Subsection 111(1) - Losses deductible
Paragraph 111(1)(a) - Non-capital losses
Cases
The Queen v. Merali, 88 DTC 6173, [1988] 1 CTC 320 (FCA)
"There is nothing in the Act to prevent a resident from carrying over non-capital losses incurred when he was a non-resident taxpayer having...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 216 - Subsection 216(1) | 106 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer | 24 | |
| Tax Topics - Statutory Interpretation - Ordinary Meaning | 60 |
Oceanspan Carriers Ltd. v. The Queen, 87 DTC 5102, [1987] 1 CTC 210, 87 DTC 5102 (FCA)
"A corporation which incurs losses from business activities outside Canada when it is neither a resident nor had income from a source in Canada,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) | 77 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer | 77 |
See Also
Hatt v. The Queen, 2015 TCC 207 (Informal Procedure)
The taxpayer, who became a non-resident when she went on unpaid leave from her Canadian job in 2003, retired in 2007 and thereupon received...
Administrative Policy
2015 Ruling 2015-0582101R3 - loss utilization
Completed transactions
- Lossco (which incurred non-capital losses in a number of taxation years) borrowed (not in excess of its borrowing...
2015 Ruling 2015-0604071R3 - Loss Consolidation Arrangement
Background
Profitco is wholly-owned by Lossco, which is wholly owned by Parent. Based on Profitco's audited financial information, it would be in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) | loss shifting transaction not affected | 89 |
19 August 2015 External T.I. 2015-0589611E5 - loss consolidation arrangements
In loss consolidation transactions: are they permitted to occur amongst related parties that are not affiliated? Does it matters whether or not...
2015 Ruling 2014-0559181R3 - Internal Reorganization
CRA provided s. 55(3)(a) and other rulings for spinning off various business divisions of an indirect subsidiary (Bco) of a public corporation to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) | business division spin-offs by indirect public corp sub to new sisters | 365 |
2014 Ruling 2013-0516071R3 - Reorganization
Background
Profitco is wholly-owned by Foreign Parent 2 which, in turn, is indirectly wholly-owned by Foreign Parent 1. Profitco is the limited...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(14) | transfer by Profitco of profitable LP to Lossco which is affiliated by virtue of common NR indirect parent | 100 |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) | transfer of profitable LP to Lossco followed by allocation of previously-earned profits of LP to Lossco | 95 |
2014 Ruling 2014-0543911R3 - loss consolidation
underline;">:
Similar to 2013-0498551R3
.
Proposed Transactions
Lossco, which is an indirect subsidiary of Parent and has permanent...
2015 Ruling 2014-0563151R3 - Loss consolidation
This is essentially identical to 2014-0518451R3 from a year earlier. Briefly, a lossco parent (Lossco) will not transfer losses to a profitco...
2013 Ruling 2013-0498551R3 - Loss Consolidation
Lossco, an indirect subsidiary of Parent, will make interest-bearing loans to Parent, and Parent will subscribe for redeemable retractable...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount | no forgiven amount on loan transfer to debtor | 72 |
2014 Ruling 2014-0525441R3 - loss consolidation arrangement
Existing structure
Parent holds Subsidiary, which is profitable, directly, and holds Lossco A (which, in turn, holds Lossco B and Lossco C)...
2 December 2014 CTF Roundtable, Q2(a)
In a loss consolidation arrangement, "Lossco," which has non-capital losses, lends money to Profitco at a reasonable stated rate of interest and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | positive spread/independent servicing source in loss consolidations | 165 |
2 December 2014 CTF Roundtable, Q2(b)
Must corporations be affiliated or related or both in a loss consolidation arrangement? CRA responded:
The CRA will consider ruling requests where...
2 December 2014 CTF Roundtable, Q2(c)
Does the decision in the 2013 Federal Budget not to proceed with a corporate group taxation system impact rulings for loss consolidation...
2014 Ruling 2014-0518451R3 - Loss consolidation
Overview
Loan 2 (in step 3 below) is being made by Lossco (the wholly-owned loss subsidiary of Parent) to Aco (so as to generate losses in Aco...
2014 Ruling 2013-0511991R3 - Loss consolidation
Structure
Lossco, which is a specified financial institution with non-capital losses, is a subsidiary of non-resident parent, and serves as the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) | s. 88(1.1) loss transfer not effective until articles of dissolution | 134 |
13 June 2014 External T.I. 2014-0522251E5 - Independent source of income for loss utilization
Lossco, which is developing a commercial use building, lends money to Profitco (a related corporation) at interest and Profitco uses the proceeds...
2013 Ruling 2013-0512321R3 - Loss Consolidation
Conventional loss shift between two sister corporations (Lossco and Profitco) utilizing preferred shares and interest-bearing loan.
2013 Ruling 2013-0504301R3 - Loss Consolidation
Background
Lossco, which is a Canadian public corporation with a portion of its shares held by Parentco, wishes to transfer losses to Profitco,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | provincial GAAR ruling re loss shift | 126 |
2014 Ruling 2013-0483491R3 - Loss Consolidation Arrangement
Existing structure/debt indenture
Parentoco, a widely-held non-resident corporation, holds Forco, a non-resident holding company, which holds...
2013 Ruling 2012-0458091R3 - XXXXXXXXXX - loss consolidation
Proposed transactions
- Parent borrows on a daylight basis from the Financial Institution.
- Parent makes a daylight loan to a partnership (New LP)...
2013 Ruling 2013-0496351R3 - Loss Consolidation
Background
Opco, which has non-capital losses and is a great-grandchild RFI subsidiary of Parentco (also an RFI) and an immediate subsidiary of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) | Subco "has been wound up" when it is dissolved | 115 |
2013 Ruling 2012-0472291R3 - Loss consolidation
Background
Lossco, which has non-capital losses and is a holding company subsidiary of Parent, holds all the common shares of Opco, which is a...
18 December 2012 Internal T.I. 2012-0461651I7 - Foreign Tax Credits - s. 126 vs. s. 110.5
Canco realized deductible losses on FX hedging instruments due to the strengthening of the U.S. dollar. Accordingly, it engaged in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 110.5 | policy of s. 110.5 | 300 |
2012 Ruling 2012-0451431R3 - Loss Consolidation
LossCo, which is insolvent, and ProfitCo, both are indirect subsidiaries of a foreign parent. LossCo is indebted to ProfitCo under the LossCo...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | addition of conversion right | 125 |
| Tax Topics - Income Tax Act - Section 51.1 | intercompany debt conversion to senior and junior note and elimination of junior note | 27 |
| Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(4) | intercompany debt conversion to senior and junior note and elimination of junior note | 326 |
2012 Ruling 2012-0439191R3 - Loss Consolidation
Lossco, which is a wholly-owned indirect subsidiary of a non-resident parent ("Parent"), borrows money under a daylight loan and uses the...
5 October 2012 APFF Roundtable, 2012-0454061C6 F - Transfer of a Lossco to a related corporation
Example 1
Son claims an ABIL under s. 50(1) with respect to his share investment in a wholly-owned corporation (Lossco), which had ceased active...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Shares | non-capital losses taken into account | 162 |
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | 422 | |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) | 262 |
2012 Ruling 2012-0437881R3 - Loss Utilization
Set-up
Aco, which is a direct Canadian-resident holding-company subsidiary of Parentco (which, in turn, is a wholly-owned subsidiary of Ultimate...
2012 Ruling 2011-0427951R3 - Loss Consolidation
1st Proposed transactions
Subsidiary1, which is a non-resident subsidiary of Parent (a non-resident publicly listed corporation) makes an...
2012 Ruling 2012-0426581R3
Creditco is an indirect subsidiary of Parentco, which is a Canadian corporation. Creditco carries on business in one province, has non-capital...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.4 - Subsection 125.4(1) - Qualified Corporation | 167 |
Income Tax Technical News No. 44 13 April 2011 [archived]
If a typical loss-consolidation transaction results in an incidental shifting of income or losses between provinces, simply because the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) | exchangeable debenture appreciation not recognized | 90 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(f) | exchangeable debenture appreciation not recognized | 106 |
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | exchangeable debenture exercise | 84 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(c) | FMV basis in contributed property | 35 |
| Tax Topics - Treaties - Article 10 | use of s.à r.l. | 123 |
2010 Ruling 2009-0332571R3 - Loss consolidation - related or affiliated
Mr A and Mrs B are siblings. Mr A holds all the voting shares of HA which, in turn, holds Lossco. HA also is the common shareholder of HASub....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | loss shift between related but unaffiliated corporations | 163 |
2009 Ruling 2008-0289771R3 - Loss Consolidation
Favourable ruling was given with respect to transactions in which the following three transactions are repeated until the right amount of...
17 December 2008 External T.I. 2007-0253031E5 - Loss Consolidation Arrangement
Ruling request denied because the Lossco did not have the borrowing capacity to effect the loss consolidation arrangement: "It is the borrowing...
Income Tax Technical News, No. 30, 21 May 2004
As noted earlier, loss consolidation transactions must be legally effective. ...However, we would not feel comfortable providing a ruling on a...
27 May 1998, Chartered Accountants of Ontario Roundtable, 9811750
"Transfers of income or deductions between corporations that are affiliated using transactions that are legally effective and complying with all...
12 April 1995 T.I. 9508595 [inventory roll-down to use non-capital losses]
Would GAAR apply where inventory is transferred by a corporation to a wholly owned corporation for the purpose of utilizing the accumulated non-...
1994 A.P.F.F. Round Table, Q. 3
Where Mr. X has been employed by Opco Inc. for a number of years and is also the sole shareholder of a corporation ("Investco") with accumulated...
1 December 1992 T.I. (Tax Window, No. 27, p. 9, ¶2319)
If one of the purposes of a series of transfers of a capital property within a related corporate group is to utilize non-capital losses of one of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 49 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | 82 |
2 October 1990 T.I. (Tax Window, Prelim. No. 1, p. 21, ¶1024)
Where a non-resident person incurs a non-capital loss in a business carried on in Canada, the loss may be applied against income earned by the...
Articles
Vukets, "Structural Issues and Utilization of Domestic Loss Carryforward Pools", 1993 Conference Report, C. 23
Discussion (at pp. 28-29) of Revenue Canada's position on similar businesses.
Paragraph 111(1)(b) - Net capital losses
Administrative Policy
14 August 2014 Internal T.I. 2013-0506691I7 - Capital Losses - Health & Welfare Trusts
Are health and welfare trusts ("HWTs") permitted to incur capital losses and deduct net capital losses when computing taxable income under...
5 July 2013 External T.I. 2013-0479161E5 - Capital Loss Adjustment - 152(4)
The correspondent asked whether a capital loss for a statute-barred year can be amended to increase the amount of the capital loss, and whether...
Paragraph 111(1)(e) - Limited partnership losses
See Also
Green v. The Queen, 2016 DTC 1018 [at 2629], 2016 TCC 10
Paris J found that the business losses of a limited partnership allocated to an upper-tier partnership in excess of its at-risk amount continue to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(2.1) | limited partnership losses flow through a 2-tier LP structure | 511 |
Administrative Policy
31 May 2012 External T.I. 2012-0436521E5 - Ltd ptnp losses in stacked ptnsp
In Year 1, C and D form a limited partnership (CD), which incurs a loss of $500 in that year, which is $300 in excess of their contributed...
25 February 2005 External T.I. 2004-0107981E5 - Limited Partnership Losses-Tiered Partnership
In response to an inquiry as to the deductibility of limited partnership losses ("LPL") in a multi-tier partnership arrangement, the Directorate...
14 May 2004 External T.I. 2004-0062801E5
Suppose that Mr A and B form a partnership (AB Partnership), with AB taking the $100 contributed by each of them to, in turn, contribute $200 to a...
2 May 1994 External T.I. 5-940777
A general partnership, that is a limited partner of a limited partnership, cannot carry forward its limited partnership losses arising from the...
92 C.M.TC - Q.11
Deductions under s. 111(1)(e) are not available to a general partner who was formerly a limited partner.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | may be no disposition on conversion of limited to general partnership | 34 |
Articles
Forster, "Limited Partnership Losses", Canadian Current Tax, June 1992, p. P57
A limited partner who becomes a general partner thereafter will have no at-risk amount and, accordingly, will be unable to deduct any unutilized...
Subsection 111(2) - Year of death
Articles
Sandra Bussey, Jim Barnett, "Capital Gains and Losses in the Year of Death", Tax for the Owner-Manager, Vol. I, No. 2, April 2001, p. 10.
Subsection 111(3) - Limitation on deductibility
Cases
CCLI (1994) INC v. Canada, 2007 DTC 5372, 2007 FCA 185
In its 1989 taxation year, the taxpayer deducted non-capital losses of $29.4 million which it treated as comprising a non-capital loss carried...
Paragraph 111(3)(b)
Administrative Policy
17 May 1993 Memorandum (Tax Window, No. 31, p. 11, ¶2522)
Except as provided in s. 111(3)(b), s. 111 does not impose an ordering on the application of losses and, therefore, a taxpayer can claim losses in...
Subsection 111(4) - Acquisition of control
Administrative Policy
10 July 1997 External T.I. 5-971588
"The policy stated in paragraph 18 of IT-302R3 would apply to a corporation receiving a notice of reassessment in the same manner as is described...
Paragraph 111(4)(c)
Administrative Policy
2005 APFF Roundtable Q. 1, 2005-014088
As s. 249(4) does not apply to a non-resident corporation that does not have a permanent establishment in Canada and whose control is acquired by...
Paragraph 111(4)(d)
Administrative Policy
94 C.P.T.J. - Q.25
S.111(4) does not generally apply to the capital property of a foreign affiliate upon the acquisition of control of the affiliate or the Canadian...
Tax Professionals Mini Round Table - Vancouver - Q. 11 (March 1993 Access Letter, p. 104)
Where s. 111(4)(d) applies to create a loss, then s. 40(2)(g) will deem that loss to be nil where the criteria therein are met.
Paragraph 111(4)(e)
Administrative Policy
7 October 2016 APFF Roundtable Q. 17, 2016-0652781C6 F - Functional currency and acquisition of control
Can a s. 111(4)(e) election be made respecting a pre-transition debt held immediately before an acquisition of control so as to realize a gain the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(9) - Paragraph 261(9)(a) | exclusion of pre-transition debts from s. 111(4) | 98 |
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(10) | exclusion of pre-transition debts | 153 |
10 February 1995 T.I. 950069 (C.T.O."Paragraph 111(4) Amended Designation")
"In view of the fact that, in subsection 248(1) of the Act, the term 'assessment' is defined as including a 'reassessment', it is our position...
10 February 1995 T.I. 942448 (C.T.O."Paragraphs 111(4)(c) & e")
S.111(4) does not generally apply to the capital property of a foreign affiliate upon the acquisition of control of the affiliate or the Canadian...
93 CR - Q. 22
Depreciable property designated under s. 111(4)(e) is deemed to have been disposed of by the corporation and reacquired by it for the purposes of...
8 July 1992 External T.I. 5-922051
Because an "assessment" includes a "reassessment", a corporation is allowed to amend a previously-made election under s. 111(4)(e) for a taxation...
13 February 1992 T.I. (Tax Window, No. 16, p. 19, ¶1747)
RC will accept an election under s. 111(4)(e), or any written amendment thereto, made within 90 days from the date of assessment or reassessment...
90 C.R. - Q42
Because s. 111(4)(e) is only applicable with respect to capital properties rather than foreign currency obligations, the designation will not be...
90 C.R. - Q45
RC will not accept designations under s. 111(4)(e) beyond the time limits specified therein.
88 C.R. - Q8
Ss.111(4)(c), (d) and (e) do not apply to foreign exchange gains and losses on indebtedness of the corporation.
Subsection 111(5) - Idem [Acquisition of control]
Cases
Yarmouth Industrial Leasing Ltd. v. The Queen, 85 DTC 5401, [1985] 2 CTC 67 (FCTD)
For the purposes of s. 111(5), control of a corporation may be acquired by virtue of control being acquired of its parent. [C.R.: 125(1)]
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(b) - Subparagraph 111(5)(b)(ii) | 68 |
Malka v. The Queen, 78 DTC 6144, [1978] CTC 219 (FCTD)
The taxpayers, who acquired 400 voting common shares in a company were held to have thereby acquired control of it notwithstanding that 500 voting...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 159 - Subsection 159(2) | de facto liquidator | 65 |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares | 139 |
See Also
A.G. of Canada v. Fallbridge Holdings Ltd. (1985), 31 BLR 57 (FCA)
It was stated, obiter, that the fact that two companies acted in concert to effect an acquisition did not necessarily constitute them as a group...
Administrative Policy
25 February 1999 External T.I. 5-990002
Various illustrations of the RC position that there generally will be an acquisition of control whenever one of two shareholders, each holding 50%...
Income Tax Technical News, No. 16
"The Department will apply the Supreme Court's findings [in Duha] that, outside of the constating documents of a corporation and its share...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Reasonable Expectation of Profit | 38 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(4) | 37 |
93 C.R. - Q. 57
Where an individual makes an assignment in bankruptcy, there will be no acquisition of control of a corporation owned by the individual for...
88 C.R. - Q.43
Where 4 unrelated individuals each own 1/4 of the shares of a corporation and one of the individual's shares are redeemed, then control of the...
Articles
Joel A. Nitikman, "Who Has De Jure Control of a Corporation When Its Shares Are Held by a Limited Partnership?", 2011 Canadian Tax Journal, Vol 59, p. 765
Argues that (at least where the shares of a subsidiary corporation held as partnership property are registered in the name of the limited...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 249 - Subsection 249(4) | 63 |
Paragraph 111(5)(a)
Cases
Manac Inc. Corp. v. Canada, 98 DTC 6605 (FCA)
All the voting shares of a corporation ("Nortex") which manufactured resin-coated wood panels, were acquired by a subsidiary of a predecessor of...
Canada v. Diversified Holdings Ltd., 97 DTC 5203 (FCA)
The taxpayer, which at the relevant times operated a ranch and was a real estate developer, acquired, in an arm's length transaction, another BC...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(2) - Paragraph 80(2)(a) | 129 |
The Queen v. Dorchester Drummond Corp. Ltd., 79 DTC 5163, [1979] CTC 219 (FCTD)
A company which acquired vacant land with the intention of eventually erecting a highrise office tower thereon, and which during the period...
Orlando v. The Minister of National Revenue, 62 DTC 1064, [1962] CTC 108, [1962] S.C.R. 261
With the exception of minimal revenues from the sale of hay, the only revenues derived by the taxpayer from her farm lands were sums which she...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Commodities, and commodities futures and derivatives | course of conduct of selling topsoil | 114 |
See Also
Birchcliff Energy Ltd. v. The Queen, 2015 TCC 232
A predecessor ("Birchcliff") of the taxpayer negotiated a plan to merge with a corporation ("Veracel"), which had discontinued its medical...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Sham | transitory share issuance under plan of arrangement was not a sham | 177 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) | share subscription was avoidance transaction notwithstanding its "overarching purpose" was financing | 148 |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | abusive reverse takeover by Lossco through diverted private placement | 261 |
NRT Technology Corp. v. The Queen, 2013 DTC 1021 [at 110], 2012 TCC 420, briefly aff'd 2013 DTC 5153 [at 6360], 2013 FCA 221
The taxpayer, which sold ATMs to the gaming industry, and specialized keyboards and price scanners to retail stores, in January 2006 acquired a...
No. 678 v. MNR, 60 DTC 45 (TAB)
The taxpayer, which had been a dealer in trucks and cars, ceased operations and, following a change of control, started operating service...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14 | 130 |
Maidment v. Kibby & Anor., [1993] BTC 291 (D)
Vice-Chancellor Nicholls affirmed the finding of the Commissioner that the purchase as a going concern by the taxpayers of an existing fish and...
Montplaisir Ltée v. MNR, 92 DTC 2317 (TCC), aff'd , 2001 DTC 5366 (FCA)
The taxpayer, which acquired control of a corporation ("Pinard") carrying on a used car dealership, was found not to be carrying on the business...
Queen & Metcalfe Carpark Ltd. v. MNR, 74 DTC 6007, [1973] CTC 810 (FCTD), aff'd [1976] CTC xvi (FCA)
The proposed renting out of hotel premises or a cinema structure was implicitly treated as part of the taxpayer's business of acquiring various...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(dd) | 138 |
Jeffrey v. Rolls - Royce, Ltd. (1961), 40 TC 443 (HL)
In finding that sums received by the taxpayer for providing technical know-how to foreign organizations were receipts of its trade of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Patents and Know-How | 143 |
Utah Co. of Americas v. MNR, 59 DTC 1275, [1959] CTC 496, 59 DTC 1275 (Ex Ct)
A Nevada company which was engaged in Canada in the construction of housing (and of a large building in Vancouver), and which carried on a mining...
Frankel Corporation Ltd. v. Minister of National Revenue, 59 DTC 1161, [1959] CTC 244, [1959] S.C.R. 713
An operation of recovering non-ferrous metals from scrap material, alloying them with other non-ferrous metals to specifications required by...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Commodities, and commodities futures and derivatives | inventory included in business sale | 105 |
Keir & Cawder, Ltd. v. C.I.R. (1958), 38 TC 23 (C.S. (1st Div.))
The taxpayer, which sold materials for use in construction projects, made a foray into the field of construction contracting which was terminated...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | 71 |
Canadian Fruit Distributors Ltd. v. MNR, 54 DTC 1145, [1954] CTC 284 (Ex. Ct.)
The respective activities of the taxpayer in acting as a broker for the sale of the fruit and vegetable products of its parent and of third...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | 74 | |
| Tax Topics - Income Tax Act - Section 9 - Nature of Income | income reduced to nil by obligation to pay | 149 |
Administrative Policy
2011 Ruling 2011-0392171R3 - XXXXXXXXXX
A deposit-taking financial institution with significant non-capital losses (LossCo") was directed by the provincial regulator to quickly merge...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 272 |
2007 Ruling 2006-019842
Ruling that following the transfer by Lossco of a business to a partnership of which it was part owner and an indirect acquisition of control of...
Income Tax Technical News, No. 34, 27 April 2006 under "Sale of Tax Losses"
Where Profitco avails itself of the benefit of tax losses of Lossco, a publicly traded corporation that is insolvent and has ceased to carry on...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 56 |
2005 APFF Roundtable Q. 6, 2005-014098
Where there is an acquisition of control of two Canadian furniture manufacturers (A and B), and B then leases all its assets to A and transfers...
Income Tax Technical News, No. 30, 21 May 2004
The Agency "would not feel comfortable providing a ruling on a loss consolidation transaction that contemplates dollar amounts and time frames...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) | 36 | |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) | dollar amounts not artificial; parent lossco must have independent income source | 135 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | 105 | |
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii) | 108 | |
| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | 92 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(f) | 155 | |
| Tax Topics - Income Tax Act - Section 96 - Subsection 96(1) - Paragraph 96(1)(g) | 36 |
17 February 2003 External T.I. 2003-000072
It is unlikely that the similar property test would be satisfied where a profitable corporation that is in the business of producing a type of...
24 March 1997 Memorandum 9705947
Tin and uranium are similar properties for purposes of s. 111(5)(a)(ii). Similarly, "the Department has previously opined that income derived by a...
17 October 1996 T.I. 962781
RC referred to a passage from Barnwell Consolidated School District No. 15 v. Canadian Western and Natural Gas, Light, Heat & Power Co. in...
5 January 1996 External T.I. 5-951491
Where a business carried on by a corporation subsequent to an acquisition of control of the corporation, is transferred to a partnership in which...
Revenue Canada Round Table TEI, 16 May 1994, Q. 10 (C.T.O. 94 TEI Round Table Reasonable Expectation of Profit")
RC referred to the general principles laid down in Moldowan v. The Queen, 77 DTC 5213 as to what constitutes a reasonable expectation of...
19 May 1993 T.I. (Tax Window, No. 31, p. 12, ¶2524)
Although an operation of oil and gas wells in Alberta following an acquisition of control would not be the same business as the operation of oil...
17 May 1993 Memorandum (Tax Window, No. 31, p. 12, ¶2523)
Losses from a rental property incurred by a corporation prior to an acquisition will continue to be available after the acquisition of control if...
17 May 1993 Memorandum (Tax Window, No. 31, p. 2, ¶2508)
Where three shareholders (A, B and C) each owning 1/3 of the shares of LossCo transfer their shares of LossCo to ACo, BCo and CCo, then assuming...
September 1991 Memorandum (Tax Window, No. 9, p. 4, ¶1443)
Discussion of when a number of shareholders comprise a "group". The existence of a shareholders' agreement will not always be prima facie evidence...
October 1990 T.I. 1990-128
Company A, whose losses from Div 1 are streamed due to a previous acquisition of control, transfers Div 1 to a partnership, whose other partner...
11 June 1990 T.I. (November 1990 Access Letter, ¶1530)
A business involving software is not similar to a business involving computer hardware and peripheral equipment, although a business involving...
13 February 1990 T.I. (July 1990 Access Letter, ¶1331)
The construction of single-family houses and the construction of rental properties cannot be considered as similar services. Where an acquiring...
11 January 1990 T.I. 5-9152
Where Company A, a wholesaler of a product, acquires all the shares of a retailer of the same product in order to ensure continued distribution of...
12 September 89 T.I. 5-8250
A corporation which is in the business of retailing clothing, which it has manufactured or which has been manufactured by others, through its...
89 C.R. - Q.37
Where a loss corporation transfers its entire business to a partnership of which the corporation is a member, that corporation would normally be...
IT-206R "Separate Businesses"
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 22 - Subsection 22(1) | 8 |
Articles
Anu Nijhawan, "When is 'Loss Trading' Permissible: A Purposive Analysis of Subsection 111(5)", draft 2015 CTF Annual Conference paper
Absence of purpose test for loss-streaming rules (p. 5)
[S]ubsection 111(5) does not incorporate a purpose test. Such inclusion was explicitly...
Ian Gamble, "Income from a Business or Property: General Principles and Current Issues", 2014 Conference Report, Canadian Tax Foundation, 5:1-32
Share investments potentially a business (pp. 5:10-15)
[C]onsolidated Mogul's chief task in the relevant years was the development and management...
Anthony Schiefer, "Buyer Beware - Structuring to Minimize to Minimize Capital Tax Consequences of a Share Purchase", Corporate Structures in Groups, Vol. IV. No. 1, p. 300
Discussion of techniques to use interest expense of purchaser to shelter taxable income of target.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 181.2 - Subsection 181.2(3) | 15 |
Cadesky, "Corporate Losses", 1990 Conference Report, c. 19.
Paragraph 111(5)(b)
Subparagraph 111(5)(b)(ii)
See Also
Yarmouth Industrial Leasing Ltd. v. The Queen, 85 DTC 5401, [1985] 2 CTC 67 (FCTD)
For the purposes of the pre-1983 version of s. 111(5)(a), it was found that a corporation - whose business had consisted in the leasing of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) | 23 |
Subsection 111(5.1) - Computation of undepreciated capital cost
Administrative Policy
25 April 1990 T.I. (September 1990 Access Letter, ¶1429)
Where the amount designated by a corporation under s. 111(4)(e) in respect of a depreciable property exceeds its fair market value at the time of...
88 CPTJ - Q.24
S.111(5.1) applies whether or not the purchaser's intention is to acquire losses.
84 C.R. - Q.42
Where the controlling shareholder of a public corporation disposes of sufficient of its shares to the public to lose control, or where a 49% block...
84 C.R. - Q.43
Guidelines on what constitutes the same or similar business have not yet been developed.
81 C.R. - Q.47
There is a control change where a corporation owned equally by X and Y becomes fully owned by X, or where a corporation fully owned by X becomes...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(a) | 38 |
Subsection 111(5.5) - Restriction
Administrative Policy
2014 Ruling 2014-0523221R3 - Amalgamation of mutual funds
underline;">: Proposed transactions. C1, which is a smaller mutual fund corporation than C2, will amalgamate with C2 to form Amalco. C1, C2 and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) | amalgamation of two mutual fund corporations each with capital losses | 132 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) | amalgamation of two mutual fund corporations each with capital losses | 134 |
Subsection 111(8) - Definitions
Non-Capital Loss
Cases
Taylor v. The Queen, 88 DTC 6422 (F.CTC)
A submission that a (foreign non-business income) tax can never be an expense so as to create a loss within the meaning of s. 111(8)(b) was...
Administrative Policy
22 May 1997 TI 970019
"A taxpayer may claim a net capital loss carried over from a previous year ... pursuant to variable E in the formula, notwithstanding the fact...
3 July 1997 T.I. 963922
Although s. 114 specifies that each partial period is treated as a whole taxation year, for purposes of s. 111, the loss from one period and the...
5 September 1996 External T.I. 5-962696
A loss to a mortgage investment corporation resulting from it paying taxable dividends in an amount greater than its income for the year will give...
6 April 1993 T.I. (Tax Window), No. 30, p. 7, ¶2489)
Where a non-capital loss in a preceding year has been reinstated as the result of the carryback to that year of a net capital loss, the taxpayer...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(6) | 39 |
24 June 1992 External T.I. 5-920948
Respecting an inquiry as to the treatment of CEE renounced to a non-resident shareholder, the Rulings Directorate stated:
For the purpose of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 3 | flow-through shares a source | 86 |
30 August 1991 T.I. (Tax Window, No. 8, p. 7, ¶1427)
S.111(8)(b) required a taxable capital gain for a year to be reduced by deductions available for the year (in this case, deductions for dividends...
24 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 23, ¶1104)
An individual who has realized a capital gain but has no net income for the year may claim the capital gains exemption on the full amount of the...
20 April 1990 TI 5-9269
A taxpayer (which is not a principal business corporation) may deduct CEE or CDE without restriction to its income so as to create a non-capital...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 3 | 55 |
90 C.R. - Q52
An ABIL is included in non-capital losses and may be carried back three years and forward seven years without adjustment for the different...
Articles
Forster, "Administrative and Regulatory", Canadian Current Tax, March 1992, p. A7
Subsection 111(9) - Exception
Administrative Policy
18 April 1990 T.I. (September 1990 Access Letter, ¶1428)
Where the rental activities of a non-resident did not constitute the carrying on of a business in Canada, the net losses generated would not be...
IT-262R2 "Losses of Non-Residents and Part-Year Residents"
Subsection 111(12) - Foreign currency debt on acquisition of control
Administrative Policy
2 August 2016 External T.I. 2014-0544941E5 F - Interaction between ss. 111(12) and 80.01(3)
Aco is indebted to Bco (its wholly-owned subsidiary and also a Canadian-controlled private corporation) for US$1,000,000 under a “commercial...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(3) | deemed settlement under 80.01(3) before operation of 111(12) | 153 |