Income Tax Severed Letters - 2003-06-27

Principal Issues:
1. Whether employer paid premiums relating to a group accidental death and dismemberment insurance plan are a taxable benefit to an employee.
2. Whether the receipt of benefits under the group accidental death and dismemberment insurance plan will be included in computing taxable income of the recipient.
3. Whether the answer to the above two questions is any different when the insured is the spouse or common-law partner of the employee.

Position: 1. No.
2. Question of fact.
3. Question of fact.

Reasons:
1. Excluded under subparagraph 6(1)(a)(i) of the Act.
2. Amounts received in respect of accidental dismemberment are not included in income, amounts received as a "disability payment" are included in income under paragraph 6(1)(f)) and amounts received as a death benefit are included in income under 56(1)(a)(iii)).
3. May be excluded because of wording of 6(1)(a) and 6(1)(f) of the Act where the recipients are not employees.

Principale Question:

Un particulier exerce sa profession par l'intermédiaire d'une société par actions. Il doit payer personnellement un montant à titre de dommages-intérêts suite à une poursuite en responsabilité professionnelle en raison d'une faute commise dans l'exercice de sa profession au sein de la société.

Le montant de dommages-intérêts est-il une dépense déductible dans le calcul du revenu du particulier? Si oui, à quel titre : employé, administrateur ou actionnaire de la société?

Position Adoptée:
Les dommages-intérêts ne sont pas déductibles. Les exigences en matière de déductibilité des dommages sont résumées aux paragraphes 5 et 6 du Bulletin d'interprétation IT-467R2.

Principal Issues:
Whether, the debt forgiveness rules (section 80) apply where a person converts a loan receivable from a limited partnership into additional partnership capital.

Principal Issues:
Can certain payments made under the Ontario Social Housing Reform Act, 2000 be treated as the payment of retiring allowances.

Position: No

Reasons:
Section 52(9) of the legislation indicates that the employees did not terminate their employment on their transfer between employers.

Principal Issues:
If, as one of its investments, a pooled fund trust" ("PFT") invests in another trust that only invests in assets listed in 5000(7)(a)(i), for purposes of determining whether the first trust satisfies paragraph (d) of the PFT definition, can we look through the second trust to income from its assets?

Position: No

Reasons: The wording of the legislation does not accommodate this approach.

Principal Issues: If the FMV of a policy exceeds its CSV and the policy is transferred in circumstances such that subsection 148(7) applies, can the transferee, in computing the ACB of the policy include the full amount of any subsection 15(1) benefit realized on the transfer?

Position: No

Reasons: The legislation

Principal Issues:
1. Whether a portion of the death benefit under a life insurance policy paid to a qualified donee as a beneficiary under the policy would qualify as a charitable gift.
2. Can the CCRA provide general guidelines in determining whether a shared ownership arrangement between a policyholder and a charity would result in a charitable gift?

Position:
1. Yes, if all the requirements set out in subsection 118.1(5.1) are met.
2. Not at this time since we have not had the opportunity to review specific shared ownership arrangements.

Reasons:
1. Subsections 118.1(5.1) and (5.2).
2. Such a determination can only be made on a case-by-case basis.