Income Tax Severed Letters - 2026-09-16

Ruling

2024 Ruling 2023-1002271R3 - Sequential Butterfly

Unedited CRA Tags
55(3)(b), 55(3.1)

Principal Issues: Whether the proposed transactions qualify for the butterfly exemption found in paragraph 55(3)(b).

Position: Yes.

Reasons: The proposed transactions meet the requirements in paragraph 55(3)(b) and are not subject to any of the butterfly exemption denial rules found in subsection 55(3.1).

Technical Interpretation - External

25 June 2026 External T.I. 2025-1084451E5 - Definition of Qualified Small Business Corporation

Unedited CRA Tags
Definition of "qualified small business corporation shares" in subsection 110.6(2.1) 110.6(2.1), 110.6(8), 110.6(9), definition of "share" in subsection 248(1), section 6205 of the Income Tax Regulations

Principal Issues: Whether the type of share (common or preferred) or voting rights attached to a share affects the QSBCS status of the share.

Position: No, however, subsection 110.6(8) must be considered when determining whether a capital gains deduction is available under subsection 110.6(2.1).

Reasons: Definition of QSBCS.

16 March 2026 External T.I. 2023-1000691E5 - Mineral Resource Certification.

Unedited CRA Tags
248(1) "mineral resource"

Principal Issues: Whether a deposit qualifies as a mineral resource as that term is defined in subsection 248(1) of the Act where the principal minerals to be extracted are XXXXXXXXXX.

Position: Yes.

Reasons: Favourable opinion from NRCan.

Technical Interpretation - Internal

5 February 2026 Internal T.I. 2025-1054461I7

Summary Under
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(a) - Subparagraph 95(2)(a)(ii) - Clause 95(2)(a)(ii)(B) - Subclause 95(2)(a)(ii)(B)(I)
interest paid by a US Opco FA to a Finco FA would qualify under s. 95(2)(a)(ii)(B)(I) even if the IRC denied the deduction or required its capitalization to depreciable property
Summary Under
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(2) - Paragraph 5907(2)(j)
Reg. 5907(2)(j) engaged where interest deduction was per se denied or ceased to be a prospect due to a wind-up

Principal Issues: (1) Whether any amount of interest permanently denied under a foreign tax law set of rules can be deducted in computing the earnings of payor FA in application of paragraph 5907(2)(j) of the Regulations? (2) Whether this amount of interest can be considered deductible under clause 95(2)(a)(ii)(B), such that the recipient FA's corresponding interest income could be recharacterized as active business income under that clause?

Position: (1) Yes. (2) Yes, provided that all the other relevant conditions under clause 95(2)(a)(ii)(B) are satisfied.

Reasons: Wording of the Act.