Income Tax Severed Letters - 2011-07-01

Ruling

2011 Ruling 2010-0366511R3 F - Réorganisation-SR&ED

Unedited CRA Tags
37(1), 37(8), 18(1), 96(1), 127(9).

Principales Questions: 1. Est-ce qu'une nouvelle société créée, détenue entièrement par un commandité, qui effectuera des activités admissibles de RS&DE auparavant exercées par la société en commandite pourra avoir droit aux crédits d'impôt à l'investissement à l'égard de la RS&DE?
2. Est-ce que la société en commandite peut déduire dans le calcul de son revenu le montant des redevances qu'elle versera pour les droits d'usage et de jouissance quant aux résultats des activités de RS&DE effectuées par cette nouvelle société ?

Position Adoptée: Sujet aux conditions qui sont spécifiées dans la demande de décision anticipée, nous répondons favorablement aux demandes qui nous sont adressées.

2010 Ruling 2009-0350481R3 - Reorganization of a REIT

Unedited CRA Tags
80(1), 107.4(1), 132.2(1), 132(6), 253.1, 122.1(1), 245(2)

Principal Issues: Rulings (1) Whether the settlement of some debts will result in a "forgiven amount" as defined in subsection 80(1), (2) Will the transfer of Holding Trust assets to Trust B be a "qualifying disposition" within the meaning of subsection 107.4(1), (3) Whether the transfer of property from Trust B to the Fund will constitute a "qualifying exchange" in subsection 132.2(1), (4) Whether the proposed transaction will affect the Funds qualification as a mutual fund trust, (5) Whether 253.1 of the Act will apply, (6) Whether the proposed transactions cause the Fund to exceed the Normal Growth Guidelines as set out by the Dept. of Finance on December 15, 2006, (7 ) Whether the consolidation of the Fund units held by the unit holders will result in a disposition of the Fund units by the unit holders, (8) Whether subsection 245(2) will be applied to re-determine any of the tax consequences confirmed in the rulings given. Opinion: Whether proposed subsection 143.3(4) will apply for purposes of determining the forgiven amount in respect of the Holding Trust notes.

Position: Rulings (1) No, (2) Yes, (3) Yes, (4) No, (5) Yes, (6) No, (7) No, (8) No Opinion: No

Reasons: In compliance with the law

Technical Interpretation - External

23 June 2011 External T.I. 2011-0397881E5 - 149(1)(l) Entity - Use of Land by Shareholders

Unedited CRA Tags
15(1); 149(1)(l); 149(5)

Principal Issues: Whether there is a benefit to a shareholder for use of property of a 149(1)(l) corporation at a cost below FMV.

Position: Maybe.

Reasons: If a shareholder is able to use property of a 149(1)(l) corporation below FMV there may be a benefit to the shareholder under 15(1).

22 June 2011 External T.I. 2010-0387391E5 F - Allocations pour véhicule à moteur

Unedited CRA Tags
6(1)b)(vii.1); 6(1)b)(x); 8(1)h.1)
allowance taxable (but s. 8(1)(h.1) deduction) where 2 different rates
employees entitled to s. 8(1)(h.1) deduction where they received an allowance that was taxable under s. 6(1)(b)(x)

Principales Questions: Dans la situation présentée, relativement au déplacement entre le lieu de résidence des employés et les chantiers où ces derniers sont attitrés, est-ce que les allocations pour l'usage d'un véhicule à moteur qui leur sont versées doivent être incluses dans le calcul de leur revenu? Est-ce que ces derniers pourront déduire les frais afférents à un véhicule à moteur relativement à ce déplacement?

Position Adoptée: Questions de fait. Voir nos commentaires ci-dessous.

Raisons: Loi de l'impôt sur le revenu et positions antérieures.

17 June 2011 External T.I. 2011-0403541E5 - "employer"/ "person"

Unedited CRA Tags
Subparagraph 2(b) of Article XV of the Canada-US Treaty

Principal Issues: At the 2008 TEI-CRA Liaison Meeting, the CRA stated that whether the word "person" or the word "employer" is used in subparagraph 2(b) of Article XV of the Fifth Protocol to the Canada-United States Convention (the "Treaty"), the intention is to determine who, in fact, is exercising the functions of employer. In making this determination, the CRA generally will refer to principles developed under Canadian jurisprudence and the Quebec Civil Code. Has CRA changed its views?

Position: No change in position.

13 June 2011 External T.I. 2011-0394061E5 - clergy residence deduction

Unedited CRA Tags
8(1)(c)

Principal Issues: Whether an individual employed as a full-time Student Ministries Associate with XXXXXXXXXX , qualifies for a clergy residence deduction pursuant to paragraph 8(1)(c) of the Act.

Position: Inconclusive.

Reasons: We do not have enough information to determine if the individual satisfies both the status and function tests.

8 June 2011 External T.I. 2011-0398021E5 - Overtime meal allowances

Unedited CRA Tags
Para. 6(1)(a), 6(1)(b)

Principal Issues: 1. Whether the $17 reasonable overtime meal allowance is a daily allowance or an allowance per meal. 2. Whether more than one meal allowance may be provided during a period of overtime without being considered a taxable benefit.

Position: 1. Per meal. 2. In this case, yes.

Reasons: 1 CRA's administrative policy allows for $17 per meal where all conditions of the administrative policy are met. 2. CRA's administrative policy allows for more than one meal allowance being provided during a period of continuous overtime worked as long as all conditions of the policy are met.

2 March 2011 External T.I. 2010-0378071E5 F - CIFM - Quadriporteur

Unedited CRA Tags
118.2(2); 118.2(2)(i); 118.2(1)
scooter can qualify as “wheelchair” where it is acquired in lieu of one
Words and Phrases
wheelchair

Principales Questions: Un contribuable peut-il réclamer le crédit d'impôt pour frais médicaux relativement à l'achat d'un quadriporteur?

Position Adoptée: En l'espèce non.

Raisons: L'achat d'un quadriporteur donnera droit au crédit d'impôt pour frais médicaux lorsqu'il est acquis en place et lieu d'un fauteuil roulant conventionnel, c'est-à--dire, lorsque le contribuable a peine à, ou ne peut, marcher.

Conference

10 June 2011 Roundtable, 2011-0404641C6 F - Shareholders Agreement and FMV

Unedited CRA Tags
85(1)(e.2), 15(1), 51(2), 86(2)
examples of clauses reducing the FMV of freeze preferred shares
freeze preferred shares must not have a clause that impairs their FMV, e.g., retractability for a NIB term note

Principal Issues: Provide examples of clauses in a shareholders agreement that would reduce the FMV of freeze shares.

Position: Gave the following three examples

Reasons: The FMV of freeze shares is negatively affected by such clauses.

20 May 2011 Roundtable, 2011-0398361C6 - Loss Consolidations

Principal Issues: Has the CRA's position regarding provincial tax implications of loss consolidations within corporate groups changed since the Department of Finance released the Consultation Paper on the Taxation of Corporate Groups in November 2010?

Position: No

19 May 2011 IFA Roundtable, 2011-0404521C6 - calculation of tax-free surplus balance

Unedited CRA Tags
draft 88(1)(d)(ii)(B)
waiving of surplus computation on bump and run transaction

Principal Issues: Administrative position regarding draft 88(1)(d)(ii)(B)

Position: See below.

Reasons: To alleviate the administrative burden of computing the tax-free surplus balance where such a calculation does not impact tax consequences to the taxpayer.

Technical Interpretation - Internal

29 June 2011 Internal T.I. 2011-0408171I7 - Crossover Utility Vehicles

Unedited CRA Tags
248(1) "automobile"

Principal Issues: Whether a CUV is considered similar to a pick-up truck or van for the purposes of paragraph (e) in the definition of "automobile" in subsection 248(1) of the Act.

Position: Question of fact.

Reasons: To the extent that a CUV has the same utility and function as an SUV, it will be considered a similar vehicle to a pick-up truck or van for the purposes of paragraph (e) in the definition of "automobile" in subsection 248(1) of the Act.

22 June 2011 Internal T.I. 2011-0409301I7 - Shareholder Benefit

Unedited CRA Tags
15(1) and 214(3)(a)

Principal Issues: Does Parent's sale of the shares of Canco to another non-resident subsidiary of Parent, for proceeds in excess of the FMV of such shares, give rise to a 214(3)(a) deemed dividend.

Position: Question of fact.

Reasons: Not if there is no appropriation of any of Canco's funds and Canco has not been "impoverished" by the sale of its shares.