Income Tax Severed Letters - 2010-07-02

Principal Issues: Whether baby wipes qualify under paragraph 118.2(2)(i)

Position: No

Reasons: The reference to other products in the statement "for or in respect of diapers, disposable briefs, catheter, catheter trays, tubing or other products" is restricted to the same class of products as diapers, disposable briefs, etc.
LEGISLATIVE REFERENCE: 118.2(2)(i.1)
HAA: No paper record.

Principal Issues: One time change from expense carryforward to credit carryforward and whether the unused medical expenses from Plan Year 1 could be used against new credits allocated in Plan Year 2.

Position: One time change may be acceptable.

Reasons: Consistent with prior interpretation

Principal Issues: 1- Degree of independence and criteria to be met in choosing the trustee or trustees for a health and welfare trust. 2- Does a trust account need to be opened for each employee or is one trust account with a financial institution sufficient?

Position: 1- Question of fact. 2- Generally, a trust bank account for each employee is not necessary.

Reasons: 1- Question of fact as to whether trustee or trustees are independent of the employer. 2- Generally, it would not be necessary to keep a separate trust bank account for each employee. Proper internal records for each employee should be maintained to ensure compliance with the Income Tax Act and its reporting requirements.

Principal Issues: Are legal fees deductible if incurred to (1) settle an estate and (2) to secure the payment of dividends?

Position: (1) No. (2) Possibly

Reasons: (1) Generally, legal fees incurred for the purpose of settling an estate (taking possession of the property of the deceased, obtaining probate, distribution of a deceased's property) are personal expenses that are non-deductible. (2) Legal fees incurred to establish a right to income are generally considered to be capital in nature and non-deductible. Where it can be demonstrated that there is a pre-existing right to property income (such as dividends) and there is a direct connection between the legal fees incurred and efforts to enforce the payment of that property income, the expense may be deductible in the taxation year in which it was incurred.

Principal Issues: 1. Whether a wheelchair cushion qualifies as a medical expense. 2. Whether bath cushions qualify as medical expenses.

Position: 1. Yes. 2. No.

Reasons: 1. 118.2(2)(i). 2. Bath cushions are not provided for under ss. 118.2(2) or Regulation 5700.

Principal Issues: Whether hair removal procedures qualify for the purposes of the METC and for PHSPs.

Position: Generally no.

Reasons: Hair removal procedures are generally for enhancing a person's physical appearance.

Principal Issues: 1.will rooftop solar panels & equip qualify for inclusion in class 43.2 under various scenarios subject to the specified energy rules limiting CCA . 2.will claiming cca jeopardize the principal residence exemption?

Position: 1.provided expenses incurred for the purpose of producing income & other conditions of the class are met; 2. the principal residence claim will not be jeopardized provided no cca claim is made on the building itself & the earning of income is ancillary to the residence use.

Reasons: 1. 1102, 1100(25); 1100; 2.45(2) & IT120-r6

Principales Questions: 1) Est-ce qu'un gain en capital réalisé par un citoyen portugais résident du Canada et découlant de la disposition d'un immeuble situé au Portugal serait imposable au Canada ?
2) Dans l'affirmative, le particulier pourrait-il invoquer le bénéfice du paragraphe 1 de l'Article 23 de la Convention Canada - Portugal ?

Position Adoptée: 1) Oui.
2) Non.

Raisons: 1) et 2) Libellé de la LIR et de la Convention Canada - Portugal.