Income Tax Severed Letters - 2010-04-23

Ruling

2010 Ruling 2010-0359271R3 - Structured Settlement

Unedited CRA Tags
56(1)(d)

Principal Issues: An individual (Plaintiff) who is a minor, suffered serious permanent injuries as a result of a motor vehicle accident. The Plaintiff, by his father and next friend, commenced an action for damages against the driver of the other vehicle and various other defendants. Pursuant to an out-of-court settlement, the casualty insurer of a certain defendant will assign (pursuant to an Assignment and Assumption Agreement) its rights and obligations to two assignment companies (the "Assignees"), who will each then purchase a single premium annuity contract with a life insurance company to provide the proposed periodic payments to be received under a structured settlement arrangement. The Assignees will direct the life insurance company to pay the periodic payments under the annuity contract to a Public Trustee on behalf of the Plaintiff, such persons as may be appointed the Trustee of the Plaintiff's estate or the Plaintiff's estate, as the case may be. Will such payments be taxable in the hands of the recipients?

Position: No.

Reasons: The terms of the structured settlement are consistent with the CRA's position as set out in paragraph 5 of Interpretation Bulletin IT-365R2.

2009 Ruling 2009-0344191R3 - Loss Consolidation

Unedited CRA Tags
20(1)(c)

Principal Issues: Is the loss utilization arrangement acceptable?

Position: Yes

Reasons: meets our published position

XXXXXXXXXX 2009-034419 XXXXXXXXXX , 2009

Ministerial Correspondence

16 April 2010 Ministerial Correspondence 2010-0359201M4 - Public transit pass credit

Unedited CRA Tags
118.02

Principal Issues: Why XXXXXXXXXX program users are not eligible for the transit pass credit.

Position: Does not meet definition of public commuter transit services.

Reasons: Definition under 118.02(1).

24 March 2010 Ministerial Correspondence 2010-0354961M4 - HRTC - condo complex currently under construction

Unedited CRA Tags
Section 118.04 of the ITA

Principal Issues: Whether a corporation can claim the HRTC for expenditures incurred in constructing fifty new condominium units and get a refund of $1350.00 on each unit.

Position: No.

Reasons: The HRTC can only be claimed by individuals for qualifying expenditures incurred for qualifying renovations made in respect of their eligible dwellings. Furthermore, the condominium units, which are currently under construction, do not qualify as eligible dwellings during the eligible period because they are not owned by an individual and not ordinarily inhabited by the individual, common-law partner, or their children during that period.

11 March 2010 Ministerial Correspondence 2010-0356441M4 - HRTC - Qualifying Expenditure

Unedited CRA Tags
Subsection 118.04(1) of the ITA

Principal Issues: Do the individual unit owners of a condominium qualify for the HRTC for expenditures incurred for major renovations completed between January 1, 2009 and February 1, 2010 under an agreement signed in 2007?

Position: No.

Reasons: Pursuant to subsection 118.04(1) of the ITA, expenditures for services received or goods acquired under agreements entered into before January 28, 2009, do not qualify for the HRTC.

Technical Interpretation - External

16 April 2010 External T.I. 2009-0348641E5 - Indian Employment Income - Trucking Industry

Unedited CRA Tags
81(1)(a)

Principal Issues: Is all or part of the employment income of an Indian who transports goods to and from and through reserves exempt from tax?

Position: Depends.

Reasons: The travel time considered must be a duty of employment and must be compensated. Employment duties performed on a reserve may be relevant in determining exempt income if not merely incidental. Travel time between reserves may in some cases be relevant in the transport industry where the trip both begins and ends on reserve.

2009-034864
XXXXXXXXXX Officer: Lori Merrigan
(613) 957-8979
April 16, 2010

15 April 2010 External T.I. 2009-0311091E5 - personal versus employment travel

Unedited CRA Tags
6(1)(e)

Principal Issues: 1. Does travel between home and school location(s) in an employer-provided vehicle give rise to a taxable benefit?
2. Does travel between home, meetings and conferences in an employer-provided vehicle give rise to a taxable benefit?

Position: 1. It is a question of fact, but likely yes in this situation
2. It is a question of fact.

Reasons: 1. Any location at or from which the employee regularly reports for work or performs the duties of employment is generally considered a regular place of employment. An employee can have more than one regular place of employment, which can change from time to time because of the nature of the employment situation. Travel between the employee's home and a regular place of employment is personal travel and the use of an employer's vehicle for this travel would give rise to a taxable benefit.
2. It is unclear whether the meetings and conferences are held with sufficient regularity or at locations such as would constitute a regular place of employment.

14 April 2010 External T.I. 2010-0356901E5 F - RAP- Rétroactivité

Unedited CRA Tags
146.01(1)e) "montant admissible principal"
Summary Under
Tax Topics - Income Tax Act - Section 146.01 - Subsection 146.01(1) - Regular Eligible Amount - Paragraph (e)
ownership of a home whose purchase was voided did not count

Principales Questions: Aux fins de l'alinéa e) de la définition de "montant admissible principal au paragraphe 146.01, peut-on considérer qu'un contribuable n'a pas été propriétaire d'une habitation lorsqu'en vertu du C.c.Q., une vente est réputée n'avoir jamais existé?

Position Adoptée: Oui

Raisons: Nous acceptons, pour les fins du RAP, de considérer qu'un contribuable n'a pas été propriétaire d'une habitation dont le contrat d'achat a été annulé avant le moment du retrait.

14 April 2010 External T.I. 2008-0293981E5 F - Loi de 2007 sur les impôts de l'Ontario

Unedited CRA Tags
46 LI 48 (4) LI
Summary Under
Tax Topics - Other Legislation/Constitution - Ontario - Taxation Act 2007 - Section 46 - Subsection 46(1) - Transition Time
amalgamation in 2008 results in a transition time corresponding to the amalgamation time
Summary Under
Tax Topics - Other Legislation/Constitution - Ontario - Taxation Act 2007 - Section 46 - Subsection 46(1) - Eligible pre-2009 Winding-up
completion time does not occur until formal dissolution

Principales Questions: 1. Quelle est la date de transition d'une société issue d'une fusion dans une situation où les deux sociétés remplacées ont une date de transition?
2. Quel est l'objectif de l'alinéa a) de la définition de Liquidation antérieures à 2009 admissibles?
3. Quel est l'objectif de l'alinéa b) de l'élément I de la disposition 1 du paragraphe 48(4) LI?

Position Adoptée: 1. Dans cette situation, la société issue de la fusion n'aura pas de date de transition.
2. Commentaires généraux.
3. Commentaires généraux.

Raisons: Analyse législative.

XXXXXXXXXX 2008-029398
Landry, M. Fisc
Le 14 avril 2010

13 April 2010 External T.I. 2009-0341801E5 - RRSP Investment Mortgage Foreclosure

Unedited CRA Tags
146(1), 146(8), 149(9)

Principal Issues: Treatment of legal fees and recovered funds.

Position: Funds recovered in a legal action which relates to the investment owned by the RRSP should be deposited into the RRSP. No amount will be required to be included in the annuitant's income for the taxation year as a result of the monies derived from the settlement of the legal action provided that the amounts are paid directly or through a solicitor to the trustee of the RRSP. Any legal fees should be paid from the RRSP.

Reasons: The trust governed by RRSP is owner of the debt obligation secured by the mortgage.

13 April 2010 External T.I. 2010-0358941E5 F - CIRD - franchise

Unedited CRA Tags
118.04
Summary Under
Tax Topics - Income Tax Act - Section 118.04 - Subsection 118.04(1) - Qualifying Expenditure
qualifying expenditure generally not reduced by insurance reimbursement
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense
expense generally incurred by taxpayer even where reimbursed by insurance company

Principales Questions:
Est-ce qu'un montant payé à titre de franchise prévue dans un contrat d'assurance peut être admissible CIRD?

Position Adoptée:
Question de fait.

Raisons:
Analyse législative.

XXXXXXXXXX 2010-035894 I. Landry, M. Fisc.
Le 13 avril 2010

13 April 2010 External T.I. 2006-0207001E5 - Subparagraph 115(1)(a)(vi)

Unedited CRA Tags
115(1)(a)(vi)

Principal Issues: What are the tax implications when a non-resident disposes of an interest in a life insurance policy that is not a "life insurance policy in Canada" as that term is defined in subsection 138(12) of the Income Tax Act.

Position: Only general comments provided.

Reasons: Subparagraph 115(1)(a)(vi) is applicable only if the policy is a "life insurance policy in Canada". When the policy is not a "life insurance policy in Canada" the tax implications can only be determined after a review of the terms and conditions of the particular life insurance policy.

XXXXXXXXXX 2006-020700
S. Bernards
April 13, 2010

12 April 2010 External T.I. 2009-0347081E5 - Liquidating a Nil Asset from an RRSP

Unedited CRA Tags
146(1)

Principal Issues: How to remove a cease traded security from an RRSP.

Position: A security may be removed from an RRSP as a withdrawal from the RRSP by the annuitant or by sale to another party.

Reasons: Explained options available in these circumstances.

12 April 2010 External T.I. 2010-0359501E5 - Employee Birthday Gifts

Unedited CRA Tags
6(1)

Principal Issues: If an employee is allowed to select a birthday gift from a list of 15 specific items valued under $500, does this qualify for the tax exemption on non-cash gifts?

Position: Yes - Depending on the circumstances for each employee.

8 April 2010 External T.I. 2009-0318591E5 - Home Buyers' Plan and Bankruptcy

Unedited CRA Tags
ITA 146.01

Principal Issues: Can an individual's HBP balance be extinguished when the individual declares bankruptcy?

Position: No.

Reasons: The individual still has to make the annual repayment to his or her RRSP until all amounts withdrawn are repaid. If the required repayment is not made for a year, it will have to be included in the individual's income for that year. There is nothing in the legislation to allow a bankrupt individual to extinguish his or her HBP balance.

7 April 2010 External T.I. 2009-0347991E5 - Home Buyers' Plan - first-time home buyer

Unedited CRA Tags
ITA 146.01

Principal Issues: Is a taxpayer a first-time home buyer for purposes of the Home Buyers' Plan if the taxpayer resides in a home that the taxpayer rents from his or her wholly-owned corporation?

Position: Factual determination.

Reasons: The definition of "regular eligible amount" in subsection 146.01(1) refers to an owner-occupied home. Since in this case, the home is owned by a corporation that is not a cooperative housing corporation, it would not be an owner-occupied home of the taxpayer.

7 April 2010 External T.I. 2009-0322651E5 - Moving Expenses - GST Paid

Unedited CRA Tags
s.62(1); s.62(3)

Principal Issues: Is the GST paid on legal fees and on the purchase of a new home deductible as a moving expense?

Position: Provided general comments.

Reasons: Legislation

XXXXXXXXXX 2009-032265
William King
April 7, 2010

7 April 2010 External T.I. 2009-0348001E5 - HBP - withdrawal limit

Unedited CRA Tags
ITA 146.01; 146(8)

Principal Issues: Can a husband and wife each withdraw up to $25,000 from their RRSPs under the Home Buyers' Plan ("HBP") to acquire a qualifying home?

Position: Yes. Each individual is permitted to withdraw up to $25,000 from an RRSP under the HBP, provided all other conditions for participation in the HBP are met.

Reasons: The legislation permits each individual to withdraw up to $25,000.

7 April 2010 External T.I. 2010-0355221E5 F - Paragraphes 145(5) et 122(2)

Unedited CRA Tags
149(5)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(5)
NPO settled before 1972 is not grandfathered

Principales Questions: Est-ce que l'exception prévue au paragraphe 122(2) s'applique à une fiducie réputée en vertu du paragraphe 149(5)?

Position Adoptée: Non.

Raisons: La fiducie réputé n'est pas réputé être établie avant le 18 juin 1971 tel que l'exige la condition prévue à l'alinéa 122(2)a).

Technical Interpretation - Internal

13 April 2010 Internal T.I. 2009-0349411I7 - 164(6) election

Unedited CRA Tags
164(6); 107(2.001); 107(2);

Principal Issues:
1) In the given situation, is the estate eligible to make the subsection 164(6) election?
2) (a) Is the estate eligible to make the subsection 107(2.001) election when it distributes the residence to the residual beneficiary? (b) Do subsections 40(3.3) and 40(3.4) apply to the capital loss?

Position:
1) No.
2) (a) The estate can submit an application to the Minister pursuant to subsection 220(3.2) of the Act requesting an extension of time to make an election or to obtain permission to amend or revoke an election already made. 2(b) Yes

Reasons:
1) As the transfer of the residence was part of the distribution by the estate to the residual beneficiary and was not a sale to the beneficiary, no capital loss should result for the estate from the deemed disposition and, accordingly, a subsection 164(6) election cannot be made.
2)(a) Under Regulation 600, subsection 107(2.001) and subsection 164(6) are prescribed provisions as referred to in subsection 220(3.2). 2(b) The residual beneficiary is a person affiliated to the estate and the other conditions of subsection 40(3.3) are met.

12 April 2010 Internal T.I. 2009-0342871I7 F - Subvention aux naissances multiples

Unedited CRA Tags
3a)
Summary Under
Tax Topics - Income Tax Act - Section 3
Quebec multiple birth subsidy is not income

Principales Questions:
Est-ce la subvention aux naissances multiples versée par le ministère de la Santé et des Services sociaux (MSSS) conformément à la circulaire portant le numéro 2002-019 doit être incluse dans le calcul du revenu fédéral de son bénéficiaire?

Position Adoptée:Non imposable.

Raisons:
Cette subvention n'est pas un revenu provenant d'une source à être inclus dans le calcul du revenu en vertu du paragraphe 3a) et elle n'a pas à être incluse dans le calcul de revenu du bénéficiaire en vertu de toutes autres dispositions de la Loi.

22 December 2009 Internal T.I. 2009-0328141I7 F - 93(2) - Perte due à fluctuation de devises

Unedited CRA Tags
39(2), 93(2), 248(1)"dividende"; Articles X et XXIII Convention Canada-Espagne
Summary Under
Tax Topics - Income Tax Act - Section 93 - Subsection 93(2)
loss under s. 93(2) includes a loss wholly attributable to a fully-hedged FX loss
Summary Under
Tax Topics - Income Tax Act - Section 93 - Subsection 93(2.01) - Paragraph 93(2.01)(b)
relief under s. 93(2.01)(b) unavailable where matching FX gain is realized in a subsequent year

Principal Issues: 1) Est-ce que le paragraphe 93(2) s'applique afin que la perte réalisée par un contribuable lors de la disposition d'actions d'une société étrangère affiliée entièrement attribuable à une fluctuation de devises soit réduite d'un montant correspondant au montant des dividendes exonérés reçus par celui-ci ?
2) Sur quelle base un montant reçu par un contribuable canadien à l'égard d'actions d'une société étrangère affiliée doit-il être qualifié de retour de capital ou de dividende ?

Position: 1) Oui.
2) Commentaires généraux; application des règles légales auxquelles est assujettie la société non-résidente d'un point de vue corporatif.

Reasons: 1) Texte de loi.
2) Positions antérieures.NOTE: View original document in Word.