Income Tax Severed Letters - 2009-01-09

Principales Questions: (1) Est-ce qu'il existe des restrictions quant au montant des travaux en cours qu'une société par actions peut choisir d'exclure dans le calcul de son revenu selon l'article 34 de la Loi de l'impôt sur le revenu lorsqu'une perte pour l'année en découlerait?
(2) Est-ce qu'une perte d'entreprise réalisée suite à l'exclusion des travaux en cours découlant du choix effectué à l'article 34 de la Loi de l'impôt sur le revenu est entièrement déductible?

Position Adoptée: (1) Non.
(2) En l'espèce, la perte de 11 000$ pourra être réclamée par la société par actions qui exploite l'entreprise.

Raisons: (1) Les TEC, évalués conformément à l'article 10(4)a) peuvent être exclus du revenu selon l'article 34.
(2) Il n'existe aucune restriction dans la Loi de l'impôt sur le revenu limitant l'admissibilité d'une perte d'entreprise réalisée suite à l'exclusion des travaux en cours selon le choix de l'article 34, sauf si les dispositions de 18(1)a), 67 ou 78(4) s'appliquent pour limiter les dépenses par ailleurs déductibles.

Principal Issues: Would a partnership interest with a "negative" adjusted cost base ("ACB") increase the "bump" amount as calculated under paragraph 88(1)(d) of the Income Tax Act ("ITA")?

Position: No. With respect to the "bump" amount determined under paragraph 88(1)(d), the cost amount of the partnership interest pursuant to subparagraph (i) cannot be negative. Paragraph (d) of the definition of ACB in section 54 states that in no case shall the ACB to a taxpayer of any property at any time be less than nil. The calculation in subparagraph 88(1)(d)(i) specifies that the "bump" amount is the amount, if any, by which the total determined under subparagraph (b)(ii) exceeds the amount, if any, by which the total of all amounts determined under clause 88(1)(d)(i)(A), exceeds the amounts determined under clauses 88(1)(d)(i)(B) and (C). Consequently, the result of the calculation in subparagraph 88(1)(d)(i) cannot be less than zero.

Reasons: Wording of the Act.

Principal Issues: Request to reduce withholding tax on a LIRSP withdrawal (withdrawal due to financial hardship) of a status Indian.

Position: Information given to taxpayer regarding forms required to request a reduction in withholdings

Reasons: Administrative assistance only

2008-030288
XXXXXXXXXX P. Burnley
(613) 957-3498
December 16, 2008

Principal Issues: Individual currently participates in foreign currency trading on a part-time basis. He plans to eventually leave his employment and carry on currency speculating through a corporation. Whether the comments in IT-346R would afford him capital treatment.

Position: None

Reasons: Question of fact.

Principal Issues:
Whether the membership fees paid to the XXXXXXXXXX for their professional XXXXXXXXXX designation are deductible?

Position:
Membership fees are not eligible as a deduction under 8(1)(i)(i) for employee taxpayer. However, for self-employed members, the membership fees could be deductible.

Reasons:
As required pursuant to subparagraph 8(1)(i)(i), the membership is not required in order to maintain a professional status recognized by statute.
Dues paid by a taxpayer whose income is from a business is deductible to the extent that they were incurred for the purpose of gaining or producing income from the business.