Income Tax Severed Letters - 2026-04-29

Ruling

2023 Ruling 2023-0974281R3 - Loss consolidation

Unedited CRA Tags
21(1), (2), (2.1) and (2.2) ITAR; 13(1), 13(7)(e), 13(21) - UCC, 39, 40, 85(1), 88(1), 245(2) and (4.1) ITA; 1100(2) and (2.2); 1102(1), (14) and (20) ITR
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(b)
capital losses used to step up a depreciable asset through a drop-down and wind-up transaction
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(20)
Reg. 1100(20) in appliable to drop-down and wind-up transaction to use capital loss to step-up depreciable property
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(14)
Reg. 1102(14) applicable to drop-down and wind-up transfer to use capital losses to step up capital cost

Principal Issues: Whether the loss consolidation arrangement is acceptable.

Position: Yes.

Reasons: The proposed transactions would be legally effective, and comply with the requirements applicable to these types of loss consolidations. Favourable rulings were issued in respect of similar transactions in the following documents: 2018-0772921R3, 2017-0693691R3, 2000-0014543 and 9418413.

Technical Interpretation - External

15 December 2025 External T.I. 2024-1043191E5 - Clean Technology ITC - Leasehold interest

Unedited CRA Tags
13(27); 13(28); 127.45(1) « clean technology investment tax credit" "clean technology property", "specified percentage"; 127.45(4); 127.45(11).

Principal Issues: Whether the lessor or the lessee under a lease-to-own arrangement in respect of a clean technology property is eligible to claim the Clean Technology Investment Tax Credit ("CT ITC") under section 127.45 of the Act.

Position: Question of fact.

Reasons: The law.

Conference

15 June 2021 Roundtable, 2021-0883211C6 - STEP 2021 – Revised Q14 - Lifetime benefits trust

Unedited CRA Tags
60.011

Principal Issues: 1. Can a lifetime benefit trust established under a will that is subject to a 21 year accumulations limit under provincial law qualify as such under section 60.011 from the time of the testator's death? 2. If so, can it continue to qualify after the end of the 21 year accumulations period when income must be paid to a residuary beneficiary or other person specified in the will by operation of provincial law?

Position: Probably not.

Reasons: There appears to be a conflict between provincial accumulations law and the exclusive beneficiary requirement in subparagraph 60.011(1)(b)(i). We are preparing a technical interpretation that will provide a more considered response.

Technical Interpretation - Internal

24 July 2023 Internal T.I. 2020-0841891I7 - Upstream Loan

Unedited CRA Tags
90(6), 90(8)(a)
Summary Under
Tax Topics - Income Tax Act - Section 90 - Subsection 90(8) - Paragraph 90(8)(a)
the wind-up of FA2, owed an upstream loan by the taxpayer, into FA1 held by the taxpayer did not constitute a repayment of the loan for s. 90(8)(a) purposes
Summary Under
Tax Topics - General Concepts - Payment & Receipt
loan owed by taxpayer to FA2 not repaid on winding up of FA2 into FA1, but was then repaid by set-off

Principal Issues: Whether the Transactions undertaken by the Taxpayer resulted in a repayment of the Loan Payable for the purpose of paragraph 90(8)(a).

Position: The set-off of the Taxpayer’s Note against the Finance FA Note resulted in a repayment of the Loan Payable for the purpose of paragraph 90(8)(a).

Reasons: The wording of paragraph 90(8)(a) does not require the loan or indebtedness to be repaid to the original creditor that initially made the loan. Consistent with our prior position on subsections 15(2) and 227(6.1).