Income Tax Severed Letters - 1997-11-28

Principal Issues:

def'n of amusement park in reg 1104(12), specifically can it be indoors, must it include all three activities listed in the regulation and whether a place which provides horseback riding, tennis, mini-golf, golf or a fishing pond qualifies as a amusement park

Position:

usually outdoors but there are incidences of indoor amusement parks, the phrase "amusements, rides and audio-visual attractions" is to be understood accd'ng to the principle of noscitur a sociis and no, none of the activities listed in letter would qualify as an amusement park in and of themsevles

Reasons:

Principales Questions:

Est-ce que lors de sa disposition en janvier 1996, le quota de lait du contribuable rencontrait la définition de "bien agricole admissible" pour les fins de la déduction pour gains en capital à l'article 110.6 de la Loi, malgré qu'il ait fait l'objet d'un choix selon le paragraphe 110.6(19) de la Loi au 22 février 1994.

Position Adoptée:

Principal Issues:

Whether a foreign affiliate doing business through the use of a non-arm's length commissionaire is conducting its business with the commissionaire or with the customers to whom its products are sold or licensed. This issue is relevant for the exclusion to the "investment business" definition in subsection 95(1).

Position:

Question of fact.

Reasons:

Principal Issues:

timing of deduction for feed purchased by cash basis farmer in one taxation year when the feed will not be delivered until the next taxation year

Position:

no deduction until title to feed is transferred to purchaser

Reasons:

Principales Questions:

Monsieur A transfère à son épouse 100 actions "A" de Publico ayant un PBR de 100$ et une JVM de 1 000$. Il y a un roulement en vertu du paragraphe 73(1) de la Loi. Madame A détient déjà des biens identiques, soit 100 actions "A" de Publico ayant un PBR de 1 000$. Madame A vend les 200 actions pour 2 000$. Comment s'appliquent les règles d'attributions à l'égard du gain en capital réalisé ?

Position Adoptée:

Principal Issues:

What constitutes "pay in lieu of notice"?

Position:

Question of fact.

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.

	                            	972561
XXXXXXXXXX                                  T. Harris
(613) 957-2114 

Attention: XXXXXXXXXX

November 3, 1997

Dear Sirs:

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.

972859
XXXXXXXXXX T. Harris
(613) 957-2114

Attention: XXXXXXXXXX

October 31, 1997

Dear Sirs:

Principal Issues:
1. Would a non-resident limited partner of a partnership which is carrying on business in Canada through a Canadian permanent establishment be considered to be carrying on business in Canada through a Canadian permanent establishment?
2. Would that non-resident limited partner be taxable in Canada (other than under Part XIII of the Act) in respect of their share of partnership income allocated to them?
3. (a) Would certain distribution fees and redemption fees paid to the partnership be subject to Part XIII tax?
(b) If Part XIII tax does so apply, would paragraph 212(13.1)(b) apply with respect to the entire amount of such payments, or only to the proportion of the payments allocable to the non-resident partner(s)?

Position:
(Note: Responses may be modified by the application of the terms of any relevant reciprocal tax agreement or convention that Canada has with another country.)
1. Yes. 2. Yes. 3. (a) To the extent the fees can reasonably be attributed to a business carried on by the partnership in Canada, those fees would be subject to tax under Part I, not Part XIII.
(b) If Part XIII did apply, the withholding applies to the full amount of the payment even though some of the partners are residents of Canada.

Reasons:
1. Consistent with decisions in Gordon Grocott v. Her Majesty The Queen (96 DTC 1025) and No. 630 v. Minister of National Revenue (59 DTC 300). Also consistent with comments at page 8:16 of the 1989 report of the Corporate Management Tax Conference.
2. Presuming the non-resident limited partner is considered to be carrying on business through a permanent establishment in Canada, generally speaking, Regulation 805(1) would apply so there would be no Part XIII tax liability in respect of the non-resident's portion of the business income earned by the partnership. Subsection 2(3) and section 115 of the Act would apply to subject a person, who was not resident in Canada at any time in a taxation year, to Part I tax in that year on taxable income earned in Canada. Section 114 of the Act would be used to determine taxable income for non- resident partners that are individuals and were only resident in Canada for part of the year.
3. (a) Consistent with Regulation 805(1) and paragraph 8 of IT-81R.
(b) See paragraph 7 of IT-81R.

Principal Issues:

1)Taxability of course costs paid on behalf of students under the "Opportunities Fund for Persons with disabilities."
2)Amount of benefit to be taxed to student when HRDC pays for full course cost.
3)Whether there is any required withholding at source on amount of benefit.
3)Whether the tuition tax credit is available.

Position:

1)Taxable under 56(1)(n)
2)Fair market value; rates regularly charged to the public.
3)No, but T4A to be completed.
4)Not prevented by subparagraph 118.5(1)(a)(iii.1).

Reasons:

Principal Issues:

Would an election under section 17 of the Public Service Superannuation Regulations constitute an agreement in writing for the purposes of paragraph 147.2(4)(b)?

Position:

No

Reasons:

Principal Issues:

Would a spouse be taxed on pension income received as a result of a court ordered division of pension benefits under the Matrimonial Properties Act (Saskatchewan) where there is no marriage breakdown?

Position:

No

Reasons:

Principal Issues:

Whether a cash distribution made to a Canadian shareholder of a U.S. corporation constituted a dividend or a return of capital for Canadian tax purposes?.

Position:

No conclusive opinion was given because we did not have the relevant information.

Reasons:

Principal Issues:

Whether an amount of income of a foreign affiliate which "shall not be included in computing the income" of a foreign affiliate of a taxpayer pursuant to paragraph 81(1)(c) of the Act can be considered to be "subject to tax under Part I of the Act" for the purposes of paragraph 5906(1)(b) of the Regulations to the Act.

Position:

No

Reasons:

Principal Issues:

How is the income of the profits of an association incorporated under the Societies Act of Alberta taxed?

Position:

The profits should be reported on a T2.

Reasons:

Principales Questions:

Est-ce que l'amortissement total déduit sur un immeuble avant la faillite, est effacé suite à la faillite, dans la situation ou le bien est retourné au failli par le syndic au moment de la libération ?

Position Adoptée:

Position Adoptée:

Principal Issues:

Whether an expenditure is a leasehold improvement or an expenditure subject to subsection 1100(8) of the Regulations.

Position:

The expenditure is subject to subsection 1100(8).

Reasons:

Principal Issues:

(1) Status Indian wishing to start a tree removal business. Client refers to a Revenue Canada letter of 1988 in which he is advised that the sole criterion is whether the employer resides on a reserve, in which case employment income was considered exempt. Client wishes to know whether this is still our position.

Position:

(1) Although position has changed, in this particular situation exemption could be granted provided certain conditions are met. The change in position resulted from court cases in which the exemption and the cases in which it is applicable, have been more precisely determined.

Reasons:

Principal Issues:
The producer of a film entered into an agreement to dispose of the film to a non-arm's length distributor which would also acquire the rights to all of the revenues from the exploitation of the film in all exploitable markets. Would the producer be entitled to the film tax credit?

Position:
No.

Reasons:
Based on IT-441, paragraph 4, such an agreement would be considered to be a disposition (prior to the production) of the film. However, the production may be considered to be done for the distributor and the labour expenditure may be considered to be incurred by the distributor, instead of the producer. Accordingly, the producer's labour expenditure would be nil and would not be entiled to the credit.

Principal Issues:

Treatment of payment made by a tenant to landlord which is the Crown and used by the Crown to make specific major improvements to property leased from the Crown.

Position:

Not a gift and not a current operating expense.

Reasons:

Principal Issues:

(1) Status Indian employee (network coordinator) of an XXXXXXXXXX-based organization: whether working either at home on a reserve or in a "First Nation environment" for a total of 60% of the duties leads to exemption under Guideline 3.

(2) Application of Proration Rule under Guideline 1 if answer to (1) is negative.

Position:

(1) Exemption might be granted provided certain conditions are met.

(2) Proration Rule might be applicable provided no other Guideline applies.

Reasons:

Principales Questions:

inapplication de 88(1)c) a trois situations présentées

Position Adoptée:

Principales Questions:

lors de la fusion d'une filiale et de sa société-mère, y a-t-il un acquisition des biens de la filiale par la société-mère aux fins de 87(11)

Position Adoptée:

Principales Questions:

interprétation sur la façon d'appliquer le test de 10% à 186(4)

Position Adoptée: