Income Tax Severed Letters - 2004-05-07

Principal Issues: Whether the cost of sending an autistic child to an integrated day care would qualify as a medical expense under paragraph 118.2(2)(e) of the Income tax Act.

Position: No

Reasons: The certification does not clearly indicate that the Centre has specialized equipment, facilities, or trained personnel to provide care, or care and training, of a person with an autistic disorder.

Principal Issues: Whether CMHC mortgage default insurance is an eligible moving expense?

Position: No.

Reasons: Subsection 62(3) provides that for greater certainty, moving expenses do not include costs (other than costs referred to in paragraph (f)) incurred by the taxpayer in respect of the acquisition of the new residence. Paragraph 62(3)(f) allows the deduction of legal fees in respect of the purchase of the new residence, and any tax, fee or duty (excluding GST or value added tax) imposed on the transfer or registration of title to the new residence.

Principal Issues: whether interest is deductible in various fact situations where a shareholder borrows money (at interest) and loans money interest-free to a corporation in which the shareholder owns shares

Position: question of fact

Reasons: question of fact

Principal Issues: Can an individual claim a medical expense of a patient who is
the mother of the taxpayer's deceased spouse?

Position: Yes, provided that the patient is a dependent of the
individual.

Reasons: Extension of administrative practice as described in Appendix A of IT-513R that where a marriage has been dissolved by death, the family relationships created by the marriage continue to exist.

Principales Questions: Est-ce que notre position quant à l'application du paragraphe 15(2) de la Loi est maintenue compte tenu de la décision dans la cause Gillette Canada inc. ?

Position Adoptée: Notre position est maintenue.

Raisons: Nous sommes en désaccord avec la position prise dans cette affaire. À notre avis, les paragraphes 15(2) et (2.1) de la Loi pourraient être applicables à certaines situations impliquant des sociétés des personnes et cette position est en accord avec la politique fiscale sous-jacente à ces paragraphes.

Principal Issues: Whether employees are subject to taxable employment benefits that are calculated on a basis other than using the "standby charge", because the pick-up trucks are not considered "automobiles" under the Act.

Position: Question of fact.

Reasons: Certain vans, pick-up trucks or similar vehicles are excluded from the definition of automobile in subsection 248(1), depending on their use in transporting goods, equipment or passengers in the course of gaining or producing income. For example, subparagraph (e)(i) excludes such a vehicle that "has a seating capacity for not more than the driver and two passengers and that, in the taxation year in which it is acquired or leased, is used primarily for the transportation of goods or equipment in the course of gaining or producing income". Subparagraph (e)(ii) excludes such a vehicle "the use of which, in the taxation year in which it is acquired or leased, is all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income". Subparagraph (e)(iii) excludes a motor vehicle of a type commonly called a pick-up truck that is used in the taxation year in which it is acquired or leased primarily for the transportation of goods, equipment or passengers in the course of earning or producing income at one or more locations in Canada that are, in respect of any of the occupants of the vehicle, a special work site pursuant to subparagraph 6(6)(a)(i) or a remote work location pursuant to subparagraph 6(6)(a)(ii). The subparagraph (e)(iii) exception only applies where the taxpayer was required by the taxpayer's duties to be away from the taxpayer's principal place of residence, or to be at the special work site or location, for at least 36 hours.

Principal Issues: Whether lump-sum payment from German tax-exempt life insurance plan is taxable in Canada?

Position: Question of fact, but likely to be taxable under 56(1)(a) or 56(1)(j).

Reasons: Not enough details to make a determination.

Principal Issues: 1. In an employee-pay-all wage loss replacement plan, where an employer makes a contribution to the plan and includes the amount on the employee's T4 slip, is the payment subject to CPP and EI?
2. Where an employer makes a contribution to an employee's RRSP, is the contribution subject to CPP and EI?

Position: 1. Yes.
2. CPP - Yes; EI - Depends

Reasons: 1. Payment is salary, wages or other remuneration.
2. CPP - amount is taxable. EI - If employee is able to withdraw funds from RRSP, amount is salary, wages, or other remuneration; if employee cannot withdraw funds, the amount is treated as a non-cash benefit.

Principales Questions:
Qui doit s'imposer sur la prestation de décès versée par la RRQ si la prestation de décès a été reçue :
au cours des années d'imposition 1997 et suivantes?
avant l'année d'imposition 1997?

Position Adoptée:
Pour les années d'imposition 1997 et suivantes, en vertu de la division 56(1)a)(i)(F) et de l'alinéa 56(1)a.1) de la Loi, seul le récipiendaire d'un tel paiement qui est également une succession doit l'inclure dans le calcul de son revenu. Pour les années d'imposition antérieures à 1997, les dispositions de la division 56(1)a)(i)(B) de la Loi s'appliquaient.

Raisons:
Application de la Loi.