Income Tax Severed Letters - 2005-04-15

Principales Questions: L'accumulation d'heures supplémentaires dans une banque de temps peut-elle être considérée comme une entente d'échelonnement de traitement?

Position Adoptée: Question de fait. Il faut établir si un des principaux objets est de différer l'impôt.

Raisons: Définition d'entente d'échelonnement de traitement

Principal Issues: Whether the CRA's general position set out in a technical interpretation letter (document # 2001-0087365), in regards to the determination of the gain or loss, as the case may be, to the borrower upon the termination of the short sale lending arrangement to which section 260 of the Act does not apply, would be relevant to an equivalent securities lending arrangement to which section 260 of the Act does apply.

Position: Generally, yes.

Reasons: The provisions of section 260 of the Act apply solely to the lenders of qualifying securities under circumstances described in the said section. Thus, the determination as to whether an obligation of the securities borrower is settled or extinguished is a question of the law of contract and commercial law notwithstanding the provisions of section 260 of the Act and its application to a securities lender.

Principal Issues: What is the nature of the payments received by the taxpayer and how will the payments be treated for income tax purposes.

Position: Business Income

Reasons: The amounts received in the year were reported on a T4A slip. The taxpayer is an independent contractor. The amounts should be included in calculating the taxpayer's business income for the taxation year in which the amounts were received.

Principales Questions: Est-ce que l'ARC considère que le choix prévu au paragraphe 10(6) de la Loi a été fait par un artiste qui a inscrit zéro comme inventaire de fin d'exercice lors de la production de son état de revenus et dépenses?
Est-ce qu'un artiste qui décède est imposé sur la valeur de son inventaire pour lequel il avait fait un choix prévu au paragraphe 10(6) de la Loi?

Position Adoptée: Oui.
L'inventaire pour lequel un choix prévu au paragraphe 10(6) de la Loi a été fait est un droit ou bien. Par conséquent, le paragraphe 70(2) de la Loi pourrait s'appliquer sous réserve de l'application du paragraphe 70(3) de la Loi. Si le paragraphe 70(2) de la Loi s'applique, la valeur de l'inventaire au décès serait incluse dans le revenu de la personne décédée. Si le paragraphe 70(3) de la Loi s'applique, le bénéficiaire devra inclure la somme reçue lors de la réalisation ou de la disposition de l'inventaire dans son revenu.

Raisons: Il n'y a aucun formulaire prescrit ni aucune modalité prescrite.
Paragraphe 6 du Bulletin IT-212R3

Principal Issues: A GST registrant failed to collect GST on the sale of a depreciable property. Whether the 4% GST penalty paid by the vendor in a "wash transaction" can be deducted as a current expense or, alternatively, deducted from the proceeds of sale of depreciable property..

Position: The reduced GST penalty payable in a wash transaction on the disposition of a depreciable property is in the nature of capital which is deducted from the proceeds and is, therefore, not deductible as a current expensse.

Reasons: The decrease to a taxpayer's UCC of a particular class includes for each disposition of a depreciable property of the class that has occurred before the time of the UCC calculation the lesser of the following two amounts: the proceeds of the property's disposition minus any related disposition costs of the taxpayer; and the taxpayer's capital cost of the property.

Principal Issues: Should the paragraph references to subsection 85(1) as contained in paragraph 97(2)(a) include a reference to paragraph 85(1)(f)?

Position: Yes.

Reasons: Paragraph 85(1)(f) refers to the consideration received other than shares of a transferee corporation or interest in a transferee partnership.

Principal Issues: Can a trust be designated as a beneficiary under an RRSP? If yes, is it possible for the trust to be a testamentary trust as defined in subsection 108(1) of the Act?

Position: Yes. Question of fact.

Reasons: The Income Tax Act does not restrict who can be designated as a beneficiary under an RRSP. Provided the trust satisfies the definition of testamentary trust in subsection 108(1) of the Act and certain conditions are satisfied.

Principal Issues: Whether certain warranties provided by a manufacturer of wind turbines to the corporate purchaser thereof would cause shares intended to be flow-through shares (issued by the purchaser to fund the acquisition of the test wind turbines) to be prescribed shares under paragraph 6202.1(1)(c) of the Regulations.

Position: Such determinations must be made based upon the relevant facts and circumstances, however, warranties given by the manufacturer to the corporate purchaser solely to warrant the reliability of the wind turbine equipment, where those parties deal at arm's length and the terms of the warranties are commercially reasonable, will generally not, in and by themselves, cause shares issued by the purchaser to fund the acquisition of the test wind turbines to be prescribed shares.

Reasons: Consideration of the relevant provisions of the Act and Regulations as well as the nature of the tests involved.

Principales Questions: Lorsque le solde de l'encaisse d'un club social d'une division d'une société est liquidé au moyen d'un tirage au sort d'un item acheté à même ce solde, est-ce que l'item gagné, d'une valeur de plus de 2 000 $, constitue un revenu d'emploi pour l'employé recevant l'item ou s'il correspond plutôt à un prix gagné dans le cadre d'une loterie à ne pas inclure dans son revenu aux fins de l'impôt, dans la situation où les employés et l'employeur contribuaient conjointement au fonds du club social.

Position Adoptée: La proportion de la valeur de l'item qui a été payé par une contribution faite par l'employeur dans le fonds du club social constitue un avantage imposable en vertu de l'alinéa 6(1)a) de la Loi pour l'employé gagnant.

Raisons: L'employé a reçu un avantage au titre, dans l'occupation ou en vertu d'une charge ou d'un emploi. Ne rencontre aucune des exceptions prévues aux sous-alinéas 6(1)a)(i) à (v) de la Loi.