Income Tax Severed Letters - 2008-05-23

Miscellaneous

12 September 2003 Income Tax Severed Letter 2003-0038105 F - INDEMNISATION D'UN REER

Unedited CRA Tags
146(5) 146(8)

Principales Questions: Traitement fiscal d'un montant reçu pour indemniser une perte subie dans un REÉR.

Ruling

2008 Ruling 2007-0227931R3 - Loss utilization proposal

Unedited CRA Tags
20(1)(c) 112(1)

Principal Issues: Loss utilization within a corporate group.

Position: Acceptable.

Reasons: Previous rulings and proposal meets paragraph 32 of IT-533.

XXXXXXXXXX 2007-022793

Ministerial Correspondence

7 May 2008 Ministerial Correspondence 2007-0247081M4 - Childrens Fitness Tax Credit - disability

Unedited CRA Tags
118.03

Principal Issues: Whether an activity suitable for a disabled child will be eligible for the Children's Fitness Tax Credit.

Position: Likely yes

Reasons: For children eligible for the disability tax credit, the Regulations contain a specific definition of "physical activity". Further, in recognition of additional expenses incurred, the Act was amended to introduce a separate non-refundable amount for children eligible for the disability tax credit.

7 May 2008 Ministerial Correspondence 2007-0248651M4 - Children's Fitness Tax Credit - bowling

Unedited CRA Tags
118.03

Principal Issues: Is bowling eligible for the children's fitness tax credit

Position: Likely yes

Reasons: The CRA does not make general determinations regarding whether a particular activity is eligible or ineligible. However, the CRA website uses bowling as an example of an activity with a sufficient degree of exertion to meet the requirements of the Income Tax Regulations. Subject to satisfying the other conditions such as supervision and duration of the program, bowling would therefore likely qualify.

Technical Interpretation - External

12 May 2008 External T.I. 2008-0268941E5 - Proposed Purchase by NPO

Unedited CRA Tags
149(1)(l)

Principal Issues: Can an entity that qualifies for an exemption from tax under paragraph 149(1)(l) invest in property and later sell the property to its members? Would the property be inventory or capital property?

Position: Unable to answer these questions as it depends on the facts surrounding the transaction. General information about paragraph 149(1)(l) is provided.

Reasons: Whether the transactions described would, in and of themselves, prevent the corporation from qualifying as a paragraph 149(1)(l) entity could only be determined having regard to all the facts. Similarly, the question whether particular properties are held as inventory or capital property depends on the facts.

9 May 2008 External T.I. 2008-0271781E5 F - Dédommagement pour perte de revenu de pension

Unedited CRA Tags
56(1)a)(ii) 3(a)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Superannuation or Pension Benefit
lump sums paid by Quebec government to members of deficit plans were not taxable
Summary Under
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a)
lump sums paid by Quebec government to members of deficit plans were not income from a source

Principales Questions:
Est-ce que les montants versés par le gouvernement du Québec à des participants de régimes de retraite sont imposables?

Position Adoptée: Non

Raisons: Les montants ne sont pas reçus au titre ou en paiement intégral ou partiel d'une prestation de retraite ou de pension ou d'une allocation de retraite et ils ne représentent pas une substitution de ces montants. Les montants ne découlent pas d'une source de revenu.

2008-027178
XXXXXXXXXX Catherine Ayotte,
Notaire, M.Fisc
Le 9 mai 2008

9 May 2008 External T.I. 2007-0239641E5 - SR&ED

Unedited CRA Tags
248(1); 37(1), (2); 37(8); 2900(2)

Principal Issues: Whether the cost of transporting the prototype for testing outside Canada is an expenditure that may be eligible for deduction in computing income pursuant to subsection 37(1) or (2).

Position: May be deducted pursuant to subsection 37(2), but not subsection 37(1).

Reasons: Whether subsection 37(1) or (2) applies to the transportation cost in the situation described depends on the location where the SR&ED activities are carried out and not on the location where the transportation cost is incurred or paid (e.g., the location where the transportation contract is entered into or the location of the bank account used for payment).

9 May 2008 External T.I. 2008-0268131E5 - Classification of Audio Books

Unedited CRA Tags
Class 8 Class 12(a)

Principal Issues: 1. Whether an audio book rented for a fee is a "book that is part of a lending library" for the purpose of class 12.

Position: No.

Reasons: An audio book is not a book based on the ordinary meaning of the word "book".

2 May 2008 External T.I. 2008-0270711E5 - "Approved" Status

Unedited CRA Tags
37(1)(a)(ii) 37(7) 248(1)

Principal Issues: "Approved" status requested by the XXXXXXXXXX , which is a not-for-profit organization that funds and facilitates collaborative R&D that benefits the XXXXXXXXXX .

Position: Approval denied.

Reasons: Information found on the XXXXXXXXXX website indicates that they conduct activities other than SR&ED, XXXXXXXXXX , and they conduct some research that is restricted domain R&D where the results may not be divulged to the general public. Accordingly, it is our view that XXXXXXXXXX does not meet the requirements for "approved" status under clauses 37(1)(a)(ii)(A) and (B) as set out in Application Policy SR&ED 96-10.

1 May 2008 External T.I. 2008-0264471E5 - Interaction of 149(1)(d.5) and 149(1.3)

Unedited CRA Tags
149(1)(d.5) 149(1.3) 149(1.2)

Principal Issues: Whether it is sufficient for municipalities to hold 90% of the voting shares of a corporation with share capital in order for the corporation to be exempt from tax under 149(1)(d.5).

Position: No.

Reasons: The requirement to own 90% of capital (including non-voting shares) and the requirement to be entitled to 90% of votes at shareholder meetings are different and distinct requirements. Amendments to 149(1.3), if enacted as proposed, expand the application of the voting requirement from annual meetings of shareholders to any meetings of shareholders and add a de facto control test.

Technical Interpretation - Internal

7 May 2008 Internal T.I. 2008-0272161I7 - Tuition Arrears Paid to a Collection Agency

Unedited CRA Tags
118.5

Principal Issues: Can an educational institution issue a T2202A to a student who has paid tuition arrears to a collection agency, acting on its behalf?

Position: Yes.

Reasons: Where the student has paid tuition arrears for a particular year to the educational institution's agent, the institution should issue a Revised T2202A for that year reflecting the correct amounts paid for that year.
May 7, 2008
NL-CRA Call Centre HEADQUARTERS
Income Tax Rulings
Attention: Tammy Priddle Directorate
L. Zannese
(613) 957-2747