Income Tax Severed Letters - 2000-02-04

Miscellaneous

25 January 2000 2000-000273A - RRSP JUDGE

Unedited CRA Tags
146 REG 8309

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.

PRINCIPAL ISSUE:

RRSP deductions -Judges

Position TAKEN:

N/A

REASON FOR POSITION TAKEN:

N/A

XXXXXXXXXX 			2000-000273
L. J. Roy, CGA
January 25, 2000

Dear XXXXXXXXXX,

21 January 2000 9922746 - TAXATION OF RETIREMENT BENE.-WORKERS COMP.

Unedited CRA Tags
56(1)(v)

Principal Issues:
1. Whether retirement benefits under the New Brunswick Worker's Compensation Act should be included in income under paragraph 56(1)(v)?
2. Should a T5007 be issued when the individual's pension entitlement is transferred to an insurance company/annuity holder who then administers the pension payments?

Position:
1. Included in income under paragraph 56(1)(v) of the Act.
2. No.

Reasons:
1. Certain benefits provided under the worker's compensation acts may also be considered payments that qualify as a pension benefit under paragraph 56(1)(a) of the Act. However, since the provisions of paragraph 56(1)(v) of the Act are more specific than the provisions of paragraph 56(1)(a) of the Act, any payments under the New Brunswick WCA will be considered worker's compensation payments and not pension income payments for purposes of the Act.

20 January 2000 9929846 - AUTO ALLOWANCE

Unedited CRA Tags
6(1)(b)(x) 6(1)(b)(vii.1)

Principal Issues: Reasonableness of Flat Monthly Rate Combined with a Per Kilometre Automobile Allowance.

Position: Not Considered Reasonable.

Reasons: Subparagraph 6(1)(b)(x) of the Act.

13 January 2000 9926166 - CHARITABLE ANNUITIES USING REGISTERED

Unedited CRA Tags
146

Principal Issues: It is proposed that annuitants under an RRSP be permitted to transfer assets from the RRSP to a registered charity. The charity would provide the annuitant with the retirement income and retain any balance of assets on the annuitants death. It is requested that no tax consequences be recognized to the annuitant (or the annuitant's estate) at the time of the transfer or when the annuitant dies.

Position: The proposed position could not be maintained under the current wording of the Act. The desirability of amending the Act or prove the requested treatment would properly be within the responsibility of the Department of Finance.

Reasons: In order to achieve the desired tax result, it would be necessary either to disregard any tax consequences of the initial disposition from the trust or it would be necessary to treat the recipient charity in the same manner as a registered plan. Moreover, we think it should be recognized that commercial annuities are different in nature from charitable annuities such that IT-111R2 might not condone the issuance of commercial annuities from a charity.

21 December 1999 9905796 - GROUP RESP, SINGLE TRUST

Unedited CRA Tags
146.1

Principal Issues: Is each RESP contract or plan a separate trust or can group RESPs exist as one trust? How would this interpretation interact with new subsection 207.1(3) (penalty tax for non-qualified investments)?

Position: It is a question of trust law whether a single trust is created that holds the property on behalf of several RESPs. However, if a single trust is created in this situation, the ITA rules respecting a trust governed by an RESP apply.

Reasons: Where a trust exists to hold property for one or more RESPs that trust is the subject of the rules set out in section 146.1 and subsection 207.1(3) of the Act.

23 September 1999 9921926 - ANNUITY CONTRACT AS AN RESP

Unedited CRA Tags
146.1(1)

Principal Issues: Whether annuity contract can be registered as RESP

Position: Theoretically yes - but contract in issue does not appear to satisfy requirements in 146.1(2)(a), (d.1), (f) and "qualified investment" rule.

Reasons: Contract provides for other purposes than as set out in definition of "trust" in 146.1(1), allows "accumulated income payments" prematurely, and on termination permits property of the trust to be used for unacceptable purpose of providing annuity income to subscriber; and segregated fund units purchased through contract are not qualified investments.

Ruling

26 January 2000 Ruling 2000-0001833 - CAPITAL GAINS CRYSTALLIZATION

Unedited CRA Tags
85 245

Principal Issues: 1. Whether the conversion of common shares into preferred shares is a disposition for purposes of the election under subsection 85(1)?
2. Whether transactions designed to crystallize the capital gains exemption are subject to GAAR?

Position: 1. Yes.
2. No.

Reasons: 1. Pursuant to our position at the 1991 Round Table and numerous letters.
2. Pursuant to our position as stated at the 1988 Round Table.

1999 Ruling 9920513 - LOSS CONSOLIDATION

Unedited CRA Tags
20(1)(c) 245(2)

Position:
Favorable ruling given.

1999 Ruling 9914053 - EARLY REDEMPTION OF DPS

Unedited CRA Tags
9 12(1)(x)

Position:

1999 Ruling 9832613 - SPECIFIED LEASING PROPERTY

Unedited CRA Tags
rer 1100(1.11)

Principal Issues: Whether the sale of leased property to an arm's length person would cause the property to become specified leasing property.

Position: No. Not considered to be a material change to the lease.

Reasons: Grandfathering rule for leases entered into prior to XXXXXXXXXX.

1999 Ruling 9922093 - 6801(D), DEFERRED SHARE UNITS

Unedited CRA Tags
6801(d)

Principal Issues: Will the payment of Directors' fees in the form of deferred share units ( which may, at the option of the employer, be redeemed on termination of employment in the form of shares purchased on the open market or in cash ) constitute an SDA for purposes of the Act?

Position: No.

Reasons: Exempted under the provisions of paragraph 6801(d) of the Regulations.

1999 Ruling 991426A - RETURN OF PUC BY PUBLIC CORPORATION

Unedited CRA Tags
84(2) 84(4.1) 55(3)(a)

Principal Issues: Whether in a particular situation a "reorganization" of a taxpayer's business occurs for the purposes of subsection 84(2).

Position: Yes.

Reasons: Based upon the facts of the particular situation.

1999 Ruling 9902423 - SERIES OF LOANS OR REPAYMENTS

Unedited CRA Tags
214(3)(a) 15(2)

Principal Issues: Whether the settlement or repayment of a loan by offsetting against a dividend payment should be considered "part of a series of loans or other transactions or repayments" for purposes of subsection 15(2)

Position: Not part of a series.

Reasons: See detailed issue sheet for 3-971764

1999 Ruling 9925733 - WAIVER OF DIVIDEND

Unedited CRA Tags
56(2) 246(1) 15(1) 245(2)

Principal Issues: Application of 15(1), 56(2), 246(1) and 245(2) to waiver of dividend by U.S. corporation on exchangeable shares.

Position: N/A

Reasons: Benefit provisions N/A on their words. GAAR N/A because no "misuse or abuse".

1999 Ruling 9917373 - BUTTERFLY RULING

Unedited CRA Tags
55(3)(b)

Principal Issues: (See attached Statement of Principal Issues)

Position: (See attached Statement of Principal Issues)

Reasons: (See attached Statement of Principal Issues)

1999 Ruling 9905893 - SPECIFIED LEASING PROPERTY

Unedited CRA Tags
reg 1100(1.1)

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
XXXXXXXXXX 990589
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1999

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX ("Purchaser 1")
XXXXXXXXXX ("Purchaser 2")
XXXXXXXXXX ("Purchaser 3")
XXXXXXXXXX ("Purchaser 4")

1999 Ruling 9924223 F - BIENS AGRICOLES ADMISSIBLES

Unedited CRA Tags
110.6(1) 110.6(2)

Principales Questions:
Est-ce que le terrain dont dispose Mme X est considéré comme un «bien agricole admissible» tel que définit au paragraphe 110.6(1) de la Loi?

Position Adoptée:
Oui.

1999 Ruling 9918303 - TAXABLE CANADIAN PROPERTY

Unedited CRA Tags
115(1)(b) 2(3)

Principal Issues: Application of Subsection 2(3) and Section 115 to Gain on Units Listed on a Prescribed Stock Exchange

Position: Gain not Subject to Part I Tax - Taxpayer is a Non-Resident and Property Disposed of is not Taxable Canadian Property

Reasons: Taxpayer and Persons not Dealing at Arm's Length With the Taxpayer Do not Own, in Aggregate, 25% or More of the Shares of any Class of the Capital Stock of the Corporation

1999 Ruling 9910443 - SAFE-INCOME DETERMINATION TIME

Unedited CRA Tags
55(1) 111(4)(e) 149(10(b)

Principal Issues: See issue sheet

Position: See issue sheet

Reasons: See issue sheet

1999 Ruling 9927513 F - ALLOCATION DE RETRAITE ET 60 (J.1)

Unedited CRA Tags
248(1) 60j.1)

Principales Questions: Les contribuables ont-il droit de transférer à leurs REER le montant d'allocation de retraite qu'il recoivent de leurs employeurs?

Position Adoptée: Oui car les montants rencontrent les limites prévues à l.'alinéa 60(j.1) de la Loi.

1999 Ruling 9918653 - BUTTERFLY REOGANIZATION

Unedited CRA Tags
55(3)(b)

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		991865

Attention: XXXXXXXXXX

XXXXXXXXXX, 1999

Dear Sirs:

Re: XXXXXXXXXX.("DC1") - XXXXXXXXXX
XXXXXXXXXX ("DC2") - XXXXXXXXXX
XXXXXXXXXX.("Opco") - XXXXXXXXXX
Advance Income Tax Ruling

1999 Ruling 9911403 - LOSS CONSOLIDATION

Unedited CRA Tags
20(1)(c)

Principal Issues: Loss Consolidation

Position: ok

Reasons: Previous Files

1999 Ruling 9919223 - SUPPLEMENTARY

Unedited CRA Tags
55(1)

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
XXXXXXXXXX 							1-991922
XXXXXXXXXX 

Attention: XXXXXXXXXX

XXXXXXXXXX, 1999

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Advance Income Tax Ruling

1999 Ruling 9911853 - INCOME DISTRIBUTION REINVESTMENT PLAN

Unedited CRA Tags
105(1) 52(1) 108(2) 132(6)

Principal Issues: Where an income distribution reinvestment plan of a unit trust enables a unitholder to reinvest income distributions in new units at a price equal to XXXXXXXXXX % of the average market price and without commission or service charge, will a benefit be considered to be conferred pursuant to subsection 105(1)?

Position: Yes.

Reasons: The issue was considered by the Policy Review Committee and it was decided that it would not be appropriate to extend our long-standing favourable administrative position concerning dividend reinvestment plans of corporations to income distribution reinvestment plans of trusts. This is consistent with E9321283 in which we concluded that the proposed discounts of 10% to 15% would result in a benefit under 105(1).

Technical Interpretation - External

27 January 2000 External T.I. 1999-0006755 - POINT BASED REWARD PROGRAM

Unedited CRA Tags
9

Principal Issues: Whether a corporation that carries on a retail business is entitled to deduct the liability (based on a number of cents per point earned by each customer who is a member of the program) owing to an administrator of a point based reward program.

POSITION: There seems to be no provision that would deny such a deduction in computing the corporation's profit from the retail business. We would need to see the documents before giving an opinion in the situation where the retailer undertakes his own point system.

Reasons: There seems to be a genuine liability for a legitimate business expense. However, we would need to see the documents where the corporation has its own point system and is simply using a third party as an administrator.

26 January 2000 External T.I. 1999-0011905 - WOODLOTS

Unedited CRA Tags
9 110.6

Principal Issues: 1.Does the administrative position of reducing the ACB of a woodlot by the amount of proceeds from sale of timber still apply.
2.Is a sale of timber on account of income, capital or does 12(1)(g) apply.
3.Can the enhanced capital gains deduction apply in view of the Jens Larsen case

Position: 1. No. Subsection 43(1) applies.
2. Question of fact and circumstances.
3. Yes. The Jens Larsen case held that a one-time sale of real property that was used in the business of farming can qualify, provided that all other requirements for the deduction are satisfied.

Reasons: 1. Subsection 43(1).
2. Depends on facts.
3. Federal Court of Appeal decision in the Jens Larsen case.

25 January 2000 External T.I. 2000-0002735 F - REER JUDGE

Unedited CRA Tags
146 REG 8309

Position Adoptée:
Application de la Loi.

25 January 2000 External T.I. 1999-0014165 - EMPLOYEE CONTRIB. TO A HCSA

Unedited CRA Tags
6(1)(a)(i)

Principal Issues: Whether an employee's contributions to a health care spending accounts can be made with before-tax dollars.

Position: No. An employee will be taxed on his gross salary and not the net amount after contributions.

Reasons: Paragraphs 3 and 22 of IT-529. An employee's contributions to a HCSA constitutes part of his or her salary.

25 January 2000 External T.I. 1999-0005315 - TAX. OF US SOCIAL SECURITY TO INDIAN

Unedited CRA Tags
56(1)(a) 81(1)(a)

Principal Issues: Whether pension income from the United States, received by a Status Indian residing in Canada, is taxable in Canada.

Position: Possibly. It depends on whether the employment income to which the pension relates was taxable in Canada, and whether relief from taxation in Canada is provided by the Canada-US tax Convention.

Reasons: Pension income received from a source in the US is taxable under paragraph 56(1)(a) unless it would be exempt from taxation in the US if the recipient were a resident of the US.
The Fourth Protocol amended the Canada-US Tax Convention, effective January 1, 1996, to allow the pension benefit to be taxed in the country in which the recipient lives. The entire pension must be included in income and a 15% deduction is allowed at paragraph 110(1)(f).
According to the Williams decision, income that is ancillary to employment income, such as pension income, would be exempt from taxation if the related employment income was exempt, which depends on the factors connecting the employment income to a reserve. Therefore, a Status Indian receiving pension income from the US may be exempt from taxation on pension income if the pension income relates to employment income that was exempt and there are sufficient factors connecting the pension income to a reserve.

25 January 2000 External T.I. 1999-0006475 - SALARY AND NON-TAXABLE

Unedited CRA Tags
6(1)(a) 5(1)

Principal Issues: As part of the settlement of a new collective agreement, arrangements would be made for the employer to establish a dental plan (the "Plan") for certain employees with an appropriate third party insurance carrier. The collective agreement would indicate that the employer is obligated to pay the premiums. The concern is whether salary would be considered to have been converted into Plan benefits, with the attendant result that an income inclusion would occur in respect of the Plan.

Position: We generally accept the terms of a collective agreement. Accordingly, the fact that terms have been included in a collective agreement concerning a dental plan that qualifies as a PHSP, will not, in and by itself, give rise to adverse consequences..

Reasons: The position is consistent with the comments in 9 of IT-529.
As a further general comment, we have also mentioned that, in relation to the Department's position in paragraphs 9 of IT-529, the tax consequences of any particular situation can only be determined on a case-by-case basis and will depend on the relevant facts and documentation.

25 January 2000 External T.I. 1999-0006485 - QSBC-LIFE INSURANCE POLICY

Unedited CRA Tags
110.6(15)

Principal Issues: Whether paragraph 110.6(15)(a) of the Act applies to a joint (last to die) or multi life insurance policy.

Position: Yes.

Reasons: Even if there is more than one person's life insured under a life insurance policy owned by a particular corporation, the requirement in paragraph 110.6(15)(a) of the Act that "a person whose life was insured under an insurance policy owned by a particular corporation, owned shares of the capital stock of the particular corporation..." would still be met by each person whose life was insured under that policy and who owned shares of the corporation.

24 January 2000 External T.I. 1999-0008275 F - APPLICATION DU PARAGRAPHE 75(2)

Unedited CRA Tags
75(2)

Principales Questions:
1. Est-ce que le paragraphe 75(2) s'appliquerait lorsque l'auteur de la fiducie est l'un des trois fiduciaires, que les décisions sont prises à la majorité et que l'auteur n'a aucune obligation de faire partie de la majorité ?

2. Est-ce que le paragraphe 75(2) s'appliquerait lorsque l'auteur de la fiducie est bénéficiaire du capital d'une fiducie discrétionnaire et où, selon les dispositions de l'acte de fiducie, les fiduciaires pourraient distribuer la totalité des biens à tout bénéficiaire à leur discrétion ?

3. Est-ce que le paragraphe 75(2) s'appliquerait lorsque l'auteur de la fiducie est bénéficiaire du capital d'une fiducie non discrétionnaire dont les parts sont fixées d'avance ?

4. Est-ce que le paragraphe 75(2) s'appliquerait lorsque l'auteur de la fiducie est le seul fiduciaire d'une fiducie non discrétionnaire dont les parts sont fixées d'avance ?

Position Adoptée:
1. Nous sommes d'avis que le paragraphe 75(2) de la Loi ne s'appliquerait pas dans une telle situation uniquement en raison de cette caractéristique. Cependant, il pourrait exister d'autres dispositions dans l'acte de fiducie qui feraient en sorte que le paragraphe 75(2) s'appliquerait. Par exemple, l'acte de fiducie pourrait contenir des dispositions à l'effet que les fiduciaires doivent obtenir du fiduciaire-auteur un consentement ou des instructions sans égard à la décision majoritaire.
2. Oui
3. Selon les dispositions de l'acte de fiducie, le sous-alinéa 75(2)a)(i) pourrait trouver application.
4. Oui

21 January 2000 External T.I. 9930855 - DESCRIPTION OF AN RCA

Unedited CRA Tags
248(1) PART XI.3

Principal Issues:?
The writer provided a brief description of 5 situations and asked whether they were eligible for an RCA application.

Position:
The writer was provided basic information on RCAs.

Reasons:
It would be a question of fact whether an arrangement established in any of the situations would be an RCA. A basic explanation of what an RCA is was provided to assist in this determination.

20 January 2000 External T.I. 9918035 F - SOCIETE DE PERSONNES RATTACHEE

Unedited CRA Tags
15(2) 15(2.1)

Principales Questions:
Est-ce qu'une société de personnes « Y enr. » dont les 5 associés sont également actionnaires de 5 sociétés individuelles qui sont membres d'une autre société de personnes « X enr. » peut être considérée comme étant rattachée à un actionnaire d'une société individuelle pour les fins de 15(2) ? « X enr. » a consenti un prêt à « Y enr ».

Position Adoptée:
Oui, si lien de dépendance.

20 January 2000 External T.I. 9924815 - EMPLOYMENT AGENCY WORKERS

Unedited CRA Tags
6(6)

Principal Issues: Does subsection 6(6) of the act exempt board and lodgings received by a self-employed by placement and employment agencies?

Position: No.

Reasons:. Subsection 6(6) will exempt certain amounts received by virtue of an office or employment. The CPP and EI may contain provisions to deem self-employed individuals hired by placement agencies to be employee for purposes of pensionability and insurability, these deeming provisions do not extend to the Income Tax Act.

20 January 2000 External T.I. 9932435 - DEDUCTIONS FROM OAS & CPP BENEFITS

Unedited CRA Tags
8 5(2) 3(d)

Principal Issues: Whether employment expenses can be deducted from OAS & CPP benefits.

Position: No.

Reasons: Section 8 permits the deduction of certain expenses in computing income from an office or employment. Any loss realized from employment pursuant to subsection 5(2) of the Act may be deducted from other sources by virtue of paragraph 3(d).

20 January 2000 External T.I. 9933385 - MUNICIPAL CORPORATIONS

Unedited CRA Tags
149(1)(d.5)

Principal Issues: correction of typo

Position: OK

Reasons: N/A

19 January 2000 External T.I. 2000-0001595 - RETIRINg ALLOWANCE SERVICE OUTSIDE CANADA

Unedited CRA Tags
60(j.1)

Principal Issues:?
Can the years of service provided outside of Canada be used in calculating the amount of a retiring allowance that may be transferred under 60(j.1) of the Act? Will a break in service have any effect? How many years of service can be counted and what amount may be transferred in the particular case?

Position:
This is a factual situation so a determinate statement cannot be provided. However general comments were provided to explain that service outside of Canada with the same employer can be counted and that a break in service will not have any effect on the calculation.

Reasons:.
Basic explanation of the law

19 January 2000 External T.I. 9932395 - PORTION OF FARMING BUS. ON RESERVE

Unedited CRA Tags
81(1)(a)

Principal Issues: Tax treatment of a status Indian's income from a grain farming business on a portion of land situated on a reserve.

Position: Where a portion of the revenue generating activities are carried on a reserve, in this situation 45%, that portion of the business income would generally be tax exempt.

Reasons: As the main aspects of a grain farming business consist of the growing and harvesting of crops, the location of the land being farmed would be a connecting factor of major importance with respect to income from such a business. In this situation, 45% of the land that the Indian farms in his grain farming business is located on reserve and the major activity of this business, the growing and harvesting, is carried on uniformly throughout the farmland although there is limited business activity that occurs off reserve (i.e., delivery of grain to off reserve elevators).

18 January 2000 External T.I. 9926715 - INCONVENIENCE PAYMENT

Unedited CRA Tags
12(1)(x) 3 9(1)

Principal Issues:

An individual farmer receiving an inconvenience payment from a public authority because he must travel 30 km farther, the roadway will be flooded and a dam will be built.
The issue is the income tax treatment of the payment.

14 January 2000 External T.I. 2000-0000135 - CLERGY RESIDENCE - UTILITIES

Unedited CRA Tags
8(1)(c)

Principal Issues:
A Rabbi is provided a home with all utilities paid. Is the entire amount of the benefit deducted or only the rental value.

10 January 2000 External T.I. 9927625 - RPP PAST SERVICE FORMER EMPLOYER\

Unedited CRA Tags
REG 8503(3)(E)

Principal Issues: Can an individual buy back past service with a former employer under his current employer's registered pension plan?

Position: No.

Reasons: The current employer's RPP does not allow for the buy back of such service.

16 December 1999 External T.I. 9926845 - TAXABLE BENEFITS RECEIVED BY STATUS INDIANS

Unedited CRA Tags
56(1)(r)

Principal Issues: Taxability of training benefits received by Aboriginal clients which are funded by HRDC.

Position: Taxable under paragraph 56(1)(r) of the Act.

Reasons: Benefits funded under the EI Act will generally be taxable under 56(1)(r) of the Act. If the training takes place on reserve, the connecting factors may exempt the benefits of status Indians from taxation pursuant to section 87 of the Indian Act.

19 October 1999 External T.I. 9927305 - ASSOCIATION

Unedited CRA Tags
256(2.1)

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 992730
S. Tevlin
Attention: XXXXXXXXXX

October 19, 1999

Dear Sirs:

Re: Technical Interpretation

Technical Interpretation - Internal

18 January 2000 Internal T.I. 9928077 - ASSOCIATED EMPLOYERS

Unedited CRA Tags
126.1 256

Principal Issues: What employers are associated under section subsection 126.1(2)?

Position: Question of fact - but partial listing provided based on stated assumptions.

Reasons: We do not have all facts.

13 January 2000 Internal T.I. 9931087 F - ENFANT MINEUR - ACHAT D'UNE RENTE

Unedited CRA Tags
60(l)(ii)(B)

Position Adoptée: 4 ans selon l'exemple du contribuable

13 January 2000 Internal T.I. 9926817 - EMPLOYMENT INCOME OF STATUS INDIAN

Unedited CRA Tags
81(1)(a)

Principal Issues: Whether an Indian's employment income is taxable. The particular individual lives on a reserve. Although the employer's objective is to serve the needs of aboriginals, it also serves the needs of non-aboriginals, and its location is off reserve.

Position: Likely taxable.

Reasons: In order for Guideline 2 of the "Indian Act Exemption for Employment Income Guidelines" to apply, the employee must live on a reserve and the employer must be resident on a reserve. The condition that the employer is resident on a reserve means that the reserve is the place where the central management and control over the employer organization is actually located.

12 January 2000 Internal T.I. 9921267 - DONATION OF AIR MILES

Unedited CRA Tags
118.1 149.1

Principal Issues:
Where Air Miles are transferred to a charity for missionary travel, what are the income tax implications to both the charity and the missionary when the Air Miles are used?

Position:
1. A registered charity may issue an official tax receipt for a gift of credits earned under an awards program provided that the credits can be transferred to the charity and the value of the credits donated can be reasonably estimated. The charity will be required to include the value of the credits in computing its income. Where the charity has issued a receipt for the credits, the value of the credits will also be included in the charity's disbursement quota calculation.

2. Provided that the airfare is given to the missionary to be used in connection with the charitable activities of the charity, there are no income tax implications to the missionary.

Reasons:
1. The term "property" is broadly defined in subsection 248(1) to include a right of any kind whatever. Since credits earned under an awards program give the individual a right to redeem the credits for certain benefits under the program, it is our view that the credits constitute property and therefore can be the subject of a gift.

2. The airfare is not available for the personal use of the missionary.

5 January 2000 Internal T.I. 9931817 F - TRANSFER D'UNE POLICE D'ASSURANCE-VIE

Unedited CRA Tags
148(7) 148(9) 69(4) 15(1)

Principales Questions: Avantage accordé lorsqu'une société transfert une police d'assurance-vie à son actionnaire sujet à 15(1) ?

Position Adoptée: Oui

5 January 2000 Internal T.I. 9927357 - ELECTEDSCHOOL TRUSTEE STIPEND

Unedited CRA Tags
5(1)

Principal Issues: Is the stipend received by an elected school trustee taxable under subsection 5(1) as income from an office?
The taxpayer has requested that she not be paid the stipend at this time since she may compromise her CPP disability pension eligibility. Is the amount taxable?

Position: Yes
It is taxable if the amounts are unconditionally available to the taxpayer.

Reasons: Similar to payments made to elected members of provincial legislative assemblies. See paragraph 2 of IT-266 which states that such amounts are taxable under 5(1) as income from an office. Also, see cases cited below and paragraph 3 of IT-292
We have previously indicated that an amount is received by a taxpayer when it was considered to be unconditionally available.

20 December 1999 Internal T.I. 9928917 - H&W TRUST "ADMIN. SERVI" FEES

Unedited CRA Tags
104(6)

Principal Issues: Whether administrative only fees (ASO fees) paid by a health and welfare trust may be deducted from the trust's investment income.

Position: Likely yes.

Reasons: Pursuant to our policy in paragraph 12(b) of IT-85R2.

15 December 1999 Internal T.I. 9925357 - PEIB Q&A DEMUTUALIZATION BENEFITS

Unedited CRA Tags
139.1

Principal Issues: 3 PEIB documents dealing with demutualization benefits

Position: See attached.

Reasons: Notice of Ways and Means Motion tabled on December 7, 1999 and draft legislation released on December 15, 1998.

14 December 1999 Internal T.I. 9922637 - CAPITAL COST ALLOWANCE

Unedited CRA Tags
Class 1 Class 8

Principal Issues: The proper classification of computer hardware and software comprising a building automation system.

Position: Question of fact, generally Class 1(q) or Class 8(b)(i).

Reasons: The type of property and the use of the property will be relevant in the determination of whether it meets the requirements of a specific class.

7 December 1999 Internal T.I. 9928827 - AUTOMOBILE STANDBY CHARGE

Unedited CRA Tags
6(2)

Principal Issues: Does the term "total available days" in subsection 6(2) of the Act include the days where a taxpayer goes away on a two week business trip and leaves his company car on company premises and leaves the car keys with the fleet manager so that other employees can use the vehicle while the taxpayer is gone.

Position: It will depend on the facts of the particular circumstances. In the situation where the taxpayer is required by his employer to leave the car on company premises and hand in the keys while absent on a business trip, then the days should not be included in the "total available days". If the automobile is left at the company premises at the taxpayer's discretion, then the days should be included in the "total available days"

Reasons: In the first situation, the taxpayer is required by the employer to return the automobile and the control over its use. As indicated in paragraph 11 of IT-63R5 this would be the time when total available days ends. In the second situation, the automobile is not required by the employer to be returned to the employer and, thus, should be included in the total available days.

December 7, 1999

2 November 1999 Internal T.I. 9926207 - M&P

Unedited CRA Tags
125.1

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.

Ministerial Letter

14 December 1999 Ministerial Letter 9923738 - WITHHOLDING TAX

Unedited CRA Tags
153(1)

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.

December 14, 1999

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Dear XXXXXXXXXX: