The CRA appears to accept that the cash surrender value (CSV) of a life policy held by a corporation can be allocated to a special tracking share (and not other issued shares of the corporation) for the purposes of 70(5),…
CRA and relationship breakdowns
My very first butterfly was undertaken pursuant to 55(3)(a) for a couple who were divorcing after many years of marriage. I recall looking carefully at whether their divorce would be treated as part of the series of transactions that included…
C-208 caution
Allan Lanthier has written about how C-208 provides opportunities for abusive surplus stripping that tax professionals have only dreamed about. He has updated his post, however, to point out that the Federal Court of Appeal’s recent decision in R v…
Sidecar structure fail
In Nicole L. Tiessen Interior Design Ltd. v R, 2021 TCC 29, the court considered the following circumstances. A firm of architects carried on business through a single corporation. In 2010 and 2011, the firm undertook a reorganization that saw…
Trusts and the exemption holding period test
The authors use some examples to illustrate the application of the deeming rules in subparagraph 110.6(14)(c) that apply to trusts. Example 1 Mr X incorporates Opco in 2015. He settles a family for himself and his family on February 23,…
Maybe the AAII grind isn’t so bad after all
The adjusted aggregate investment income (AAII) grind might not be the end of the world, especially in Ontario (which did not adopt the grind), because of the lower rate paid by an individual when funds are withdrawn from the corporation…
C-208
Bill C-208, the version that received Royal Assent, is short and sweet and obviously not drafted by the persons at Justice who normally draft tax bills. See, eg, new subparagraph 84.1(2.3)(a)(iii). “Operation”? That’s an odd word choice. I’m not aware…
Tax Court settlements
In McKenzie v R, 2012 TCC 329, the court held that a settlement offer must include a “degree of compromise” of the offeror’s position. A waiver of legal fees by itself isn’t enough to earn an entitlement to enhanced costs.…
Reliance on a section 116 certificate
In Landbouwbedrijf Backx BV v R, 2021 TCC 2, the court held that the CRA was not bound by a section 116 “letter” it had issued that had found, in effect, that the taxpayer was not a resident of Canada.…
Novation and withholding tax
CRA technical interpretation 2018-0757501E5 (September 29, 2020) states that the novation of a debt with accrued but unpaid interest results in the payment of the interest. The author notes that, if this is right (and he questions whether it is),…