Income Tax Severed Letters - 2010-01-08

Ruling

2009 Ruling 2009-0308611R3 - Alter Ego Trust

Unedited CRA Tags
73(1); 40(3.4); 40(3.6); 118.1(1)

Principal Issues: (1) Will subsection 73(1) apply to the contribution of the Existing Aco Shares and the Existing Bco Shares to the AE Trust? (2) Will the transmission of the shares of Trustco from Individual A to the executors of the estate of Individual A result in an acquisition of control of Trustco, Aco or Bco? (3) As a consequence of the transactions contemplated in the Aco Share Exchange Agreement and the Bco Share Exchange Agreement, and pursuant to subsection 84(3), will the AE trust be deemed to receive a dividend? (4) Is a capital loss realized when the AE trust makes a gift of shares of capital property to the Foundation pursuant to provisions in the trust's indenture that gives its trustees the discretion to do so? (5) Will the gifts of property by the AE Trust to the Foundation be included in the trust's total charitable gifts?

Position: (1) Yes. (2) No. (3) Yes. (4) Yes. (5) Yes.

Reasons: (1) Legislative requirements are satisfied. (2) Clause 256(7)(a)(i)(C). (3) Plain reading of subsection 84(3). (4) The AE Trust will wind-up, at which point any suspended capital losses will be realized under paragraph 40(3.4(b)(i) for it will not be possible for the AE Trust to be affiliated with any person or partnership upon winding-up. (5) The trustee has absolute discretion as to whether to make the gift and the possibility exists that all the property could be gifted to an entity that is not a qualified donee.

2009 Ruling 2009-0312081R3 - Donation of Exchangeable Shares

Unedited CRA Tags
38(a.1)(iii)

Principal Issues: Whether the taxable capital gain on the disposition of exchangeable shares will be nil where the shares are exchanged for shares that are subsequently gifted to a qualified donee.

Position: Yes.

Reasons: Based on the proposed transactions, the requirements of subparagraph 38(a.1)(iii) are satisfied.

Ministerial Correspondence

18 December 2009 Ministerial Correspondence 2009-0343911M4 - Government Eco Grants

Unedited CRA Tags
9; 12(1)(x)

Principal Issues: Income tax treatment of Government of Canada ecoEnergy Retrofit grant and Province of Ontario's Home Energy Retrofit grant received by a corporation that owns a house, which it uses to earn rental income.

Position: General Comments

Reasons: IT-273R2. To extent that the expenditure is deductible as a current expense in computing the corporation's income, the grants would reduce the expense so deducted. To the extent that the expenditure is capital in nature and is part of the cost of capital property, the grants would reduce the cost of the property.

18 December 2009 Ministerial Correspondence 2009-0346581M4 F - CIRD - cotisations spéciales

Unedited CRA Tags
118.04

Principales Questions: Est-ce que des versements de cotisations spéciales faits par les copropriétaires entre le 28 janvier 2009 et 31 janvier 2010 pourront être des dépenses admissibles au CIRD même si les travaux de rénovation ou de modification se rapportant à ces cotisations spéciales ne sont effectués qu'après le 31 janvier 2010?

Position Adoptée: Pour que des versements de cotisations spéciales soient, en tout ou en partie, des dépenses admissibles au CIRD, le syndicat de copropriétaires doit engager ou effectuer des dépenses pour des biens acquis ou des services rendus dans cette période.
Les dépenses engagées ou effectuées par un syndicat de copropriétaires après le 27 janvier 2009 et avant le 1er février 2010 pour des biens acquis dans cette période seront des dépenses admissibles au CIRD, même si les travaux de rénovation ou de modification se rapportant à ces biens ne sont effectués qu'après le 31 janvier 2010. Toutefois, les dépenses engagées ou effectuées par un syndicat de copropriétaires après le 27 janvier 2009 et avant le 1er février 2010 pour des services à n'être rendus qu'après le 31 janvier 2010 ne seront pas admissibles au CIRD. Advenant la situation où des dépenses sont engagées ou effectuées par un syndicat de copropriétaires après le 27 janvier 2009 et avant le 1er février 2010 pour des travaux qui ne seront pas complétés avant le 31 janvier 2010, seulement la portion des dépenses engagées dans cette période se rapportant aux travaux qui auront été effectués dans cette période sera admissible au CIRD.

Raisons: Analyse législative.

14 December 2009 Ministerial Correspondence 2009-0338571M4 F - Crédit pour l'achat d'une première habitation

Unedited CRA Tags
118.04

Principales Questions:
Est-ce qu'un particulier qui construit lui-même son habitation en 2009 sur un fond de terre qu'il a acheté avant 2009 est admissible au CIAPH?

Position Adoptée:
Oui, une habitation dont un particulier a entrepris la construction sera considérée comme acquise par ce dernier dès qu'elle est habitable.

Raisons:

Technical Interpretation - External

8 January 2010 External T.I. 2009-0327441E5 - Issuance of T2200 Form to teachers

Unedited CRA Tags
8(1)(i)(iii)

Principal Issues: Whether a T2200 Form should be issued to teachers who pay for their own supplies.

Position: If there is no express or implied requirement for the employee to supply and pay for the supplies there is no need to issue the T2200.

Reasons: We would not expect an employer to issue a T2200 if the conditions for deduction are not met.

5 January 2010 External T.I. 2009-0317611E5 - Workspace in Home expenses

Unedited CRA Tags
8(1)(i)

Principal Issues: Whether various expenses incurred by an employee and related to a workspace in the home are deductible employment expenses. More specifically, the expenses incurred are a second telephone line, an unlimited long distance plan, monthly internet access fees and gas, hydro and water charges.

Position: Pursuant to subparagraph 8(1)(i)(iii), the expenses incurred by a salaried employee for a second telephone line and a monthly internet access fees are not deductible but that portion of the cost for a telephone plan for unlimited long distance that reasonably relates to the earning of employment income is deductible. Pursuant to paragraph 8(1)(i), a reasonable proportion of expenses paid for the maintenance of the home such as the cost of fuel, electricity and water charges will be deductible.
Pursuant to subparagraph 8(1)(f), if all the preliminary requirements are met, all the enumerated expenses are deductible for an employee earning commission income.

Reasons: The expenses incurred for a second telephone line and monthly internet access fees are not deductible under 8(1)(i)(iii) as they are not supplies consumed directly in the performance of duties of employment. The cost for an unlimited limited long distance plan qualifies as office supplies consumed insofar as the expenses relate to employment-related calls. For the cost of fuel, electricity, the CRA's position is expressed in guide T-4044.
While some other provision of the Act may restrict the deduction (e.g. section 67), if it can be established that the expenses are paid by an employee in a taxation year for the purpose of earning income from a commission sales employment, and all the requirements of subparagraphs 8(1)(f)(i) to (iv) are met, paragraph 8(1)(f) would not specifically deny their deduction unless the amount represents a payment on account of capital.

23 December 2009 External T.I. 2009-0341951E5 F - Déductibilité des frais d'emprunt

Unedited CRA Tags
20(1)e)(ii)
legal fees of lender re security package come within s. 20(1)(e)(ii)

Principales Questions: Dans le cadre d'un prêt hypothécaire servant à acquérir des placements générant différents types de revenus de biens, est-ce que les frais encourus à la suite des exigences d'une institution financière qui sont accessoires à une demande d'emprunt peuvent être déductibles en vertu de l'alinéa 20(1)e) ?

Position Adoptée: Oui

Raisons: Texte de la loi.