The CRA accepts that, if refundable tax contributes to the gain on a share immediately before its disposition, it can also contribute to the safe income of the share. In the example, a corporation with a December 31 year-end, sells…
Corporate guarantee of shareholder loan
A shareholder of a corporation borrows money for an income-earning purpose, and the corporation guarantees the loan, which guarantee is secured by a mortgage on corporate-owned property. The shareholder pays a reasonable guarantee fee to the corporation. The shareholder is…
Insurance premium benefit
Opco, as the revocable beneficiary of a life insurance policy, might be required to include an amount in income under subsection 246(1) of the Income Tax Act where the holdco-shareholders of Opco had paid the premiums under the policy. The…
Sale to alter ego trust
A settlor of an alter ego trust can sell property to the trust for a purchase equal to the fair market value of the property, receive cash in satisfaction of that purchase price and still be considered to have transferred…
Joint spousal trust and 75(2) attribution
A and B each contribute a portfolio of securities to a joint spousal trust, and subsection 75(2) of the Income Tax Act (Canada) applies to each of A and B in respect of their contributions. The CRA takes the position…
Taxation year-end of a trust that has dissolved
The taxation year of a GRE ends at the time it is terminated (all of its assets are distributed) during a year. See paragraph 249(1)(b) and subsection 249(5) of the Income Tax Act (Canada) (the “Act”). On the other hand,…
More good times with TOSI
The CRA confirmed that multiple businesses run by a husband and wife where they work fewer than 20 hours per week in each business would not be “excluded businesses” under the “bright line test” for substantial involvement. The CRA wrote…
Filing elections electronically
The CRA has made the T217, T2 Sch 89 and T2054 available for electronic filing. The T2057, T2058 and T2059 will be available online by March 1, 2023. The remaining election forms will be digitized over the next few years,…
Trusts and acquisitions of control for 88(1) bump purposes
The CRA confirmed the position it took in ruling 2009-0350491R3 regarding an alter ego trust that owned two corporations. On the death of the settlor of the trust, it was required to transfer the shares of one corporation to the…
Trust loans to beneficiaries and debt forgiveness
Consider a trust that loans money to a beneficiary, who uses the loaned funds for investment purposes. If the trust later transfers the loan to the beneficiary as a distribution of capital, it will be considered to have forgiven the…