Income Tax Severed Letters - 1996-01-12

Principal Issues:

Whether a return of capital from a Delaware Corporation to a Canadian shareholder which has to be distributed from the Corproation's "surplus" account is a "dividend".

Position:

Yes.

Reasons:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Agriculture Canada
Market and Industry Services Branch
Horticulture and Special Crops Division 952948
2200 Walkley Road A.M. Brake
Ottawa, Ontario
K1A 0C5

Attention: Murray Pearson, Director

January 3, 1996

Dear Sirs:

Principal Issues:

Whether grazing leases may qualify as "qualified farm property".

Position:

Grazing leases may qualify as qualified farm property.

Reasons:

Principal Issues:

Whether contributions made by a Canadian resident employee to a U.S. 401(k) pension plan are included in the employees gross employment income.

Position:

Yes

Reasons:

Principal Issues:

Can a Charitable Foundation avail itself of the policy outlined in IT-111R2 by having an insurance company issue an annuity to a donor and the donor will not be required to report the annuity payments as income?

Position:

Basically it appears no as by entering into an annuity arrangement the foundation would be considered to have incurred a debt other than those allowed.

Reasons:

Principal Issues:

Whether a gain from the disposition of goodwill, on the sale of an international shipping business the income from which is exempt from taxation in Canada under paragraph 81(1)(c) of the Act, is subject to tax under the Act.

Position:

The disposition of goodwill associated with such business generally gives rise to taxable capital gain. However under proposed 115(1)(b)(ii) the property used in an international shipping business is excluded from the definition of taxable Canadian property provided the requisites for that exclusion are otherwise satisfied.

Reasons:

Principal Issues:

Whether a non-capital loss incurred in a taxation year subsequent to the averaging period can be carried back to a taxation year in the averaging period.

Position:

Yes subject to section 111 and 119(1)(a), however, this will also result in a reassessment to the year of averaging in that the amounts referred to in paragraph 119(2)(a) would decrease, and as a result the taxpayer may also wish to revoke the election.

Reasons:

Principal Issues:

Whether section 6, 7 or 15 applies to tax benefit received by employee as a result of share offering by non-resident corporate parent.

Position:

Depends on capacity of individual who receives benefit; confirmed that if employee, section 7 applied in preference to 6.

Reasons:

Principal Issues:

Conditional repayments out of an EBP by the employer

Position:

General position on trustee EBP,no position given on custodial EBPs

Reasons:

Principal Issues:

Can a determination of losses be requested by a taxpayer where the Department has not otherwise ascertained that the amount of the taxpayer's loss was different than that reported by the taxpayer. The reason for requesting a determination is to reduce certain permissive deductions for the year in order to increase a claim for ITC's which have otherwise expired.

Position:

No

Reasons:

Principales Questions:

1. Aux fins du paragraphe 81(3) de la Loi, est-ce qu'une somme versée à titre de rémunération de conseillers municipaux est considérée comme comprenant une allocation versée lorsqu'il n'existe aucune disposition de présomption dans la législation municipale?

2. Quels documents Revenu Canada accepte-t-il pour qu'une somme soit considérée comme ayant été effectivement versée, à titre d'allocation de dépenses, aux maires et conseillers municipaux?

Position Adoptée:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Human Resources Development Canada
Place du Portage, Phase IV, 4th Floor
Hull, Quebec							952627
K1A 0J9								A.M. Brake

Attention: Alison Flood, TAGS Development Team

October 11, 1995

Dear Ms. Flood:

Re: Taxability of TAGS Employment Bonus