Income Tax Severed Letters - 2007-08-03

Ministerial Correspondence

30 July 2007 Ministerial Correspondence 2007-0239191M4 - Travel Expense for Unemployed Individuals

Unedited CRA Tags
8(1)(h) 8(4) 3 9

Principal Issues: Whether unemployed individuals may deduct travel expense incurred to find employment.

Position: Only employees and self-employed individuals may deduct certain travel expenses from employment and business income, respectively.

Reasons: Where an individual is unemployed, there is no source of income from which to deduct the expense.

24 July 2007 Ministerial Correspondence 2007-0240601M4 - Transit Pass Tax Credit

Unedited CRA Tags
118.02

Principal Issues: Request that bus tickets be eligible for the transit pass credit.

Position: Taxpayer referred to Finance.

Reasons: Finance is responsible for amendments to the Act.

3 July 2007 Ministerial Correspondence 2007-0240891M4 - Children's Fitness Tax Credit

Unedited CRA Tags
118.03

Principal Issues: Will discounted program fees made available to low-income families affect an individual's eligibility for the children's fitness tax credit?

Position: No.

Reasons: Eligibility is not affected. However, because the formula for calculating the fitness tax credit makes reference to 'an amount paid in the tax year by an individual, only the amount actually paid may be used to calculate the credit.'

29 May 2007 Ministerial Correspondence 2007-0233601M4 - Children's Fitness Tax Credit

Unedited CRA Tags
118.03

Principal Issues: 1. Will the cost of a uniform included in a program's registration fee affect the calculation of the fitness tax credit? 2. Will a low-income parent's receipt of financial assistance or a discounted registration fee affect the individual's eligibility for the credit?

Position: 1. In general, no. 2. No

Reasons: 1. Provided that the uniform/clothing is used for the program and has little or no residual value, then the cost of the clothing will not have to be removed from the registration fees. 2. Eligibility is not affected. However, because the formula for calculating the fitness tax credit makes reference to 'an amount paid in the tax year by the individual, only the amount actually paid may be used to calculate the credit.'

Technical Interpretation - External

25 July 2007 External T.I. 2007-0227601E5 - Involuntary Disposition - Subsection 44(2)

Unedited CRA Tags
44(2) 13(21) 54 248(1)

Principal Issues: Where a property is subject to an involuntary disposition and proceeds are, or may be, receivable from both an insurance settlement and a civil suit, should settlements in respect of those actions be considered separately?

Position: No.

Reasons: Previous position. Wording of the Act. Subsection 44(2) lists the circumstances that will trigger the timing of the deemed disposition of a property involuntarily disposed. In the situation described, paragraphs 44(2)(a) or (b) should be applicable, as the case may be. The application of 44(2) results in a single disposition.

Conference

16 May 2007 May 16, CLHIA Roundtable Q. 19, 2007-0229841C6 - Foreign affiliates - deemed active business income

Unedited CRA Tags
95(2)(a)(i)

Principal Issues: Whether certain investment income of foreign affiliate in reinsurance business would be recharacterized as active business income.

Position: In the circumstances described it would be.

Reasons: Income is from activities directly related to active business activities of related foreign affiliate and would income from active business if earned by it.