Income Tax Severed Letters - 2002-03-01

Administrative Letter

11 March 2002 Administrative Letter 2002-0125662 - MEDICAL PRACTITIONER;CHRISTIAN SCIENCE

Unedited CRA Tags
118.4(2)

Principal Issues: whether Christian Science practitioners in Ontario are "medical practitioners"

Position: no

Reasons: 118.4(2)

Ruling

2002 Ruling 2001-0095293 - Internal Reorganization

Unedited CRA Tags
55(3)(a)

Principal Issues:
1. Where shareholders A and B of Aco are unrelated to each other for the purposes of section 55 and the voting and non-participating shares of Aco owned by shareholder A are redeemed and subsequent to the share redemption, Aco spins off its assets to Bco which is controlled by shareholder B, whether the share redemption would be part of a series that includes the subsequent spin-off under subsection 248(10)?
2. Where the redemption of Aco shares owned by shareholder A as described in #1 above, has caused Aco and shareholder B to be related to each other, whether subsection 55(4) would apply to deem Aco and shareholder B not to be related to each other for the purposes of section 55?

Position:
1. It is a question of fact as to whether the share redemption and the subsequent spin-off have some connection to each other. In the case at hand, based on the taxpayer's representation, such share redemption would not be part of the series that includes the subsequent spin-off.
2. It is a question of fact as to whether one of the main purposes of redeeming shareholder A's shares in Aco was to cause Aco and shareholder B to be related to each other so that subsection 55(2) would not apply to a subsequent spin-off dividend. In the case at hand, based on the taxpayer's representation, subsection 55(4) would not apply to the share redemption transaction.

Reasons:
1. As stated above.
2. As stated above.

2002 Ruling 2002-0124033 - STOCK OPTION PLAN

Unedited CRA Tags
7 110(1)d)

Principal Issues:
Will amendments to file 2001-011593 affect the rulings given?

Position: No.

Reasons: The amendments do not affect the application of the law.

XXXXXXXXXX 2002-012403

2002 Ruling 2002-0126143 - DSU PLAN

Unedited CRA Tags
REG 6801(d)

Principal Issues:
Can wording which was inadvertently deleted from an amended DSU plan and ruling be reinstated?

Position: Yes.

Reasons:
An error occurred which resulted in wording being deleted from the amended DSU plan and our ruling, which presented administrative problems for the plan. The correction of the error does not affect the previous rulings given.

2002 Ruling 2001-0106783 F - Butterfly Transaction - Papillion

Unedited CRA Tags
55(3)(b) 55(3.1) 55(2) 186(4)

Principal Issues: Split-up butterfly transaction.

Position: Favourable rulings provided.

Reasons: Meets the requirements of the law.

2002 Ruling 2001-0107613 - EMPLOYEE OPTION TRANSFERS

Unedited CRA Tags
7(1) 110(1)(d)

Principal Issues: Rulings were requested in respect of a transfer of employee stock options to a corporation for estate planning purposes.

Position: Only limited rulings on the initial transfer could be
provided.

Reasons: We could not provide all of the rulings requested because they are based on alternative transactions that will occur (death) or may occur, in the future. Some limited comments were provided.

2002 Ruling 2001-0093903 - German Organschaft

Unedited CRA Tags
95(2)(9)(ii)(B)
application of s. 95(2)(a)(ii)(B) to profit transfer payments made by German subs to German parent under an Organschaft

Principal Issues: Whether income transferred to the parent affiliate of a German organschaft would be recharacterized as income from an active business of the parent pursuant to clause 95(2)(a)(ii)(B).

Position: Yes, within the limits provided in the ruling and based on the facts of this case.

Reasons: See detailed issue sheet

2002 Ruling 2001-0115933 - STOCK OPTIONS CORPORATE PARTNERSHIP

Unedited CRA Tags
7(1)(a) 110(1)(d)

Principal Issues:
Where two trusts and a corporation are the limited partners and a 2nd corporation is the general partner in a partnership, can a stock option plan be set up in respect of the partnership?

Position: Yes.

Reasons:
There are no agreements in place which limit the employment relationship of any of the employees of the partnership to any of the corporate or trust partners. Consequently, each of the employees of the partnership are considered to be employees of each of the partners of the partnership for the purposes of section 7.

2001 Ruling 2001-0096713 - CREDIT UNION SHARES

Unedited CRA Tags
137(4.1) 12(3) 12(4) 146(1)

Principal Issues: Whether the shares issued by the credit union are shares or debt obligations for purposes of the ITA including interest accrual rules.

Position: They are shares for all purposes of the ITA.

Reasons: The shares are equity shares under the XXXXXXXXXX Despite the fact that subsections 137(4.1) and (4.2) deems dividends paid on the shares to be interest, there is nothing in the ITA which changes their underlying nature as shares.

2001 Ruling 2001-0108873 - LEVERAGED BUY-OUT

Unedited CRA Tags
20(1)(c)
target transferred post-acquisition to internal buyco and amalgamated

Principal Issues:
Whether interest on a promissory note assumed by Amalco as a result of the amalgamation of Newco and Targetco is deductible pursuant to subparagraph 20(1)(c)(ii) of the Act. The debt was incurred for the purposes of acquiring all of the common shares in the capital of Targetco.

Position: Favourable ruling given.

Reasons:
The interest paid or payable is deductible as it is an amount paid or payable in respect of the year, pursuant to a legal obligation to pay interest on borrowed money used for the purpose of earning income from property.

2001 Ruling 2001-0110363 - XXXXXXXXXX

Unedited CRA Tags
88(4) 88(1)(c)
Amalgamated Target is successor of different predecessors for 88(1)(c.4)(iii) and s. 88(1)(c) midamble purposes

Principal Issues: The application of paragraph 88(4)(b) to multiple amalgamations.

Position: The reference to "the subsidiary" for the purposes described in subsection 88(4) can be read to include the predecessor of the amalgamated corporation and the predecessor's predecessor, as the case may be, for those purposes.

Reasons: The law.

2001 Ruling 2001-0109813 F - PROPOSITION CONCORDATAIRE

Unedited CRA Tags
110.6(8)

Principales Questions:
Est-ce que le paragraphe 110.6(8) de la Loi s'appliquera lors de la disposition par les contribuables de leurs actions ordinaires pour refuser la déduction pour gains en capital à l'égard d'actions admissibles de petite entreprise si la société n'a pas versé suffisamment de dividendes sur des actions non prescrites qu'elle a émises ?

Position Adoptée:
Nous n'appliquerons pas le paragraphe 110.6(8) de la Loi dans la situation présentée.

Technical Interpretation - External

26 March 2002 External T.I. 2001-0125725 - FPE OF PROFESSIONAL CORPORATION

Unedited CRA Tags
249.1(b)(iii)

Principal Issues: Can professional corporations choose a fiscal period end other than December 31, as long as it is no more than 53 weeks after the incorporation date and not after December 31 of the year in which the period began.

Position: No.

Reasons: Pursuant to subparagraph 249.1(1)(b)(iii) of the Act, professional corporations which are members of a partnership cannot have a fiscal period that ends after the calendar year in which the period began. Thus, for example, they cannot choose an October 31 fiscal period end, since the following fiscal period would end after the calendar year in which the period began. Accordingly, they have to adopt a December 31 fiscal period end.

25 March 2002 External T.I. 2002-0121985 - AMOUNT FOR AN ELIGIBLE DEPENDENT (ETS)

Unedited CRA Tags
118(1)(b)

Principal Issues: With respect to clause 118(1)(b)(i)(B):
1. What is the CCRA's interpretation of "nor lived with their spouse or common-law partner"?
2. Is there any required time period that individuals need to live apart to meet the "any time in the year" requirements of subparagraph 118(1)(b)(i)?

Position TAKEN:
1. Whether or not an individual lived with their spouse or common-law partner is a question of fact.
2. No.

Reasons:
1. Question of fact.
2. Plain meaning of the phrase "at any time in the year".

25 March 2002 External T.I. 2002-0125475 - GENERAL ISSUES RE DISPOSITION OF PROPERTY

Unedited CRA Tags
13(7)(c) 45(1)(b) 54

Principal Issues: General issues related to the disposition of properties.

Position: General comments.

Reasons: No specific technical question.

25 March 2002 External T.I. 2001-0112665 - PART 1.3 AND DIRECT FINANCING LEASES

Unedited CRA Tags
181.2(4) N/A

Principal Issues:
Whether the lease receivable reported on the financial statements of a lessor that is not a financial institution is eligible for an investment allowance under either paragraph 181.2(4)(b) or (c).

Position:
Generally no. The instruments listed in paragraphs 181.2(4)(b) and (c) are to be given their legal meanings and a lease receivable would generally not fit the legal definition of any of the instruments listed in those paragraphs. However, as with some conditional sales agreements the specific elements of a lease contract may result in the creation of one of the instruments listed in these paragraphs but this would be a factual determination that could only be rendered after examining a particular lease agreement.

Reasons:
The courts have considered the meanings of the terms used in paragraphs 181.2(4)(b) and (c) and have looked to the legal meaning of those terms in assessing whether any particular balance sheet item was included within the paragraph. A lease receivable does not generally fall within the legal meaning of these terms.

25 March 2002 External T.I. 2002-0122725 - SCIENTIFIC RESEARCH - GENERAL

Unedited CRA Tags
248(1)

Principal Issues: Whether Canco will be considered to have incurred SR&ED expenditures by providing services described in paragraph (d) of subsection 248(1) of the Act to a non-resident corporation ("Foreignco"), in support of activities carried on outside Canada by Foreignco that would otherwise be described in paragraphs (a), (b) or (c) of subsection 248(1) of the Act.

Position: No

Reasons: Paragraph (d) of the definition of SR&ED in subsection 248(1) provides that Canco's support services must be in respect of activities that are described in paragraph (a), (b) or (c) of that definition and that are undertaken in Canada.

25 March 2002 External T.I. 2002-0120945 - ELIGIBLE SMALL BUSINESS INVESTMENT

Unedited CRA Tags
44.1

Principal Issues: 1.Taxpayer enquiry on whether existing shares & proposed replacement shares will qualify for the "small business investment deferral" where original shares are shares of farming corporation and replacement shares are a "XXXXXXXXXX " corporation.

Position: Question of fact-but farming corporations do not likely qualify for such deferral. Will provide general comments

Reasons: 44.1(10) excludes corporation where >50% of FMV of assets is real property (net of debts)-unless farm is heavily leveraged it would not likely qualify.

25 March 2002 External T.I. 2002-0126665 - WHETHER NEAR CASH USED IN ACTIVE BUSINESS

Unedited CRA Tags
110.6(1)

Principal Issues: Whether a corporation's short-term investments, which are accumulated for the purpose of purchasing land and a building, would be considered to be used principally in an active business.

Position: General comments only.

Reasons: Question of fact.

22 March 2002 External T.I. 2002-0126455 - GST ON CLASS 10.1 ASSET

Unedited CRA Tags
13(7.1)

Principal Issues: Whether the GST input tax credit has to be deducted from the underpreciated capital cost ("UCC") of a class 10.1 asset when received, where the business-use of the vehicle is 100%.

Position: Yes.

Reasons: Subsection 13(7.1) of the Act provides generally that the capital cost of a depreciable property is reduced by the amount of government assistance received in respect of the acquisition of the depreciable property.

21 March 2002 External T.I. 2002-0127165 - EMPLOYEE BENEFITS RE FITNESS POLICY

Unedited CRA Tags
6(1)(a)

Principal Issues: Whether a taxable employee benefit is considered to be received when an employer reimburses an employee for gym memberships, sporting lessons, or gym equipment.

Position: Yes.

Reasons: Taxpayers are generally taxed on the value of all benefits they receive by virtue of their employment except where the Income Tax Act provides otherwise.

21 March 2002 External T.I. 2002-0120075 - MEDICAL EXPENSE - ATV

Unedited CRA Tags
118.2(2)(i)

Principal Issues: Could an ATV be allowed as a medical expense under 118.2(2)(i)?

Position: No

Reasons: No provision of the Act or policy could accommodate an ATV as a medical expense for the purposes of the Income Tax Act. Also, the ordinary meaning of the term wheelchair could not be extended to include an ATV.

20 March 2002 External T.I. 2002-0121645 - SHARE OF CAPITAL STOCK OF FAMILY FARM CORP

Unedited CRA Tags
110.6(1)

Principal Issues:
Under the definition of "share of capital stock of a family farm corporation" in subsection 110.6(1) of the Act:
(a) Whether the fair market value of the land owned by the corporation is attributable to property used principally in the course of carrying on the business of farming if 2% is rented and 98% is farmed, regardless of the fact that the fair market value of the land increases as the potential rental income increases?
(b) Is this income considered farming income under the Act?

Position:
(a) The fact that a small percentage of the land is rented does not adversely impact whether or not the fair market value of the is considered attributable to property used principally in the course of carrying on the business of farming, as required under the definition in subsection 110.6(1) of the Act. This is so even if the rental income from the rented portion happens to exceed the net income derived from farming and the value of the land has increased accordingly.
(b) No.

Reasons:
(a) Interpretation of the definition of "share of capital stock of a family farm corporation" in subsection 110.6(1) of the Act.
(b) The rental income does not relate to the farming activities, nor would it be incidental to the farming revenue - two of the essential requirements for non-farming income to be considered part of the overall farming income.

20 March 2002 External T.I. 2001-0113815 F - TVQ SUR PRIMES D'ASSURANCE - SALAIRE

Unedited CRA Tags
6(1)(f)
employee would not be credited with a contribution on paying Quebec sales tax on wage loss plan premiums/ the employer paying them would not be a contribution
employee would not be credited with a contribution on paying Quebec sales tax on wage loss plan premiums/ the employer paying them would not be a contribution

Principales Questions: Est-ce que le paiement de la taxe de vente du Québec sur les primes d'assurance d'un régime d'assurance-salaire est une cotisation versée dans le cadre du régime aux fins de la déduction prévue au sous-alinéa 6(1)f)(v) de la Loi?

Si un employé a l'obligation contractuelle ou légale de verser toutes les primes d'assurance du régime d'assurance-salaire, est-ce que le paiement, par l'employeur, de la taxe de vente sur de telles primes rendraient les prestations reçues de ce régime imposables en vertu de l'alinéa 6(1)f) de la Loi?

Position Adoptée: La taxe de vente du Québec sur les primes d'assurance ne constitue pas une cotisation versée par l'employé dans le cadre du régime d'assurance-salaire.

19 March 2002 External T.I. 2002-0121175 - ANNUITANT SALE OF RRSP PROPERTY

Unedited CRA Tags
146(1)

Principal Issues:
1. Can an annuitant sell property that is owned by an RRSP trust?
2. Can property held in an RRSP trust be transferred or sold to the annuitant?

Position:
1. No.
2. Yes.

Reasons:
1. Property held in the RRSP trust is held in the name of the RRSP trustee.
2. There is nothing in the Act preventing the sale or transfer of property from an RRSP trust to the annuitant. However, sales have to be at FMV and transfers result in an income inclusion of the FMV of the property.

19 March 2002 External T.I. 2001-0101415 - Srce Ded., Issuance T4, emp.mov. o of pro.

Unedited CRA Tags
153 Reg. 104

Principal Issues: Source deduction requirements re: salary continuance payments.

Position: Depends on nature of payments.

Reasons: Different results under regulation 100(4)(a) and (b).

19 March 2002 External T.I. 2002-0120025 - HOME OFFICE EXPENSES FOR RENTAL OPERATION

Unedited CRA Tags
18(12)

Principal Issues:
(i) Can an individual deduct home office expenses from rental income if it is considered business income?
(ii) What if the rental income is property income?
(iii) Since subsection 18(12) of the Income Tax Act indicates that it applies "in computing an individual's income from a business," does this imply that it does not apply in computing an individual's income from property?
(iv) Does it apply to a corporation?

Position:
(i) Subject to the restrictions in subsection 18(12).
(ii) Subject to the general provision relating to the deduction of expenses.
(iii) Subsection 18(12) does not apply.
(iv) No.

Reasons: The preamble to subsection 18(12) states that it applies "in computing an individual's income from a business."

19 March 2002 External T.I. 2001-0063305 - Outstanding Amount

Unedited CRA Tags
74.4(3)

Principal Issues: Proper computation of the "outstanding amount" under subsection 74.4(3). Is the reduction in the amount of excluded consideration by way of redemption of shares under subparagraph (i) or (ii) of paragraph 74.4(3)(a)?

Position: Under subparagraph 74.4(3)(a)(ii).

Reasons: The law.

19 March 2002 External T.I. 2001-0115925 - Proposed Exchange of Shares

Unedited CRA Tags
55(2) 85(1)

Principal Issues: Income tax consequences of share exchange.

Position: No response since a specific question on a section of the Act was not asked. May request an advance income tax ruling following procedures in IC-76R4.

Reasons: See above.

18 March 2002 External T.I. 2001-0087375 - REMAINDER IN REAL PROPERTY LOANBACK

Unedited CRA Tags
118,1(16)

Principal Issues:
Whether a gift of a remainder interest in real property to a non-arm's length qualified donee, with the life interest retained by the donor, would in and of itself result in the application of clause 118.1(16)(c)(ii)(A).

Position: Generally no.

Reasons:
Where a remainder interest in real property can be separated from the life interest in the real property, they are considered separate properties for the purposes of subsection 118.1(16). The use of the life interest in the real property by a 118.1(16) non-arm's length donor would generally not be viewed as a "use of the remainder interest" which is the property owned by the donee following the gift.

18 March 2002 External T.I. 2002-0125385 - INTERNET ACCESS WHETHER EMPL BENEFIT

Unedited CRA Tags
6(1)(9)

Principal Issues: Whether teachers are considered to receive a taxable employment when their employers provide them with high speed Internet at their homes to facilitate the teachers' work assignments.

Position: Question of fact.

Reasons: In making a determination, we would generally consider the reason the employer is paying or reimbursing the expense and who the primary beneficiary of this payment is. On that basis, it is our view that there are likely no significant taxable benefits to be reported by the teachers in the situation outlined.

18 March 2002 External T.I. 2002-0122245 - NATIVE OWNED TRAINING CENTRE

Unedited CRA Tags
81(1)(a)

Principal Issues: Taxpayer would like to enter into an arrangement with the federal government for a tax exemption.

Position: CCRA cannot enter into such an arrangement

Reasons: Department of Finance is responsible.

14 March 2002 External T.I. 2001-0116345 - RRSP SEGREGATED FUND ANNUITY

Unedited CRA Tags
146(8.8)

Principal Issues:
What is the value of a segregated fund annuity contract which has been registered as an RRSP and has a minimum death benefit guaranty? In this situation, the amount paid as a result of the death of the annuitant is determined as of the date that the insurance company receives notification of death, not as of the date of death.

Position:
It is not relevant when and how the ultimate payout by the insurance company is determined. If the guaranteed amount is greater than the fair market value of the annuity as otherwise determined at the time of the death of the last annuitant, then it is the guaranteed amount that is used for the purposes of subsection 146(8.8). If the fair market value of the annuity is higher than the guaranteed amount, it is this higher value that is used for the purposes of subsection 146(8.8)

Reasons:
The fair market value of the segregated fund annuity contract can never be less than the guaranteed amount.

14 March 2002 External T.I. 2002-0119695 F - Income & Losses/Business or Property

Unedited CRA Tags
9(1)
criteria applied for determining presence of agency

Principal Issues: Whether, in a particular situation, amounts received by a taxpayer as agent for other persons and remitted to them have the quality of income for the said taxpayer and should be included in her income under subsection 9(1) of the Act.

Position: No.

Reasons: The CCRA generally recognizes the existence of an agency relationship for tax purposes provided such relationship exists under the common or civil law, does not flow from some ex post facto arrangement, is not a sham, is disclosed to the CCRA at the appropriate time (and pertinent documents are forwarded to the CCRA at that time), and the facts with respect to the particular situation corroborate the existence of the agency relationship. Consequently, and considering the facts of the particular situation, the amounts received by the taxpayer as agent for other persons and remitted to such persons should not have the quality of income for the said taxpayer and should not be included in her income under the terms of subsection 9(1) of the Act.

13 March 2002 External T.I. 2002-0124945 - GIFTS RECD BY MISSIONARY WHETHER TAXABLE

Unedited CRA Tags
5(1) 9(1)

Principal Issues: Whether gifts of money received by a taxpayer in the course of her missionary work teaching the word of God in XXXXXXXXXX are taxable.

Position: Question of fact.

Reasons: The gifts may be taxable as employment income or business income, or they may be exempt, depending on the facts.

12 March 2002 External T.I. 2002-0125885 F - Section 55(3)(a) - Exception55(3)(a)

Unedited CRA Tags
55(5)(e) 55(2)
s. 55(3)(a) applies where Opco redeems 50% shareholder (Holdco A) where other shareholder is owned by the son respecting the spousal trust owning Holdco A

Principal Issues: 1) Whether, in a particular situation, the exemption under paragraph 55(3)(a) of the Act could apply so that subsection 55(2) of the Act would not apply to the dividend deemed received by a corporation on the redemption of the shares of another corporation.

Position: Yes.

Reasons: Wording of paragraph 55(3)(a) of the Act. Provided that as part of the series of transactions or events as part of which the dividend would be received, there is no disposition or significant increase in interest as described in subparagraphs 55(3)(a)(i) to (v), then by virtue of paragraph 55(3)(a), subsection 55(2) should not apply to the dividend deemed received by the corporation in the particular situation. The transactions described in the particular situation, in and by themselves, would generally not be considered to result in any disposition or increase in interest to an unrelated person as described in subparagraphs 55(3)(a)(i) to (v).

6 March 2002 External T.I. 2002-0124655 - INDIAN ACT EXEMPTION

Unedited CRA Tags
81(1)(a)

Principal Issues: Whether employment income guidelines apply to exempt the employment income of status Indian employees?

Position: Question of Fact

Reasons: General comments provided.

5 March 2002 External T.I. 2001-0113735 - Meaning of "income" under subsection 108(3)73(1.01)(c)

Principal Issues: Whether it is possible for a trust, which provides that the amount which is payable to the income beneficiary in any year during the beneficiary's lifetime is defined as a percentage of the total value of the trust property at the commencement of that year, to qualify as a spousal trust, an alter ego trust or a joint spousal or common-law partner trust.

Position: No.

Reasons: In order for a trust created by a taxpayer to qualify as a spousal trust, an alter ego trust or a joint spousal or common-law partner trust, the taxpayer's spouse or common-law partner in the case of a spousal trust, the taxpayer in the case of an alter ego trust, and the taxpayer in combination with the taxpayer's spouse or common-law partner in the case of a joint spousal or common-law partner trust, must be entitled to receive all of the income of the trust. For the purposes of this requirement, the income of a trust, as provided under subsection 108(3) of the Income Tax Act, is the income of the trust computed for trust accounting purposes minus certain specified dividends.

5 March 2002 External T.I. 2002-0122625 - HOME BUYERS' PLAN LATE WITHDRAWAL

Unedited CRA Tags
146.01(1)

Principal Issues: Can a tax free withdrawal from an individuals RRSP be made within 30 days of a purchased home becoming habitable?

Position: No if the withdrawal occurs more than 30 days after the purchase of the home.

Reasons: Paragraph (d) of the definition of "regular eligible amount" as defined in subsection 146.01(1) of the Act requires that the withdrawal must occur no more than 30 days after the individual or the individual's spouse acquired the home.

11 February 2002 External T.I. 2000-0044165 - Cost of Property Inherited

Unedited CRA Tags
69(1)(c) 70(5) 107(2)

Principal Issues:
Whether the cost basis of publicly traded shares to a Canadian resident individual who inherits the shares from a foreign relative who was resident in the U.K is subject to paragraph 69(1)(c), paragraph 70(5)(a), or section 107 of the Act?

Position:
In this situation, section 107 of the Act would apply.

Reasons:
Wording of the Act and current positions.

2 November 2001 External T.I. 2001-0079285 - Status of Successive Trusts

Unedited CRA Tags
108(1) 248(1)

Principal Issues: Whether successive trusts established under the terms of an "alter ego trust" or "joint spousal or common-law partner trust" qualify as "testamentary trusts" within the meaning of subsection 108(1) of the Income Tax Act.

Position: No.

Reasons: They are not created by the deceased and property will be contributed to these trusts other than by the deceased on or after the deceased

Technical Interpretation - Internal

25 March 2002 Internal T.I. 2001-0113497 F - REMBOURSEMENT DE PRESTATIONS ASS. EMPLOI

Unedited CRA Tags
60(v)(1) 60(n)(iii) 56(1)(a)(iv)
repayment of EI benefits due to award of wrongful dismissal damages was deductible under s. 60(n)(iii)
repayment of EI benefits due to award of wrongful dismissal damages was deductible under s. 60(n)(iii) rather than s. 60(v.1)

Principale Question: Le remboursement de prestations d'assurance-emploi fait par le contribuable en XXXXXXXXXX peut-il être déduit dans le calcul du revenu du contribuable en vertu du sous-alinéa 60n)(iii) ou de l'alinéa 60 v.1) de la Loi?

Position Adoptée: En vertu du sous-alinéa 60n)(iii) de la Loi.

21 March 2002 Internal T.I. 2001-010133A F - VALIDITE D'UN JUGEMENT - PENSION ALIMENTAIRE

Unedited CRA Tags
56.1(4)
where couple reconcile and then separate a second time, child custody thereafter paid will not qualify as support amounts if no new agreement or judgment

Principales Questions: Est-ce qu'un jugement émis par un tribunal concernant la garde des enfants et la pension alimentaire à être versée suite à la séparation de conjoints de fait, est toujours valide suite à une deuxième séparation après que le couple a repris la vie commune pour une certaine période de temps ?

Position Adoptée: Le jugement n'est plus valide.

20 March 2002 Internal T.I. 2001-0113137 - TVQ SUR PRIMES D'ASSURANCE - SALAIRE

Unedited CRA Tags
6(1)(f)

Principales Questions:
Est-ce que la taxe de vente du Québec sur une prime d'assurance-salaire versée par un employé constitue une cotisation versée dans le cadre d'un régime aux fins du sous-alinéa 6(1)f)(v)?

Position Adoptée:
Elle ne représente pas une cotisation versée dans le cadre d'un régime.

18 March 2002 Internal T.I. 2001-0089547 - VOLUNTARY DISCLOSURE RCA

Unedited CRA Tags
12.2(1) 207.5(2) 207.6(2) 227(8.2)

Principal Issues:
Do payments made to a former employee under an annuity contract purchased by the former employer represent payments from an RCA?

Position: Yes.

Reasons: Not an EBP or SDA.

15 March 2002 Internal T.I. 2002-0122327 - ECP - CAPITAL GAINS ELECTION

Unedited CRA Tags
14(1) 40(1) 39(1)(a)(i)

Principal Issues:
Whether the subparagraph 40(1)(a)(iii) capital gains reserve applies to dispositions of eligible capital property in respect of which an election has been filed pursuant to subsection 14(1.01) of the Act.

Position: No.

Reasons:
Subsection 14(2) of the Act deems all of the proceeds of disposition to have become payable to the taxpayer at the time the election is made.

12 March 2002 Internal T.I. 2001-0094067 F - DEDOMMAGEMENT - TITRE DE PROPRIETE

Unedited CRA Tags
3 9(1)
damages received for use of a property contrary to the recipient’s co-ownership right were tax-free receipts
damages received for separated spouse’s unlawful use of taxpayer’s property were tax-free receipts
legal fees incurred in ownership dispute were capital expenditures

Principales Questions:
Quel est le traitement fiscal des frais légaux et du paiement de dédommagement résultant du litige:
1. Pour le payeur,
2. Pour le récipiendaire.

Position Adoptée:
1. Les montants sont de nature capitale, donc non déductibles.
2. Le paiement de dédommagement est de nature capitale, donc non imposable. Une partie des frais légaux liée à l'acquisition de la propriété pourrait être capitalisée au coût du bien alors que l'autre partie est de nature capitale, donc non déductible.

6 March 2002 Internal T.I. 2001-0108587 F - AIDE A DOMICILE DE LA SAAQ

Unedited CRA Tags
165(1) 164(1.1)
refunds not issued beyond Objection period based on favourable judgment rendered to another taxpayer
in cases similar to Maurice, parent caregivers may be exempted on compensation received

Principales Questions:
Peut-on accorder un remboursement d'impôt à un contribuable concernant des années antérieures en se basant sur une décision favorable de la cour à l'égard d'un autre contribuable?

Est-ce que les montants à titre d'allocations d'aide personnelle à domicile pour une victime d'accident versés par la SAAQ au père ou à la mère de la victime sont imposables entre leurs mains puisqu'ils rendent eux-mêmes les services ?

Position Adoptée: Une demande de remboursement concernant des années antérieures basée sur une décision de la cour à l'égard d'un autre contribuable ne peut être accordée. Toutefois, si un avis d'opposition était présenté par écrit au Ministre, dans les délais requis par la Loi, la possibilité d'un changement à la cotisation initiale pourrait être considérée puisque dans les cas similaires à l'affaire Johanne Maurice c. Sa Majesté La Reine, nous sommes d'avis que les montants à titre d'allocations d'aide à domicile en vertu de l'article 79 de la Loi sur l'assurance automobile du Québec reçus par le père ou la mère d'une victime d'âge mineure ou inapte mentalement à gérer ses affaires ne seraient pas imposables entre leurs mains même si ces montants ont été reçus par ces derniers en leur qualité de personne rendant les services.

5 March 2002 Internal T.I. 2001-0102757 F - PERTE FINALE

Unedited CRA Tags
20(16) 1102(1)c) 68
cost of moving rental building off land for subsequent sale, in order to construct parking lot and create more space for existing rental buildings, was addition to ACB of land
a rental building that was acquired with a view to then moving it off the subjacent land and then selling it, was not a depreciable property

Principales Questions:
Doit-on capitaliser au coût du terrain la perte finale encourue suite à la disposition d'une bâtisse qui a été déménagée de ce terrain peu avant la vente ?
La perte finale sur la bâtisse est-elle acceptable étant donné qu'elle est constituée en majeure partie de frais de déménagement encourus?
Doit-on capitaliser une fraction de cette perte à titre d'immobilisation admissible?

Position Adoptée:
Oui, dans une certaine mesure
La perte finale n'est pas acceptable
Non

25 February 2002 Internal T.I. 2002-0118117 - PART 1.3 - ADVANCES & HOLDBACKS

Unedited CRA Tags
181.2(3)

Principal Issues:
Comments with respect to the application of Part I.3 to a number of fact situations as a consequence of the adverse decision in Manufacturer's Life Ins. Co.

Position: See memo.

Reasons: See memo

25 February 2002 Internal T.I. 2001-0105537 - LIABILITY IN RESPECT OF SEGREGATED FUNDS

Unedited CRA Tags
REG 1404 REG 1406

Principal Issues:
Is the Negative Reserve in respect of a segregated fund excluded from the amount determined under section 1404 of the Regulations by virtue of paragraph 1406(b) of the Regulations?

Position: No

Reasons:
An amount determined under section 1404 of the Regulations in respect of a Negative Reserve does not represent a liability in respect of a segregated fund.

22 February 2002 Internal T.I. 2001-0101867 - Shareholder - Loans & 15(1)

Unedited CRA Tags
15(1) 56(2)

Principal Issues: Whether advances from a corporation controlled by a shareholder to another corporation result in benefits that are taxable to the shareholder under subsection 15(1) or 56(2). Whether any interest paid on money borrowed for these purposes is deductible under paragraph 20(1)(c).

Position: Not all the facts have been provided, however, based on the known facts, it may be possible to take the position that the advances result in benefits that are taxable to the shareholder under subsection 15(1). To the extent that the borrowed money was used for these purposes any interest paid would not be deductible.

Reasons: The law.