Income Tax Severed Letters - 2003-11-21

Principal Issues: 1. Whether ghost car would be "clearly-marked emergency vehicle"; 2. Whether extended-cab pick-up truck would be automobile where its rear seat was removed; 3. Whether standby charge and operating cost benefit would arise from ghost car made available to officer while on call; 4. Whether standby charge and operating cost benefit would arise from availability and use of vehicle modified to carry police dogs by officer in charge of caring for a dog that resides with the officer.

Position: 1. Ghost car would not be clearly-marked vehicle; 2. Would not be considered automobile if it was used, in the year of acquisition, all or substantially all for transporting goods, equipment, or passengers for employment-related purposes; 3. Standby charge and operating benefit could arise from ghost car being made available to officer while on call; 4. No benefit likely with respect to availability and use of Dog vehicle since there is no personal use.

Reasons: 1. Clearly-marked emergency vehicle refers to a vehicle that is readily identified by the general public as a police or fire vehicle due to symbols or lettering on the vehicle. Since ghost cars are designed to be non-descript vehicles they would not be clearly-marked; 2. Extended-cab pick-up trucks have a seating capacity for more than the driver and two passengers notwithstanding the removal of the rear seat. Therefore, they must meet the "all or substantially all" test to be excluded from the "automobile" definition. 3. Use of ghost car to travel between home and work would be personal, as would trips undertaken while on call that were made primarily for personal reasons. Accordingly, standby charge and operating benefit may be applicable. 4. Consistent with Hoedel case, where an officer is fully responsible for care and training of police dog that stays in the officer's home, travel with the dog between home and work would be considered employment-related.

Principal Issues: Correction to Paragraph 41 of Document 2003-004032 dealing with whether certain corporations are affiliated, related or associated.

Position: Company C is associated with Company E under subsection 256(2).

Reasons: Company C and Company E are deemed to be associated with each other because each company is associated with Company A.

Principal Issues:
Is a charity permitted to issue a donation receipt when it is issued a stock option?

Position: No.

Reasons:
A donation receipt may only be issued in respect of a gift. To constitute a gift, there must be a transfer of property. A granting corporation does not transfer property to a charity when it issues a stock option.

Principal Issues:
What are the tax implications of taking a mortgage out of an RRSP? Information on writing off or disposing of a non-performing investment held in an RRSP.

Position:
Outlined possible tax consequences and noted we do not provide opinions or rule on the valuation or propriety of such transactions.

Reasons:
Explained options available to the RRSP and annuitant in these circumstances.

Principal Issues: Method of reporting income by a utility.

Position: On the earned basis.

Reasons: Provides the "truer picture" of profit.

Principal Issues:
Where in a sale by a contractor of its construction contract to a corporate purchaser under subsection 85(1) of the Income Tax Act, whether the assumption by the purchaser of the contractor's holdbacks payable as part of the purchase and sale transaction should form part of the agreed amount, where at the time of such assumption, the contractor's holdbacks payable were conditional on the issuance by an architect or engineer of a certificate of acceptance with respect to the contract?

Position:
The fair market value of the contractor's holdbacks payable at the time they were assumed should form part of the agreed amount.

Reasons:
The assumption by the purchaser of the contractor's holdbacks payable would constitute non-share consideration received by the contractor.

2002-012183
XXXXXXXXXX Daniel Wong
(613) 954-4949
November 12, 2003

Principal Issues: Does the sale of trees result in a capital gain or income for tax purposes?

Position: Question of fact.

Reasons: Can only be determined when all of the facts are known.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

XXXXXXXXXX 2003-003409

Attention: XXXXXXXXXX

September 19, 2003

Dear Sir:

Re: Principal Residence Designation by a Personal Trust