Income Tax Severed Letters - 2009-10-23

Ministerial Correspondence

2 October 2009 Ministerial Correspondence 2009-0337291M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
January 27, 2009 federal budget

Principal Issues: Do the costs incurred by cottage owners to install the main hydro line, the subdivision feeder line and the substation to their residences qualify for the HRTC.

Position: Generally, No

Reasons: The majority of the construction costs will occur on land not forming part of the eligible dwelling. The costs of installing the main hydro line, the substation and a portion of the subdivision feeder lines will not qualify for the HRTC. However, the cost of installing the subdivision feeder lines on land forming part of the eligible dwelling will qualify for the HRTC.

2 October 2009 Ministerial Correspondence 2009-0338581M4 - HRTC- Shelving

Unedited CRA Tags
2009 Budget Documents Bill C51

Principal Issues: Does the installation of shelving in a garage qualify for the HRTC?

Position: In order to qualify for the HRTC, the shelving must be permanently attached to the walls, ceiling or floor of the dwelling.

Reasons: In order to be integral to the dwelling and of an enduring nature, the installation of shelving must be permanently fixed to the dwelling in some fashion.

2 October 2009 Ministerial Correspondence 2009-0310501M4 - HRTC - retractable awning or window awning

Unedited CRA Tags
draft release of 118.04

Principal Issues: Are expenditures for retractable awnings or window awnings eligible for the home renovation tax credit (HRTC)?

Position: Provided that all other conditions are met for the credit, expenditures for a retractable awning or a window awning that is installed on an eligible dwelling will qualify for the HRTC.

Reasons: The expenditures are directly attributable to a renovation or alteration that is of an enduring nature and integral to the eligible dwelling.

2 October 2009 Ministerial Correspondence 2009-0313641M4 - HRTC - Eligibility of Window Coverings

Unedited CRA Tags
Bill C51 (2009)/Draft section 118.04 of the ITA

Principal Issues: What types of window coverings will qualify for the HRTC?

Position: Window coverings such as blinds, shutters, and shades that are directly attached to the window frame and whose removal would alter the nature of the dwelling. Draperies and curtains may qualify for the HRTC if they would not keep their value or usefulness if installed in another dwelling.

Reasons: Window coverings that are directly attached to the window frame and whose removal would alter the nature of the dwelling are generally considered to be fixtures of a dwelling and therefore qualify for the HRTC.

1 October 2009 Ministerial Correspondence 2009-0336841M4 - HRTC - Eligibility of Tenants

Unedited CRA Tags
Bill C51 (2009) /Draft section 118.04 of the ITA

Principal Issues: Are tenants eligible to claim the HRTC when they pay for home renovations themselves?

Position: No.

Reasons: The HRTC can be claimed by homeowners who use their homes personally and, therefore, tenants are not eligible to claim the HRTC.

30 September 2009 Ministerial Correspondence 2009-0332011M4 - HRTC - Condominium - Eligible expenditures

Unedited CRA Tags
Notice of Ways and Means Motion released on September 14, 2009

Principal Issues: How will a condominium corporation determine a unit owner's share of the eligible expenditures for the common areas? What documentation is required?

Position: Generally, the expenses incurred for common areas are allocated to unit owners based on the condominium corporation's governing documents. Owners will require documentation from the condominium corporation or the board of directors identifying amounts incurred for the renovation work performed on common areas.

Reasons: For owners of condominium units that are eligible dwellings, the draft legislation publicly released on September 14, 2009 provides that an individual can claim the HRTC for qualifying expenditures incurred to renovate the unit, and for the individual's share of qualifying expenditures incurred by the condominium corporation in respect of common areas. Documentation must clearly identify the type and quantity of goods purchased or services provided. Every condominium corporation is governed by its own unique rules, regulations, and bylaws.

14 August 2009 Ministerial Correspondence 2009-0316851M4 - HRTC- General Information

Unedited CRA Tags
2009 Budget Documents

Principal Issues: General information about the HRTC program.

Position: N/A- general information.

Technical Interpretation - External

15 October 2009 External T.I. 2009-0329531E5 - Employer reimbursed recreational dues

Unedited CRA Tags
6(1)(a)

Principal Issues: Whether an employer's reimbursement of certain employees' membership dues at a recreational facility is a taxable benefit to the employees.

Position: Question of fact. In this situation, yes.

Reasons: Based on the information provided, the recreational facilities fees are not provided to all employees (whether or not in-house) and do not appear to be principally for the benefit of the employer.

15 October 2009 External T.I. 2009-0333101E5 - Travel and Motor Vehicle Allowances

Unedited CRA Tags
6(1)(b)(vii) 6(1)(b)(vii.1) 6(1)(b)(x)

Principal Issues: Question on taxability of employer-provided reimbursements and/or allowances for travel and motor vehicle expenses where the travel appears to be outside the metropolitan area where the employee has an RPE.

Position: General comments only.

Reasons: The law.

13 October 2009 External T.I. 2009-0342091E5 F - Revenu d'emploi exonéré par Conv.- frais de garde

Unedited CRA Tags
2(2), 63, 110(1)f)(i), 248 "revenu imposable"; Art. XIX Conv. Canada-France
employment income that was Treaty-exempt was to be reported (on a separate line), with the s. 110(1)(f)(i) deduction then claimed
child care expenses could only be claimed by the spouse with the lower net income, notwithstanding that her income was Treaty-exempt

Principales Questions: 1) Comment un contribuable doit-il procéder afin de réclamer une exonération de l'impôt canadien dont il bénéficie en vertu du paragraphe 1 de l'Article XIX de la Convention Canada-France ?
2) Est-ce que des frais de garde d'enfants admissibles peuvent être réclamés au titre de déduction par le conjoint de la personne qui bénéficie d'une exonération de l'impôt canadien en vertu d'une Convention malgré qu'il ait un revenu net plus élevé ?

Position Adoptée: 1) Commentaires généraux.
2) Non.

Raisons: Application de la LIR.

13 October 2009 External T.I. 2009-0322421E5 - Form T2210 and subsection 20(2.1)

Unedited CRA Tags
20(2.1) Regulation 4001

Principal Issues: Whether a policyholder is required to file Form T2210 with the Minister by the date prescribed under Regulation 4001 for the purposes of subsection 20(2.1) of the Act.

Position: No.

Reasons: The Act does not require that a completed Form T2210 be filed with the Minister by the date prescribed under Regulation 4001. However, copies of the completed form should be maintained by the policyholder and insurer in accordance with Section 230, and subject to request for review by the Canada Revenue Agency pursuant to Section 231.2.

8 October 2009 External T.I. 2009-0338861E5 - Backdating of a completed transaction

Unedited CRA Tags
20(1)(c)

Principal Issues: Whether reassessment can be made based on retroactive change to a certain transaction

Position: General Comments provided

7 October 2009 External T.I. 2009-0329681E5 - Indian Tax Exemption--Overseas

Unedited CRA Tags
81(1)(a)

Principal Issues: Is an Indian taxable in Canada on income earned from employment overseas?

Position: Likely the income is taxable.

Reasons: It is unlikely that this employment income would be situated on a reserve, as that term is defined in the Indian Act.

6 October 2009 External T.I. 2008-0286721E5 - Principal residence exemption

Unedited CRA Tags
40(2)(b); 54; 45(2); 45(3),(4)

Principal Issues: 1) Whether a property can be designated as the taxpayer's principal residence for four years while the taxpayer is working overseas and the property is rented out to tenants and, 2) upon the taxpayer's return to Canada in 4 years, if in the fifth year the taxpayer continues to rent out the property to tenants but occupies a portion of the house for infrequent periods, whether the property can be designated as the taxpayer's principal residence in that fifth year.

Position: 1) Yes. 2) No.

Reasons: 1. ITA 45(2). 2. Paragraph 8, IT-120R6.

6 October 2009 External T.I. 2009-0307721E5 - Education tax credit & employer assistance

Unedited CRA Tags
118.6, 118.5, 56(1)(n), 6(1)(a)

Principal Issues: 1. Will a reimbursement of tuition in respect of a student from a family member's employer preclude the student from claiming the education tax credit when the reimbursement is included in the employee's income as an employment benefit?
2. If the reimbursement is not included in the employee's income, will the student be precluded from claiming the education tax credit?

Position: 1. Generally, no.
2. It depends on the nature of the payment. If the payment is a scholarship or bursary to the student and included in the student's income under 56(1)(n), generally, the student will not be precluded from claiming the education tax credit.

Reasons: 1. Where the reimbursed tuition is included in the employee's income as a taxable employment benefit, the student family member (spouse or child of the employee) will not be considered to have received a benefit from a person with whom the student is dealing at arm's length.
2. For 2007 and subsequent years, amounts paid to employees' dependants for tuition can be treated as a scholarship or bursary based on the Bartley, Dimaria and Okonski court cases. Receiving a scholarship or a bursary from an arm's length party does not preclude a student from claiming the education tax credit.

2009-030772
XXXXXXXXXX P. Burnley
(613) 957-2100
October 6, 2009

14 September 2009 External T.I. 2009-0314721E5 - Home Renovation Tax Credit- Tree Services

Unedited CRA Tags
2009 Budget Documents

Principal Issues: Are a variety of tree services provided by the taxpayer eligible for the home renovation tax credit (HRTC)?

Position: Services including trimming, pruning, fertilization and pest and disease control do not qualify as eligible expenditures. Tree removal and stump grinding on their own will not qualify, however they may qualify as part of an eligible landscaping project or renovation such as the installation of a deck.

Reasons: The renovation or alteration must be enduring in nature and integral to the dwelling. Routine maintenance generally performed on an annual or more frequent basis does not qualify for the HRTC.

XXXXXXXXXX 2009-031472
Robert Dubis
September 14, 2009

11 September 2009 External T.I. 2009-0313891E5 - HRTC - Condominium

Unedited CRA Tags
Annex 5 of the 2009 Budget Documents

Principal Issues: 1. Can a condominium corporation claim and receive the HRTC on behalf of the condominium unit owners?
2. Is the $10,000 expenditure limit allowed for each condominium unit or for the entire job throughout the condominium building?
3. Is a condominium corporation required to send any supporting documents in order to ensure the HRTC?

Position: 1. No.
2. The $10,000 expenditure limit is the maximum an eligible individual or his or her family can claim in respect of their eligible dwellings which may include a condominium unit.
3. No.

Reasons: 1. Generally, for purposes of the Income Tax Act (ITA)(Canada), the definition of individual does not include a corporation. Therefore, a condominium corporation is not considered to be an eligible individual for purposes of the HRTC and will not be permitted to claim or receive the HRTC on behalf of the unit owners.
2. Based on the information provided in the 2009 federal budget documents
3. Based on the general policy of the CRA for any tax credit claim

XXXXXXXXXX 2009-031389
A. Mahendran
September 11, 2009

8 September 2009 External T.I. 2009-0338241E5 - Home Renovation Tax Credit- Eavestroughing

Unedited CRA Tags
2009 Budget Documents

Principal Issues: Will the cost of installing new eavestroughing qualify for the HRTC?

Position: Yes. The cost of installing new eavestroughing will qualify for the HRTC providing the property is an eligible dwelling.

Reasons: Annex 5 2009 Federal Budget documents.

XXXXXXXXXX 2009-033824
Robert Dubis
September 8, 2009

Technical Interpretation - Internal

15 October 2009 Internal T.I. 2009-0324741I7 - Effective Refund Interest Date for Part XIII Tax

Unedited CRA Tags
s. 212 ITA s. 227(6) and (7) ITA s. 215 ITA s. 164(3) ITA

Principal Issues: What is the appropriate date for calculating refund interest on Part XIII tax.

Position: The effective interest date for calculating refund interest on Part XIII tax is the later of the date of the assessment and the date on which the payment arose.

Reasons: S. 164(3)(c)(ii).

7 October 2009 Internal T.I. 2009-0332871I7 - Qualified Farm Property

Unedited CRA Tags
110.6(1) 110.6(1.3) 70(10)

Principal Issues: Can farm property previously owned by a third-party (ineligible owner for purposes of subsection 110.6(1) of the Income Tax Act), even though the property was owned before the third-party by the great-grandfather (an eligible owner for purposes of subsection 110.6(1)), qualify as "qualified farm property" under subsection 110.6(1)?

Position: No.

Reasons: The period of continuous ownership of the property by the great-grandfather and the taxpayer was interrupted by the acquisition of the property by the third-party.