New paragraph 212.1(6)(b) deems Newco to have paid dividends to non-resident beneficiaries of an estate that is implementing a pipeline so that Newco must pay withholding tax. The change is effective from budget day, 2018, even though nothing in the…
Oral questioning on audit
Canada (National Revenue) v Cameco Corporation, 2019 FCA 67, aff’g 2017 FC 763, held that the CRA, on an audit, cannot compel a taxpayer to submit to oral questioning. Of course, a refusal to answer oral questions can lead to…
Suspended losses and trust winding-up
Amanda Laren, in “Gap in Subsections 40(3.3) and (3.4) for Wound-Up Trust?” Canadian Tax Focus 9:2 (May 2019), notes that Subsections 40(3.3) and (3.4) stipulate whether the two parties remain affiliated after the transferor is dissolved or wound up, but only if…
TOSI and 20(1)(j)
The ability to use 15(2) and 20(1)(j) for income averaging has been impaired by the TOSI rules. What’s worse, if an individual includes an amount in income under 15(2) that is split income, he or she will not be entitled…
Ponzi schemes and bad debts
Although the CRA doesn’t mention Delle Donne v R, 2015 TCC 150 (discussed here), it recently considered when a victim of a ponzi scheme can write off a bad debt in respect of interest previously included in income. See 2017-0691941I7…
Rectification Granted Post Fairmont
In Crean v Canada (Attorney General), 2019 BCSC 146, two brothers entered into an agreement they drafted that provided for one brother to sell his one-half of Opco’s shares to the other brother (the owner of the remaining one-half). The…
212.1 look-through and trusts
Section 212.1 of the Income Tax Act (Canada) is an anti-avoidance rule that applies in circumstances similar to those for section 84.1. With section 212.1, however, only PUC (and not ACB) is relevant as far as the subject shares are…
Pipeline and the 21-year rule
The CRA has issued a pipeline ruling where the ACB of the shares being used to extract funds from a corporation is derived from a deemed disposition pursuant to the 21-year rule. Eric Hamelin, “Pipeline Transactions and the 21-Year Rule”,…
Dividend income ‘through’ an estate and TOSI
In technical interpretation 2018-0777361E5 (November 7, 2018), the CRA considered whether shares of a private corporation (Investco) were “excluded shares”. The parent who held voting preference shares had died. The preference shares represented more than 10% of all votes and…
Provincial residence
Sampson v R, 2018 BCSC 1503, is a detailed decision relating to the residence of a taxpayer for provincial income tax purposes. The taxpayer was found to be resident in both BC and Alberta, but his “principal” place of residence…