Income Tax Severed Letters - 2011-09-23

Administrative Letter

6 September 2011 Administrative Letter 2011-0418391E2 - Overdue Advance Income Tax Rulings Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985, c. F-11; Interest and Administrative Charges Regulation, S.O.R./96-188, s. 2 def. of "due date". .

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Rulings Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided for otherwise, is 30 days after the day on which a demand for payment is issued.

6 September 2011 Administrative Letter 2011-0418311E2 - Overdue Advance Income Tax Ruling Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985, c. F-11; Interest and Administrative Charges Regulation, SOR/96-188, s. 2 def. of "due date".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided of otherwise, is 30 days after the day on which a demand for payment is issued.

6 September 2011 Administrative Letter 2011-0418371E2 - Overdue Advance Income Tax Ruling Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C., 1985, c. F-11; Interest and Administrative Charges Regulation, S.O.R./96-188, s. 2 def. of "overdue".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date", unless provided for otherwise, is 30 days after the day on which a demand for payment is issued.

6 September 2011 Administrative Letter 2011-0418351E2 - Overdue Advance Income Tax Ruling Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985 c. F-11; Interest and Administrative Charges Regulation, S.O.R./96-188, s. 2 def. of "due date".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided for otherwise, is 30 days after the day on which a demand is issued.

6 September 2011 Administrative Letter 2011-0418341E2 - Overdue Advance Income Tax Ruling Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985, c. F-11; Interest and Administrative Charges Regulation, S.O.R./96-188, s. 2 def. of "due date".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided for otherwise, is 30 days after the day on which a demand for payment is issued.

6 September 2011 Administrative Letter 2011-0418331E2 - Overdue Advance Income Tax Ruling Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985 c. F-11; Interest and Administrative Charges Regulation, S.O.R./96-188, s. 2 def. of "due date".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided for otherwise, is 30 days after the day on which a demand for payment is issued.

6 September 2011 Administrative Letter 2011-0418361E2 - Overdue Advance Income Tax Ruling Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985, c. F-11; Interest and Administrative Charges Regulation, S.O.R./96-188, s. 2 def. of "overdue".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided for otherwise, is 30 days after the day on which a demand for payment is issued.

6 September 2011 Administrative Letter 2011-0418321E2 - Overdue Advance Income Tax Ruling Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985, c. F-11; Interest and Administrative Charges Regulation, S.O.R.96/188, s. 2 def. of "due date".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided for otherwise, is 30 days after the day on which a demand for payment is issued.

6 September 2011 Administrative Letter 2011-0418401E2 - Overdue Advance Income Tax Rulings Fees

Unedited CRA Tags
s. 155.1 Financial Administration Act, R.S.C. 1985, c. F-11; Interest and Administrative Charges Regulation, S.O.R./96-188, s.2 def of "due date".

Principal Issues: When are advance income tax ruling fees due?

Position: 30 days after invoice is issued.

Reasons: Fees are billed under the authority of the Advance Income Tax Ruling Fees Order whether or not the request for the ruling is withdrawn. Section 155.1 of the Financial Administration Act provides for the imposition of interest in accordance with the related regulations. Under the definition of "due date" in section 2 of the Interest and Administrative Charges Regulation, the due date, unless provided for otherwise, is 30 days after the day on which a demand for payment is issued.

Technical Interpretation - External

20 September 2011 External T.I. 2011-0405191E5 - Medical marijuana - whether it qualifies for METC

Unedited CRA Tags
118.2(2)(u)

Principal Issues: Whether medical marijuana and related services qualify as eligible medical expenses for purposes of the medical expense tax credit.

Position: Question of fact.

Reasons: The medical marijuana would have to meet the conditions specified in paragraph 118.2(2)(u) and the services would have to meet the conditions specified in paragraph 118.2(2)(a)

16 September 2011 External T.I. 2011-0420111E5 - Personal Income Tax - Emigrating from Canada

Unedited CRA Tags
212(1)(h); 217; 233.3

Principal Issues: 1. If a Canadian citizen leaves Canada, to live in a foreign country that has no tax treaty with Canada and this Canadian citizen is receiving CPP and OAS, do the payments continue to be mailed to this former Canadian citizen in the new country of residence?
2. If payments of CPP and OAS continue to be made, how much is withheld for income tax to the Canada Revenue Agency in percentage, if monthly total CPP and OAS payments total $1,500?
3. If investments in Canada total $2,000 per year, how much is withheld for income tax to the Canada Revenue Agency in percentage?
4. Can this Canadian citizen return to Canada to take up residency without process, other than notification to Canada Revenue Agency?
5. Can this Canadian citizen continue to own investments or property in Canada if moving to and becoming resident in another country?
6. Am I correct in interpreting the Guide that if a home is purchased in a foreign country, and the home has a value of under Canadian $100,000, that no income tax, Canadian, is charged on the home, even if it is sold? Would Capital Gains apply?

Position: 1. Yes.
2. 25% subject to treaty or a section 217 election.
3. Depends on the particular situation.
4. Unable to comment.
5. Depends on the particular situation.
6. See response.

Reasons: 1. Based on our research. See response.
2. Legislation
3. Legislation
4. Question is not with the scope of CRA.
5. See response.
6. See response.

12 September 2011 External T.I. 2011-0397731E5 F - Crédit d'impôt pour frais médicaux

Unedited CRA Tags
118.2(2)a); 118.2(2)m)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 5700 - Section 5700 - Paragraph 5700(h)
"hospital bed" does not extend to all types of adjustable beds
Words and Phrases
hospital bed
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(a)
aquatherapy classes (or pain management courses) do not qualify if non-qualified payee

Principales Questions: Diverses dépenses pourront-elles donner droit au crédit d'impôt pour frais médicaux?

Position Adoptée: Question de fait. En l'espèce non.

Raisons: Loi de l'impôt sur le revenu. Voir les motifs ci-dessous.

12 September 2011 External T.I. 2011-0416051E5 - Subsection 13(29) Election

Unedited CRA Tags
13(29), 96(1)

Principal Issues: Is an election under subsection 13(29) available when a long-term project is carried on by a partnership?

Position: Yes.

Reasons: The law.

6 September 2011 External T.I. 2010-0389011E5 F - L'interprétation de " est en droit de recevoir"

Unedited CRA Tags
13(7.1)
Summary Under
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.1)
taxpayer is entitled to receive Quebec M&P credit at end of year in which the eligible expenditures were incurred
Words and Phrases
entitled to receive

Principales Questions: Quand-est ce qu'un contribuable " est en droit de recevoir" le montant du crédit d'impôt pour investissement relatif au matériel de fabrication et de transformation du Québec (" le Crédit ").

Position Adoptée: Si un contribuable a encourus des frais admissibles aux fins de l'article 1029.8.36.166.43 de la Loi de l'Impôt au cours d'une année d'imposition, nous somme d'avis que le contribuable sera en droit de recevoir le Crédit à la fin de cette année d'imposition.

Raisons: Selon notre compréhension de l'administration du Crédit qui relève du Ministre du revenu du Québec, le formulaire prescrit ne doit pas être considéré comme étant une condition important pour obtenir le Crédit.

11 August 2011 External T.I. 2010-0376171E5 - Spousal Trust

Unedited CRA Tags
73(1.01)(c)(i), 104(13), 104(24)

Principal Issues: 1. Whether the spouse is entitled to receive all income of the trust that arises before her death where she has the discretion not to receive the income in a particular year. 2. Whether income of the spousal trust is payable to the spouse where the spouse directs that the income from the trust for a particular year not be paid to her but retained by the trust to be paid at a later date.

Position: 1. Yes 2. Yes

Reasons: Entitled to receive all of the income of the trust means to have a legal right to enforce payment of that income. As the spouse is entitled to enforce payment of the income earned by the trust for a year that income is payable to the spouse and included in the spouse's income even if the trust retains that income until a subsequent year.

Technical Interpretation - Internal

9 September 2011 Internal T.I. 2011-0398111I7 - Disposition of Land for no Proceeds

Unedited CRA Tags
9

Principal Issues: Is the transfer of land by a land developer to a golf club builder for nil proceeds a barter transaction?

Position: While we agree with the view that this transaction otherwise meets the definition of a "barter" transaction", it is our view that a developer would be not be required to recognize a gain on the disposal provided that the developer consistently reallocates the cost of the transferred land to the remaining land inventory (to be expensed as the relevant lots are subsequently sold and income is recognized).

Reasons: Previous positions taken.

8 September 2011 Internal T.I. 2011-0411121I7 - Exigibility of Interest on Foreign Tax Adjustments

Unedited CRA Tags
s. 126(2), 161(6.1), 248(1); Reg. 5301(10).

Principal Issues: Whether interest is exigible on an adjustment to foreign tax?

Position: 1. Interest is exigible on the adjustment to Canadian tax payable; however it is not charged for the first 90 days after a taxpayer is first advised of the adjustment.
2. No interest is exigible on any deficient monthly instalment amounts.

Reasons: 1. s. 161(6.1).
2. Reg. 5301(10) and s. 248(1).

1 September 2011 Internal T.I. 2011-0410361I7 - Floating fiscal periods

Unedited CRA Tags
249(3); 249(1); 249.1(1)

Principal Issues: Would CRA accept a 2009 income tax return form for a fiscal period that started on December 29, 2008 and ended on January 3, 2010

Position: Yes.

Reasons: Subsection 249(3)
September 1st, 2011

25 August 2011 Internal T.I. 2011-0396021I7 - Reallocation of Interest

Unedited CRA Tags
161.1, 220(3.1), 221.2(1).

Principal Issues: Whether interest can be reallocated pursuant to s.161.1 between a predecessor corporation prior to an amalgamation and the new corporation resulting from the amalgamation.

Position: The company can request a re-appropriation of tax paid under 221.1(1). The amount re-appropriated reduces the amount of arrears owed on that account. Any remaining arrears interest would need to be dealt with by operation of s.220(3.1).

Reasons: See below.

16 August 2011 Internal T.I. 2011-0401721I7 F - Loss Utilization

Unedited CRA Tags
111(5), 88(1.1)
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) - Paragraph 88(1.1)(e)
factors in determining whether investments are held as a business
Summary Under
Tax Topics - Income Tax Act - Section 111 - Subsection 111(5) - Paragraph 111(5)(a)
holding company whose only sources of income were inter-affiliate loan and subsidiary shares had losses from property rather than business

Principal Issues: Whether non-capital losses incurred prior to an acquisition of control can be carried forward and used by another corporation in a taxation year ended after the acquisition of control.

Position: No. In the particular situation the source of the losses was from property. As such, non-capital losses from property incurred in a taxation year ended before an acquisition of control cannot be carried forward to a taxation year ended after the acquisition of control.

Reasons: According to the law and the particular facts.