Subsection 1106(1)
Cases
The Queen v. Larsen, 99 DTC 5757, Docket: A-570-98 (FCA)
The taxpayer and his three siblings gave a lumber company the right to enter their land to remove timber during a five-month period for consideration of $70 per cubic metre of timber removed. Noël J.A. found (at p. 5760) that "the right to remove timber by severance is, at the time of the grant, an incorporeal hereditament in land which as such constitutes real property" and indicated that there is no requirement in the definition of qualified real property that the standing timber would be used at the time of grant in farming.
Administrative Policy
20 October 2000 T.I. 2000-004172
Discussion as to whether a corporation would qualify where it has Class A voting non-participating shares owned by a Canadian citizen, and Class B participating shares held by two corporations, two of which are non-Canadian, with the Class B shares having a call option to purchase all the Class A shares.
Excluded Production
Administrative Policy
2013 Ruling 2013-0513991R3 - Reg 1106 and excluded production
The granting of the option to acquire the production by the production company (Prodco), a qualified corporation which will claim the Canadian film or video production tax credit under s. 125.4, to a related distribution corporation and prescribed taxable Canadian corporation (Master Distributor), and with no assignment of the copyright occurring until the option was exercised, would not cause the 25-year copyright ownership requirement not to be met as s. 1106(1)(a)(iii)(A) of the definition of "excluded production" contemplates a transfer of the copyright between a qualified corporation and a related prescribed taxable Canadian corporation.
2012 Ruling 2012-0463231R3 - Reg 1106 and excluded production
A sole-purpose production company (Prodco) grants to to Master Distributor the exclusive right to exhibit, distribute and license the exhibition and distribution of the Production, and also grants an Option to acquire all of Prodco's right, title and interest in the Production except for the right of Prodco to retain the proceeds of (i) any Tax Credits, (ii) any royalties received or receivable by Prodco under the Canadian Pre-Sale, and (iii) XX. The Exercise Price of the Option will be equal to the FMV of the Property at the date of exercise of the Option.
Rulings that:
- The granting of the Option will not result in the Production becoming an excluded production under clause 1106(1)(a)(iii)(A) of the "excluded production" definition.
- The exercise of the Option by Master Distributor will not result in the Production becoming an excluded production under such clause.
- Immediately after the exercise of the Option by Master Distributor, the Production that is thereby acquired by Master Distributor from Prodco will be a Class 10(x) property to Master Distributor provided that it was a Class 10(x) property to Prodco.
Subsection 1106(7)
Administrative Policy
20 July 1998 T.I. 981251
The "term" 'treaty co-production twining arrangement' means the pairing of two distinct film or video productions, one of which is a Canadian film or video production and the other which is a foreign film or video production".