In a June 20, 2016 French Technical Interpretation (2016-0648481E5, Labarre, Sylvie), CRA confirmed that a corporation eligible to claim the SBD under Subsection 125(1) is not obligated to claim the deduction.
In some cases, a company may prefer to enhance the General Rate Income Pool by forgoing the SBD claim, enabling the corporation to pay out eligible dividends.
For further information see VTN Monthly Tax Update Seminar, Issue No. 421
On July 7, 2016, Income Tax Folio S2-F3-C2, Benefits and Allowances Received from Employment, was introduced to replace and cancel Interpretation Bulletin IT-470R(Consolidated), Employees’ Fringe Benefits, along with a portion of a few other publications. New information in the Folio include, among others:
For further information see VTN Monthly Tax Update Seminar, Issue No. 421
Any mail, other than the remittance of an amount withheld or deducted (most often, a source deduction), or a payment by a corporation, sent by first class mail or its equivalent, is deemed to be received by CRA the day it was sent (Subsection 248(7)).
Though Canada Post no longer provides first class mail, CRA has acknowledged that Canada Post “letter mail” would be considered equivalent. In addition, CRA has acknowledged in the same Roundtable Question and IT-433R, Paragraph 4, that an “item entrusted to a courier service for prompt delivery is considered equivalent to first class mail”.
For further information see VTN Monthly Tax Update Seminar, Issue No. 420
The Government of Canada hosts a website, www.parl.gc.ca/Committees/en/Home, which provides a wealth of information on the various Committees, and Subcommittees, such as the Standing Committee on Finance.
Not only does the website provide details on future and past meetings, members and ongoing work, but it also provides the ability to view the meetings and access the meeting minutes. To access the videos and meeting minutes, users should select the appropriate Committee, then select the requisite area of interest (e.g., Bill C-15, Budget Implementation Act). A listing of meetings and supporting links will appear, such as the option to watch a recording of the meeting and view the meeting minutes.
For further information see VTN Monthly Tax Update Seminar, Issue No. 420
In a June 14, 2016 French Tax Court of Canada case (Poulin et al. vs. H.M.Q., 2013-2554(IT)G, 2013-2555(IT)G), at issue was whether the taxpayers, P and T, who disposed of their shares in the Corporation, were acting at arm’s length such that the proceeds of sale would constitute a deemed dividend under Section 84.1 rather than a capital gain.
The sales were in the context of a reorganization to implement the departure of P and the integration of H into the company. Simply,
The Minister took the position the P and TCo, and T and HCo acted in concert and, therefore, were deemed not to have been acting at arm’s length (Paragraph 251(1)(c)). As such, they were subject to a deemed dividend under Section 84.1.
Taxpayer P wins
The Court found that P and TCo did not act in concert, but were acting at arm’s length. In this case there was a major conflict between P and T; it was in the interest of the Corporation that one of them leave. P and T reached an agreement after difficult negotiations. P wanted to sell his shares for the best price and terms.
The Court also noted, however, that the fact that P and T organized the transaction so that P could benefit from CGE does not in and of itself demonstrate that the parties did not act at arm’s length.
Taxpayer T loses
On the other hand, the Court found that T and HCo acted in concert without separate interests. The transaction was undertaken to provide a tax benefit for T, with HCo simply accommodating T’s wishes. The transaction did not reflect normal commercial relations between parties acting in their own interest.
For further information see VTN Monthly Tax Update Seminar, Issue No. 420