Income Tax Severed Letters - 2010-11-19

Ruling

2010 Ruling 2010-0362371R3 - First Nation - 149(1)(c); Limited Partnership

Unedited CRA Tags
149(1)(c)

Principal Issues: Will the income of the Limited Partnership be exempt from income tax because the First Nation is a public body performing a function of government for purposes of paragraph 149(1)(c) of the Act?

Position: Yes.

Reasons: The First Nation has passed bylaws pursuant to section 81 of the Indian Act and performs several functions of government. It is governed by a XXXXXXXXXX accountable to their members and has entered into agreements with the Province of XXXXXXXXXX.

Technical Interpretation - External

10 November 2010 External T.I. 2010-0364751E5 F - Frais de repas des camionneurs

Unedited CRA Tags
67.1(1.1), 67.1(5)
Summary Under
Tax Topics - Income Tax Act - Section 67.1 - Subsection 67.1(1.1)
s. 67.1(1.1) extended to apply to trucking employers

Principales Questions: Est-ce que les employeurs des conducteurs de grand routier peuvent bénéficier de l'augmentation des pourcentages déterminés quant à la somme payée ou payable pour des aliments et boissons?

Position Adoptée: Oui.

Raisons: Selon l'avant-projet de propositions législatives relatives à l'impôt sur le revenu du Ministères des Finances daté du 5 novembre 2010, comprenant notamment des modifications techniques proposées à l'actuel paragraphe 67.1(1.1). Notes explicatives sur les propositions législatives concernant la Loi de l'impôt sur le revenu de novembre 2010. Communiqué du Ministère des Finances 2010-105 du 5 novembre 2010.

8 November 2010 External T.I. 2010-0361641E5 - Deductibility of Legal Fees

Unedited CRA Tags
8(1)b), 60(o.1).

Principal Issues: Are legal fees incurred by an individual to take action against the eventuality of having a loss of salary deductible for income tax purposes?

Position: It is a question of fact. In this case, the legal fees were not incurred to establish a right to any amount owed to the taxpayer by his employer.

Reasons: Paragraphs 8(1)(b).

5 November 2010 External T.I. 2010-0379021E5 - solely in connection with and as part of news prog

Unedited CRA Tags
212(5)(b)

Principal Issues: A Canadian resident corporation operates as a television channel. It pays a fee to a non-resident distributor of sport media programming. The payer uses the highlights of professional sports games, features, and other programming in its sports news and sports content analysis broadcasts. Can we say that those highlights are used "solely in connection with and as part of a news program produced in Canada" and be exempted from withholding under 212(5)(b)?

Position: No.

Reasons: According to the CRTC's television program categories, sports content analysis or magazine shows are not news programs. http://www.crtc.gc.ca/canrec/eng/tvcat.htm

8 September 2010 External T.I. 2010-0369311E5 - Transactions with a Delaware LLC

Unedited CRA Tags
20(11); 20(12); 126; 69(1)(b)(i); Paragraph 2 of Article XXIV; 91(1); 15(1)

Principal Issues: A. What is the tax treatment for the transfer of personally owned shares to your single member owned LLC registered in Delaware, United States (the "US LLC")?
B. What foreign tax credits are available on amounts distributed to you from the US LLC?
C. Can losses realized on the shares owned by the US LLC (see Question A) be available to you personally for Canadian tax purposes?
D. What are the tax implications in a situation where you transfer cash to your US LLC from a personal loan obtained by you in Canada when the US LLC repays your creditors directly?

Position: A. Possible Capital Gain or Loss to 69(1)(b)(i)
B. Foreign Tax Credits may be available pursuant to 20(11); 20(12); 126
C. No
D. 15(1) Shareholder Benefit

Technical Interpretation - Internal

4 November 2010 Internal T.I. 2010-0358441I7 F - Indien, avance de salaire

Unedited CRA Tags
81(1)a)
Summary Under
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87
salary advance cannot be exempt
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(3) - Paragraph 6(3)(a)
salary advance is taxable under s. 6(3)
Summary Under
Tax Topics - Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(n)
salary repayment could generate non-capital loss
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(8) - Non-Capital Loss
s. 8(1)(n) deduction could generate NCL

Principales Questions: Est-ce qu'une avance de salaire reçue par un Indien peut bénéficier de l'exonération de 81(1)a)?

Position Adoptée: Non

Raisons: Il est impossible de connaître les facteurs de rattachement à l'avance

3 November 2010 Internal T.I. 2010-0383561I7 - Payroll withholdings by non-resident employer

Unedited CRA Tags
153(1)(a)
Summary Under
Tax Topics - Income Tax Act - Section 153 - Subsection 153(1) - Paragraph 153(1)(a)

Principal Issues: Does a U.S. resident employer have to withhold Canadian payroll deductions from salary or wages paid to a Canadian resident employee who renders services only in the U.S.?

Position: Yes

Reasons: The employer must withhold because the employee is resident in Canada. However, the employee may be able to have withholdings reduced for the relevant foreign tax credit.