Income Tax Severed Letters - 2026-04-08

Technical Interpretation - External

18 December 2025 External T.I. 2025-1055741E5 - Flipped Property Rules - Multi-unit buildings

Unedited CRA Tags
12(12), 12(13), 12(14), 54 "principal residence"
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(13) - Paragraph 12(13)(a)
a nursing home is not, and a typical rooming house is, a “housing unit” for flipped property purposes

Principal Issues: Whether certain property owned by a taxpayer, or rooms within that property, could be a “flipped property” pursuant to subsection 12(13) of the Act.

Position: Question of fact. The Flipped Property Rules would generally not apply to nursing homes, however may be applicable to rooming houses.

Reasons: While a "flipped property" is limited to a single property containing one housing unit, a rooming house may be a property that is only one housing unit.

12 November 2025 External T.I. 2025-1080031E5 - Mineral Resource Certification

Unedited CRA Tags
ITA 66.1(6) "Canadian exploration expense"; 248(1) "mineral resource".

Principal Issues: Whether a deposit qualifies as a mineral resource where the principal minerals to be extracted include XXXXXXXXXX.

Position: Yes.

Reasons: Positive opinion provided by Natural Resources Canada.

20 October 2025 External T.I. 2023-0972451E5 - Subsection 7(1.31) and Superficial Loss

Unedited CRA Tags
7(1.3); 7(1.31); 40(2)(g); 47(1); 47(3); 54 "Superficial Loss"
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.31)
shares designated under s. 7(1.31) are not excluded from being identical properties for superficial-loss purposes
Summary Under
Tax Topics - Income Tax Act - Section 54 - Superficial Loss
SL formula used where shares designated under s. 7(1.31) sold in a higher number than those held at end of the 61-day period

Principal Issues: The impact of subsection 7(1.31) on the calculation of superficial loss in given example, and whether securities designated under subsection 7(1.31) are excluded from being identical properties for the purposes of the superficial loss rules.

Position: No.

Reasons: Subsections 7(1.3) and 7(1.31) are provisions that dictate the order in which certain securities are disposed, and are not provisions that deem otherwise identical properties to not be identical. Subsection 47(3) deems shares designated under subsection 7(1.31) to not be identical to any other shares for the purposes of subsection 47(1) only.

Technical Interpretation - Internal

14 January 2026 Internal T.I. 2023-0990701I7 - Application of Reg. 5907(8)(a) in acquisition year

Unedited CRA Tags
ITA: 87(8); 87(8.1); 87(8.2)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(8)
Reg. 5907(8)(a) is limited to mergers of what are already foreign affiliates of a corporation resident in Canada

Principal Issues: In a situation where a foreign affiliate was acquired by a corporation resident in Canada towards the end of the taxation year of the foreign affiliate, does paragraph 5907(8)(a) of the Regulations apply to a foreign merger that occurred earlier in the same year to deem the first day of the taxation year of the foreign affiliate that results from the merger to be the day on which the merger occurred for the purposes of calculating the various surplus accounts provided for in subsection 5907(1) of the Regulations, if no corporation resident in Canada held an interest directly or indirectly in the foreign affiliate immediately after the merger?

Position: No.

Reasons: The acquisition of shares of a foreign corporation by a corporation resident in Canada in the taxation year of a foreign affiliate does not result in paragraph 5907(8)(a) of the Regulations applying retroactively to the day of the foreign merger earlier in the taxation year of the foreign affiliate if, at the time of the merger, the resulting foreign corporation was not a foreign affiliate of a corporation resident in Canada.