Income Tax Severed Letters - 2008-02-29

Principal Issues: Whether each of XXXXXXXXXX proposed exploratory wind turbines will qualify as a test wind turbine within the meaning of subsection 1219(3) of the Regulations

Position: yes

Reasons: NRCan opinion that criteria have been met

Principal Issues: 1. Whether a "default allocation" in a Flex Program jeopardizes the status of a health care spending account in a private health services plan. 2. Whether a plan that consists of individual insurance policies owned by the employees qualifies as a group sickness and accident insurance plan. 3. Whether a taxable employment benefit will occur if a corporate employer transfers ownership of a life insurance policy to an employee or an employee's spouse.

Position: 1. No. 2 and 3. It is always a question of fact.

Reasons: 1. The allocation is beyond the plan member's control, the flex credits are not being saved for allocation after the beginning of the plan year, not being negotiated for cash at any time and have no intrinsic value. 2. It is possible for the individual policies to combine to form a common plan and be considered a group sickness and accident insurance plan provided each employee within a particular class or group of employees is eligible to receive the same benefits under the plan and has the same ratio of employee and employer-paid premiums. 3. Yes, if the fair market value of the policy exceeds any consideration given by the employee for the transfer of the policy. However, in the case of the joint last to die policy, the policy transfer would not give rise to an employment benefit for the surviving spouse because it is not something to which he or she is entitled by virtue of employment.

Principal Issues: Whether corporations are related

Position: General comments.

Reasons: Question of fact.

Principales Questions: 1. Quelle société contrôle les pourboires versés aux employés?
2. Les pourboires versés électroniquement doivent être assujettis aux déductions à la source?

Position Adoptée: 1. Question de faits
2. Tous les pourboires qui sont sous le contrôle de l'employeur, versés par lui-même ou une autre personne en son nom, sont assujettis aux déductions à la source.

Raisons: 1. Question de faits
2. 153(1)a) de la Loi de l'impôt sur le revenu et la politique de longue date de l'Agence.

Principal Issues: Given the recent amendment to the scholarship exemption, is it still necessary for the payor of a scholarship or bursary to issue a T4A slip?

Position: Yes

Reasons: Not all scholarships or bursaries will be completely exempt. Furthermore, the obligation to issue a T4A is contained in subsection 200(2) of the Regulations and applies irrespective of the taxability of the amount in the hands of the student.

2008-026681
XXXXXXXXXX Renée Shields
(613) 957-2049
February 19, 2008

Principal Issues: Whether a lump sum received as a result of a class action suit for damages from pollution that was initiated 5 years after the taxpayer sold the land is taxable or a windfall

Position: windfall

Reasons: IT-334R2; IT-365R2

Principales Questions:
1) Est-ce qu'un fonds de terre détenu en copropriété indivise pourrait être considéré comme un bien agricole admissible pour les fins du paragraphe 110.6(1)?
Whether an undivided interest in farmland could be considered qualified farm property as defined in subsection 110.6(1)?
2) Est-ce qu'une part indivise pourrait constituer un bien de remplacement au fin du paragraphe 44(1) tel que défini au paragraphe 44(5)?
Whether an undivided interest in farmland could qualify as replacement property for purposes of section 44(1) as defined in subsection 44(5)?

Position Adoptée:
1) Il est de notre avis possible, qu'une part indivise dans un immeuble soit, aux fins de la Loi, incluse dans l'expression bien réel ou immobilier de la définition bien agricole admissible au paragraphe 110.6(1). Cette interprétation représente un changement de position par rapport à notre position antérieure. La question de savoir si une part indivise est utilisée principalement dans le cadre de l'exploitation d'une entreprise agricole est une question de fait qui ne peut être résolue qu'après l'examen de tous les faits et documents pertinents à une situation donnée.
It is our view that the definition of property in subsection 248(1), as used in the definition of qualified farm property in subsection 110.6(1) is broad enough to include an undivided interest in farmland. This interpretation represents a change in position. The question of whether an undivided interest in farmland is principally used is a business of farming is a question of fact that needs to be examined is light of all relevant facts and documentation specific to the situation.
2) Oui, ça pourrait être possible.
Yes, it is possible.