In 2013-0499121E5, the CRA considered a simple case where an upstream loan was made to a Canadian parent (Canco) by a second tier foreign affiliate (FA 2), and was effectively sheltered by Canco’s exempt surplus in respect of FA…
In 2014-0536581I7, the CRA was asked why the so-called fresh start rule for foreign affiliates (s. 95(2)(k) & (k.1)) applies only to income from a foreign affiliate’s business and not to the affiliate’s income from property. In response, the…
In 2013-0506551E5, the CRA confirmed its view that a loan made after March 28, 2012 cannot benefit from the new regime for a “pertinent loan or indebtedness” (PLOI, s. 15(2.11)) if such loan were part of a “series of…
In 2014-0531441E5, the CRA confirmed that payments to a US resident under an unfunded long-term disability (LTD) plan by a Canadian employer would be considered salary. As such, the payment would be subject to employment-related withholdings in Canada (under…
In 0742443 B.C. Ltd. v. The Queen, 2014 TCC 301, the company provided storage units along with other services. The company argued that its net revenue from all activities constituted active business income for purposes of the small business…
The CRA recently reversed two prior positions in the foreign affiliate context: one on the redemption of preferred shares in a controlled foreign affiliate, the other on the recharacterization rule in s. 95(2)(a)(ii)(D).
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In 2014-0528001E5, the CRA was asked to consider a situation where an existing partnership (Partnership A), having an off-calendar fiscal year end, formed a second partnership (Partnership B) indirectly through a subsidiary of Partnership A (A Co). The other…
In 2014-0532651E5, the CRA said that a non-interest-bearing loan from one Canadian corporation to another (the latter, a charitable foundation) may engage s. 69(1)(a) if the loan were not repayable on demand. In these circumstances, the CRA is of…
Canada has long had an inbound financing rule designed to ensure that Canada’s thin capitalization rules could not be circumvented through a back-to-back loan – phrased in terms of one non-resident member of a group lending funds to another person…
In 2013-0482991E5, the CRA was asked to consider a situation where a Canadian subsidiary (Canco) of a foreign parent (Parent) had lent funds to a foreign company in the group (Debtco). Canco owed Parent a like amount. Rather than…