. As the Court of Appeal ruled in Girard, the CRA is entitled to follow up its proof of claim with a notice of assessment.
In Girard, the presumption of validity of notices of assessment under subsection 152(8) I.T.A. was not at issue. Rather, the debate concerned the implications of sections 69.3 and 69.4 B.I.A. with respect to the procedure for contesting a notice of assessment and the time limits applicable for doing so under the Income Tax Act when the CRA's proof of claim is contested by a trustee.
As stated in the previous question, if a trustee does not contest the CRA's proof of claim, there are no issues related to sections 69.3 and 69.4 of the B.I.A. Consequently, the notice of assessment continues to have full legal effect.
In the event that a trustee contests the CRA's proof of claim, the legal effects of the notice of assessment, including the procedure for contesting the assessment and the time limits associated with it, are suspended until the CRA obtains the lifting of the suspension of proceedings under section 69.4 B.I.A., pursuant to the Girard decision.
Official Response
Q.14 Reporting of s. 56.4(7)(g) election
There is still no form for making the joint election pursuant to s. 56.4(7)(g) regarding the avoidance of the application of s. 68. The CRA webpage entitled "Restrictive Covenant Election" indicates that, since no prescribed form has been published, the transferor and transferee must submit a letter (containing specified information) signed by each of them in order to make the election.
(a) When will the prescribed form for the election be available?
(b) What would happen in the event that the parties had made the election in their contractual agreement without knowing that they were required to report their election in a letter pending the prescribed form becoming available?
CRA Response
Subject to certain exceptions, subsection 56.4(2) provides that in computing a taxpayer's income for a taxation year there shall be included the total of all amounts each of which is in respect of a restrictive covenant of the taxpayer and is received or receivable in the year by the taxpayer or by a taxpayer with whom the taxpayer does not deal at arm's length.
In addition, section 68 provides special rules for the allocation of mixed consideration, i.e., an amount received or receivable from a person where it is reasonable to consider that this amount represents in part the consideration for:
(i) the disposition of property of a taxpayer,
(ii) the provision of services by a taxpayer, or
(iii) a restrictive covenant granted by a taxpayer.
Briefly, this allocation is based on the part of the amount that can reasonably be regarded as being the consideration for the disposition, consideration for the provision of services or consideration for the restrictive covenant, irrespective of the form or legal effect of the contract or agreement.
However, by virtue of subsection 56.4(5), section 68 does not apply to a restrictive covenant granted by a taxpayer if the consideration is deemed to be received or receivable by a taxpayer for the restrictive covenant in a situation where subsection 56.4 applies, in particular where the conditions set out in subsection 56.4(7) are all satisfied.
One of the conditions set out in subsection 56.4(7), more specifically paragraph 56.4(7)(g), is that a joint election be made on the prescribed form. This form must be filed in accordance with the requirements of subsection 56.4(13) In particular, if the person who granted the restrictive covenant was resident in Canada at the time the restrictive covenant was granted, subsection 56.4(13) provides that the election must be filed by the person with the Minister on or before the person's filing-due date for the taxation year that includes the day on which the restrictive covenant was granted.
As indicated on the Webpage, the CRA has not yet published the prescribed form for making the elections provided for in section 56.4 ITA and does not expect to publish it in the near future.
Where a provision of the Income Tax Act provides that a taxpayer may make an election on a prescribed form, but the CRA has not published the prescribed form in question, the taxpayer is generally still required to notify the CRA of the taxpayer’s election within the time allowed for making the election.
In order to allow taxpayers to make the elections provided for in section 56.4 within the time limit set out in subsection 56.4(13), the CRA has published on the Webpage that those taxpayers must, in the absence of a prescribed form, submit a signed letter to make the election. The Webpage indicates all the information that this letter must contain.
If a taxpayer has not submitted that letter within the time limit set out in subsection 56.4(13), there is the potential for the taxpayer to make the election after the due date pursuant to subsection 220(3.2) Under that subsection, the Minister effectively has the discretionary power to extend the prescribed time for filing an election under a provision referred to in section 600 I.T.R. Subsection 56.4(13) is a provision covered by section 600 I.T.R.
This discretionary power is exercised in light of the guidelines set out in Information Circular IC 07-1, Taxpayer Relief Provisions [footnote: CANADA REVENUE AGENCY, Information Circular IC 07-1R1, "Taxpayer Relief Provisions", August 18, 2017, n :1].
Official Response
2 November 2023 APFF Roundtable Q. 14, 2023-0982951C6 F - Article 56.4 L.I.R. - Clauses restrictives
Q.15 CRA discretion after Collins
In Collins, the Supreme Court indicated that the tax authorities have no discretion regarding their application of the Act:
25] Nor does Pitt v. Holt’s conclusion on this point account for our law that, in this case, required the Minister of National Revenue to apply the Act to the transactions. By s. 220(1) of the Act, Parliament has imposed upon the Minister a duty (“[t]he Minister shall”) to “administer and enforce” the Act. No discretion is afforded the Minister or the Minister’s agents: “They are required to follow [the Act] absolutely, just as taxpayers are also required to obey it as it stands” (Harris v. Canada (C.A.), [2000] 4 F.C. 37 (C.A.), at para. 36, citing Ludmer v. Canada, [1995] 2 F.C. 3 (C.A.); see also Longley v. Minister of National Revenue (1992), 66 B.C.L.R. (2d) 238 (C.A.), at para. 19). Quite apart from undermining Parliament’s direction, inconsistent exercises of discretion by the Minister or the Minister’s agents create inequity among taxpayers (S. Templeton, “A Defence of the Principled Approach to Tax Settlements” (2015), 38 Dal. L.J. 29, at p. 32). In a self‑assessing tax system such as that provided for in the Act, taxpayers should have confidence that the Minister is administering and enforcing the same tax laws in the same way for everyone (pp. 33-34 and 68).
[26] Practically, this constrains the Minister to assess a taxpayer in accordance with the facts of the matter ⸺ here, the transactions ⸺ and the law (CIBC World Markets Inc. v. Minister of National Revenue, 2012 FCA 3, 426 N.R. 182, at paras. 16 and 20‑21, per Stratas J.A.; Galway v. Minister of National Revenue, [1974] 1 F.C. 600 (C.A.), at p. 602; Canada v. 984274 Alberta Inc., 2020 FCA 125, [2020] 4 F.C.R. 384, at para. 52). This goes to the respondents’ submission and my colleague’s conclusion that what brought this case into a “zone of unfairness” was the CRA changing its interpretation of the provisions and reassessing the respondents retroactively in light of the Tax Court’s decision in Sommerer (transcript, at p. 59; see also Re Pallen Trust, paras. 9 and 56; C.A. reasons, at para. 30; Côté J.’s reasons, at para. 80). My colleague impugns this as a “discretionary” measure on the CRA’s part, and finds “unfairness” in its decision to reassess the respondents in light of the Tax Court’s decision while simultaneously arguing at the Federal Court of Appeal that it was incorrectly decided. But, and respectfully said, this ignores that the Minister was bound to apply Parliament’s direction in the Act, as interpreted by a court of law, unless and until that interpretation is judged to be incorrect by a higher court. Unless a statute gives the Minister the power to deviate from that direction, the Minister may not deviate; nor may a court undermine that direction by resort to equity, since there is nothing unconscionable or unfair about the Minister administering the Act as Parliament directs. Equity is the conscience of the common law, not of Parliament.
(a) Does CRA consider that, with the exception of provision explicitly conferring discretion, it has no discretion regarding the application of the Act.
(b) In this context, what is the worth of technical interpretations and advance rulings in CRA’s view?
CRA Response to Q.15(a)
In Collins, the Supreme Court of Canada recognized that the Minister and the Minister’s agents "are required to follow [the Act] absolutely, just as taxpayers are also required to obey it as it stands". It follows that where the CRA assesses a taxpayer, it is required to do so in accordance with the facts and the law. In this context, we agree with the conclusions of the Supreme Court of Canada that, when it makes an assessment, the CRA is bound to apply the directive set out by Parliament in the Income Tax Act, as interpreted by a court of law, provided that interpretation has not been found to be incorrect by a higher court.
CRA Response to Q.15(b)
As part of its functions, the CRA administers tax, benefit, and related programs, and provides tax compliance for taxpayers.
The Income Tax Rulings Directorate (the "Directorate") serves as the centre of expertise in income tax interpretation for the CRA as a whole. The Directorate's role is to interpret Canadian income tax legislation (the "Legislation") and explain how it applies to different situations. The Directorate provides its interpretations to internal and external stakeholders through various products, including technical interpretations, advance income tax rulings, and income tax folios, in order to facilitate and promote taxpayer compliance.
A technical interpretation is general in nature and is a written statement that sets out the CRA's interpretation of specific provisions of the Legislation in force at the time of its publication. This service is intended to assist taxpayers in determining for themselves the tax treatment of a particular situation.
An advance ruling is a written statement that confirms how the CRA's interpretation of the application of specific provisions of the Legislation applies to contemplated transactions. The purpose of this service is to provide certainty with respect to the consequences of the application of the Legislation to proposed transactions. An advance income tax ruling, subject to any conditions, restrictions, waivers or representations contained therein, is considered binding on the CRA with respect to the taxpayer and the transactions contemplated thereby.
Official Response
2 November 2023 APFF Roundtable Q. 15, 2023-0982901C6 - Impact of the Collins Family Trust decision