Income Tax Severed Letters - 2008-03-28

Ruling

2007 Ruling 2007-0227371R3 - Butterfly

Unedited CRA Tags
55(3)(b)

Principal Issues:
1)Whether the proposed butterfly reorganization meets the requirements of paragraph 55(3)(b).
2) Whether there are any concerns regarding the use of the treaty protected gain on the shares of DC.

Position: 1) Yes. 2) No.

Reasons:
1) It meets the requirements of the law.
2) It is represented that the PlantCo Common Shares will not derive their value primarily from real property situated in Canada.

2007 Ruling 2007-0255931R3 - Butterfly Reorganization

Unedited CRA Tags
55(3)(b)

Principal Issues: Minor amendments to ruling.
DC proposes to transfer the legal title to (but not beneficial ownership of) PlantC to Aco for the purposes of avoiding the land transfer tax under the Land Transfer Tax Act (Ontario). XXXXXXXXXX .

Position: 1) This is acceptable.

Reasons: 1) We have accepted this type of arrangement in previous butterflies. (See 2005-011142).
2) XXXXXXXXXX . Further, since DC, Parent and Aco will be related immediately after the reorganization, subparagraph 55(3.1)(b)(i), paragraphs 55(3.1)(b) and (c) will not be applicable.

Ministerial Correspondence

27 February 2008 Ministerial Correspondence 2008-0264631M4 - medical expenses - over the counter drugs

Unedited CRA Tags
118.2(2)

Principal Issues: Whether the cost of over the counter drugs qualify as a medical expense for purposes of the medical expense tax credit

Position: Generally no

Reasons: The Income Tax Act sets out three criteria for a drug to be considered an eligible medical expense. The drug must be used in the diagnosis, treatment or prevention of a disease, disorder, abnormal physical state, or symptoms thereof or in restoring, correcting or modifying an organic function; prescribed by a medical practitioner; and recorded by a pharmacist. Generally, provincial legislation concerning the record keeping practices required by pharmacists indicates that a pharmacist shall keep at the place where he or she practices his or her profession a record for each patient in respect of whom a prescription is filled. However, only certain types of drugs are required to be recorded by a pharmacist.

Technical Interpretation - External

19 March 2008 External T.I. 2007-0259461E5 - Test Wind Turbine

Unedited CRA Tags
Reg. 1219(3)

Principal Issues: Whether a proposed exploratory wind turbine will be eligible as a test wind turbine within the meaning of subsection 1219(3) of the Regulations

Position: Yes

Reasons: Satisfies the criteria and a favourable opinion was received from NRCan

19 March 2008 External T.I. 2008-0269301E5 - Securities transactions - 39(4) election

Unedited CRA Tags
39(4)

Principal Issues: Whether the election pursuant to subsection 39(4) of the Income Tax Act is available to an individual.

Position: General comments

Reasons: Based on comments in IT-479R

18 March 2008 External T.I. 2007-0249601E5 F - Déductibilité des intérêts

Unedited CRA Tags
20(1)c)
CRA examines on a case-by-case basis the impact of non-arm’s length transactions outside the normal course on accumulated profits

Principales Questions: Dans une situation où une société emprunterait auprès d'une institution financière sans lien de dépendance une somme d'argent correspondant à ses bénéfices non répartis (" BNR ") dans le but de verser un dividende à ses actionnaires, est-ce que les intérêts payables sur l'argent emprunté seraient déductibles si la société avait reçu immédiatement avant l'emprunt un dividende en actions de sa filiale en propriété exclusive et que ce dividende en actions aurait augmenté ses BNR.

Position Adoptée: Commentaires généraux.

Raisons: Questions de faits.

17 March 2008 External T.I. 2008-0266111E5 - Overseas Employment

Unedited CRA Tags
126 Canada-Germany Tax Agreement

Principal Issues: Whether income earned in Germany by residents of Canada is subject to tax in Canada

Position: Yes

Reasons: Canadian residents are taxed on their worldwide income. Taxpayer may be entitled to a foreign tax credit.