Income Tax Severed Letters - 1996-03-22

Principal Issues:

Whether the commuted value of a U.S. deferred annuity contract (acquired by a U.S. resident/annuitant) and payable upon the death of the annuitant to a named Canadian resident beneficiary is included in income.

Position:

General comments provided. Could qualify as a non-taxable receipt (i.e. inheritance/gift) however there is not enough information to make that determination.

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.

XXXXXXXXXX 5-960180

Le 18 mars 1996

Monsieur,

Objet: Biens agricoles de remplacement

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.

5-960038
XXXXXXXXXX J. Teixeira
(613) 957-8953

Attention: XXXXXXXXXX

March 18, 1996

Dear Sirs:

Re: Deductibility of interest on debt

Position Adoptée:

Principal Issues:

Whether rental income earned from real property in an intervivos trust and allocated to a beneficiary of the trust would qualify under the definition of earned income found in subsection 146(1) of the Income Tax Act?

Position:

No

Reasons:

Position Adoptée:

Principales Questions:

But du IT-315

Position Adoptée:

Principal Issues:

Is an amount payable by a Canadian trust to a non-resident beneficiary for which a designation under 104(13.1) has been made subject to non-resident withholding tax under 212(2)(c)?

Position:

The amount designated under 104(13.1) is not subject to 212(1)(c).

Reasons:

Principal Issues:

Investment in a business corporation as a qualified investment for an RRSP

Position:

Routine reply on 4900(6) and (12) with update for October 31/95 passage of amendments (no discussion of transitional rules with respect to property acquired between Dec. 2/92 and November 29/94).

Reasons: N/A

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.

5-950490
XXXXXXXXXX J. Teixeira
(613) 957-2095

Attention: XXXXXXXXXX

March 5, 1996

Dear Sirs:

Re: Interest calculation on revised loss claims

Principal Issues:

where separated or divorced parents have joint custody and the court order/agreement specifies that 56.1(2) and 60.1(2) apply, whether payments for the maintenance of children residing with the payer will qualify for the deduction on the basis that the other spouse shares in the custody of those children -also whether children who have reached the age of majority can still be in the custody of parents

Position:

no and no (except where a child who has reached the age of majority cannot withdraw from parents care and control because of disability or other reason)

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.

XXXXXXXXXX 960555

Attention: XXXXXXXXXX

February 28, 1996

Dear Sirs:

Re: Qualified Investments for RRSPs

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.

5-952531
XXXXXXXXXX M. Séguin
(613) 957-8953

A l'attention de XXXXXXXXXX

Le 26 février 1996,

Monsieur,

Objet: Article 256 de la Loi de l'impôt sur le revenu (la "Loi") Interprétation technique

Principal Issues:

What are the tax consequences flowing from an out-of-Court settlement negotiated between an estate and a claimant.

Position:

Cannot determine.

Reasons:

Principal Issues:

Whether flow-through shares can be issued after the exploration expenses have already been incurred.

Position:

Yes, provided there is a valid agreement between the shareholder and the corporation, as required in the definition of flow-through share in subsection 66(15), prior to the expenditures being incurred.

Reasons:

Principal Issues:

Principales Questions:

Est-ce que la contribution au Fonds national de formation de la main-d'oeuvre administré par la Société québécoise de développement de la main-d'oeuvre et les autres contributions effectuées par un employeur en raison de l'obligation de consacrer à la formation 1% de sa masse salariale, tel que prévu par la Loi favorisant le développement de la formation de la main-d'oeuvre, seraient déductibles du revenu d'entreprise de l'employeur?

Position Adoptée:

Principal Issues:

(1) Do exploration expenses incurred by a corporation on property owned by a wholly-owned subsidiary for no consideration qualify as CEE of the corporation? (2) Any tax implications to the subsidiary?

Position:

(1) Question of fact. (2) Subsection 246(1) may apply to the Subsidiary.

Reasons:

Principales Questions:

Interaction between subsections 104(21) and 89(1) of the Act

Position Adoptée:

Principal Issues:

Whether interest received on a loan to a designated person reduces the deemed interest determined under subsection 74.4(2).

Position:

No.

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.

XXXXXXXXXX 953252

February 7, 1996

Dear Sir:

Re: 1995 Federal Budget Proposals - Elimination of the Election to Defer the "21-Year Rule"

This is in reply to your letter of December 6, 1995, concerning the above.

Principal Issues:

Interpretation of proposed 143.2 as it relates to certain scenarios submitted. Determining the limited recourse amounts and whether the "expenditure" in respect of property acquired by a partnership would be the cost for capital cost allowance and capital gains purposes.

Position:

Opinion given in respect of the application of relevant provisions under section 143.2 as they relate to taxpayers, including partnerships, in general.

Reasons:

Principal Issues: