Income Tax Severed Letters - 2000-01-21

Principal Issues: For purposes of the standby charge benefits calculation, is the use by an employee of an emergency vehicle for travelling between the employee's home and usual workplace considered personal use or is the use "in connection with or in the course of the taxpayer's office or employment" where the employee is required by the terms of the employee's employment contract to so use the emergency vehicle.

Position: It continues to be our view that travel between an employee's home and usual workplace is personal use.

Reasons: This matter was reviewed as recently as September, 1999, at which time our Assistant Commissioner confirmed the above position.

Principal Issues: 1) Court Order dated XXXXXXXXXX awarding retroactive payments from XXXXXXXXXX What is the tax treatment?

Position: 1) Commencement day is XXXXXXXXXX .
Taxed under new regime
Problems with retroactivity and statute barred issues

Reasons: 1) 56 (4) Commencement day
Intent is to apply the new rules

Principal Issues: Can a separated father claim the equivalent-to-spouse credit when the child stays overnight on a regular basis such as every second weekend.?

Position: Perhaps, can only be determined on a case-by-case basis..

Reasons: When the custody rights of the secondary caregiver, the father in this case, require that person to be responsible for the usual day-to-day activities of raising a child, such as ensuring the child attends school, preparing regular meals etc., the child would be considered "to live" with the secondary caregiver during the times that the secondary caregiver has custody of the child and would likely be entitled to the equivalent-to-spouse credit. This is not the case when a non-custodial parent only has legal access or visitation rights.

Principales Questions:

Est-ce que le montant d'une rente viagère constitue un montant versé à titre de pension alimentaire déductible en vertu de l'alinéa 60b) de la Loi ?

Position Adoptée:

Principal Issues: A separation agreement dated XXXXXXXXXX , provides that XXXXXXXXXX . shall pay to his wife $XXXXXXXXXX per month as spousal support and $XXXXXXXXXX per month for child support, commencing XXXXXXXXXX . The taxpayers were divorced on XXXXXXXXXX . A verbal agreement between the taxpayers changed the child support to $XXXXXXXXXX per month and eliminated spousal support commencing XXXXXXXXXX . A written agreement dated XXXXXXXXXX provides that the XXXXXXXXXX written agreement continues to have legal force and effect except as varied by the XXXXXXXXXX agreement. The XXXXXXXXXX agreement provides that the parties agree that the Schedule A separation agreement be amended retroactive to XXXXXXXXXX , to provide for monthly child support payable of $XXXXXXXXXX per month. The XXXXXXXXXX agreement provides that the Schedule A separation agreement is amended to rescind all spousal support effective XXXXXXXXXX and that XXXXXXXXXX is required to pay to his former spouse $XXXXXXXXXX plus interest in satisfaction of all child and spousal support arrears and all claims for future spousal support and all interest accrued on the arrears of support. The XXXXXXXXXX agreement also states that XXXXXXXXXX has paid to his former spouse $XXXXXXXXXX per month for child support from XXXXXXXXXX , to XXXXXXXXXX ; and $XXXXXXXXXX per month for child support since XXXXXXXXXX ; and $XXXXXXXXXX per month for spousal support up to XXXXXXXXXX and no spousal support is payable after that date.

1) Is subparagraph (b)(ii) of the definition of "commencement day" in subsection 56.1(4) of the Act applicable to the XXXXXXXXXX separation agreement? 2) Do subsections 56.1(3) and 60.1(3) of the Act apply? 3) Is the $XXXXXXXXXX lump sum payment in satisfaction of all child and spousal support arrears and all claims for future spousal support and all interest accrued on the arrears of support taxable and deductible?

Position:
1) Yes, subparagraph (b)(ii) of the definition of "commencement day" in subsection 56.1(4) of the Act applies such that there is a commencement day for the XXXXXXXXXX written agreement.

2) XXXXXXXXXX , it is our view that subsections 56.1(3) and 60.1(3) of the Act are not applicable in this particular case.

3) Insufficient information to determine if the $XXXXXXXXXX lump sum payment is taxable/deductible. General comments provided.

Reasons: See 9804967, 9812307, 9731995, 9824705, 981266, 9806525, 9801315, 9823445, 9829345, 9922586, 9909419, 9907417, 9832235, 9910845

Principal Issues: It is not clear from the written enquiry whether the farmer reported income on his XXXXXXXXXX return pursuant to paragraph 28(1)(b) or whether the farmer claimed a deduction on his XXXXXXXXXX return pursuant to paragraph 28(1)(f) so we have discussed the tax consequences in both of these two scenarios.

1) An individual who was a farmer claimed an optional inventory adjustment of $XXXXXXXXXX on grain inventory on his XXXXXXXXXX tax return, pursuant to paragraph 28(1)(f) of the Act. The individual died in XXXXXXXXXX and the value of the grain on the date of death was $XXXXXXXXXX . Can $XXXXXXXXXX of the value of the grain be included in income on the final return of the deceased and can the remaining $XXXXXXXXXX be reported on an elective subsection 70(2) return? Alternatively, can the paragraph 28(1)(f) optional inventory deduction of $XXXXXXXXXX be claimed on the subsection 70(2) return if the value of the grain ($XXXXXXXXXX ) is reported on the subsection 70(2) return?

2) An individual who was a farmer reported income of $XXXXXXXXXX on grain inventory on his XXXXXXXXXX tax return, pursuant to paragraph 28(1)(b) of the Act. The individual died in XXXXXXXXXX and the value of the grain on the date of death was $XXXXXXXXXX . Can $XXXXXXXXXX of the value of the grain be included in income on the final return of the deceased and can the remaining $XXXXXXXXXX be reported on an elective subsection 70(2) return? Alternatively, can the paragraph 28(1)(f) optional inventory deduction of $XXXXXXXXXX be claimed on the subsection 70(2) return if the value of the grain ($XXXXXXXXXX ) is reported on the subsection 70(2) return?

Position:

1) The taxpayer's legal representative can choose to elect to file a 70(2) return and report the $XXXXXXXXXX value of the inventory at the date of death on the 70(2) return. The total value of all the deceased taxpayer's rights or things has to be reported on the 70(2) return (other than rights or things transferred to beneficiaries within the time provided by 70(3)). No portion of the value of the rights or things is to be reported on the taxpayer's final XXXXXXXXXX T1 return for the year of death. The taxpayer included the value of inventory ($XXXXXXXXXX ) in income pursuant to paragraph 28(1)(b) for the XXXXXXXXXX taxation year and claimed a corresponding deduction ($XXXXXXXXXX ) pursuant to paragraph 28(1)(f) for the XXXXXXXXXX taxation year. Therefore, no further amounts are required to be reported or deducted on the deceased's final T1 return for the year of death in respect of the optional inventory adjustment.

2) If the legal representative chooses not to file a separate 70(2) return, a deduction under paragraph 28(1)(f) would be claimed for $XXXXXXXXXX on the deceased's XXXXXXXXXX final return and the total value of the grain inventory of $XXXXXXXXXX would also be reported as income on the deceased's XXXXXXXXXX final return. If the taxpayer's legal representative chooses to file an elective 70(2) return, then the total value of the grain inventory of $XXXXXXXXXX must be reported on the 70(2) return and a deduction for $XXXXXXXXXX pursuant to paragraph 28(1)(f) could be claimed on the deceased's XXXXXXXXXX final return.

Reasons:. As indicated in paragraph 2 of IT-212R3, Income of Deceased Persons - Rights or Things, where a taxpayer at the time of death had rights or things which, when realized or disposed of, would have been included in computing income, subsection 70(2) requires the value of such rights or things at the date of death to be included in computing income for the year of death. Subsection 70(2) includes in income amounts that have been earned but have not been included in income such as amounts in respect of which an amount has been deducted in computing income such as a "cash basis" inventory. Paragraph 20 of IT-212R3 indicates that if a separate subsection 70(2) return is filed, it must include the total value of all the deceased taxpayer's rights or things other than those transferred to beneficiaries within the time provided by subsection 70(3) of the Act. Accordingly, the taxpayer's legal representative can choose to elect to file a subsection 70(2) return within the time period permitted, as set out in that provision, and report the full amount of the value of the grain inventory of $XXXXXXXXXX on the subsection 70(2) return. By virtue of subsection 70(2), the taxpayer's legal representative cannot choose to report only part of the value of the grain inventory on the subsection 70(2) return. In addition, if an election is made by the taxpayer's legal representative to file a subsection 70(2) return, all of the taxpayer's rights or things have to be reported on that return.

Principales Questions:
Une commission reçue par un travailleur autonome sur la vente d'une police d'assurance-vie acquise à des fins personnelles est-elle imposable ou peut-elle être exclue du revenu d'entreprise?

Position Adoptée:
Elle est exclue du revenu d'entreprise.

Principales Questions:

Requête pour fixation intérimaire signée le XXXXXXXXXX à valoir jusqu'au jugement pour les mesures provisoires. Consentement pour jugement à l'égard des mesures accessoires signé le XXXXXXXXXX prévoit que le montant de pension alimentaire est réduit temporairement et sera augmenté lorsque le payeur se trouvera un emploi. Est-ce que la pension alimentaire pour enfants et pour conjoint qui sera payable lorsque le payeur se trouvera un emploi sera assujettie aux nouvelles règles sur les pensions alimentaires ?

Position Adoptée: