Income Tax Severed Letters - 2013-05-22

Ruling

2012 Ruling 2011-0402611R3 F - Charitable Remainder Trust

CRA Tags
118.1(3), 118.1(18)

Principales Questions: 1) Whether the gift of an interest in a trust will give rise to a tax credit pursuant to subsection 118.1(3)?
2) Whether the capital interest is non-qualified security?

Position Adoptée: 1) Yes
2) No

Raisons: 1) The requirements in IT-226R are met.
2) Legislative analysis

2012 Ruling 2011-0421971R3 F - Réorganisation d'une société de personnes

CRA Tags
245, 125

Principales Questions: Dans le cas où un associé d'une société de personnes crée une société par actions par l'entremise de laquelle des services professionnels XXXXXXXXXX seront fournis à XXXXXXXXXX, est-ce que cette société par actions serait admissible à la déduction accordée aux petites entreprises?

Position Adoptée: Question de fait. Généralement oui, si certaines conditions sont respectées.

Raisons: Selon la Loi de l'impôt sur le revenu actuelle. En accord avec des décisions anticipées précédentes.

2012 Ruling 2012-0451421R3 - Purchase of Target and bump

CRA Tags
88(1), 212.3, 245(2), 69(11), 87(11)
Summary Under
Tax Topics - Income Tax Act - Section 212.3 - Subsection 212.3(18) - Paragraph 212.3(18)(c)
deemed investment on amalgamation of subsidiary
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c.3) - Subparagraph 88(1)(c.3)(i)
guarantee
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(4) - Paragraph 88(4)(b)
Target Amalco 2 formed post-AOC and pre-bump (occurring on amalgamation of Target Amalco 2 with Bidco) is a continuation its predecessors for s. 88(1)(c) midamble purposes/prepackaging transactions before formation of Target Amalco 2/Target asset buyers agree not to purchase Target shares

Principal Issues: Acquisition of control of Target Amalco by Bidco. Amalgamation of Target Amalco with subsidiaries followed by the amalgamation of Target Amalco 2 with Bidco. Bump of the capital property held by Target Amalco 2 before the amalgamation.

Position: Favourable rulings provided.

Reasons: In compliance with the law.

2012 Ruling 2012-0460811R3 - Public Company Spin-Off Butterfly

CRA Tags
55(3.1), 55(3), 55(2), 55(3.2)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution
standard spin-off by public resource co

Principal Issues: Whether proposed transactions are exempt from the application of subsection 55(2).

Position: Yes.

Reasons: Meet the requirements of paragraph 55(3)(b).

Ministerial Correspondence

3 May 2013 Ministerial Correspondence 2013-0484531M4 - Principal Residence - Capital Gains

CRA Tags
54, 45(3), 45(4)

Principal Issues: 1. Taxpayer has commented on content in guide T4036, Rental Income.

Position: 1. No position taken.

23 April 2013 Ministerial Correspondence 2013-0481841M4 - Northern Residents Deduction

CRA Tags
Reg. 7303.1, 110.7

Principal Issues: 1. Eligibility of a community for the purposes of claiming the northern residents deduction.

Position: 1. The community is not currently in a prescribed zone. Any proposed changes to the Regulation must be initiated by the Department of Finance.

Reasons: 1. Regulation 7303.1.

17 April 2013 Ministerial Correspondence 2013-0481831M4 - Government Assistance - Floods

CRA Tags
9, 12(1)(x)

Principal Issues: 1. Is government compensation to flood-affected businesses taxable?

Position: 1. Yes. Any amounts received are generally included under section 9 or specifically included under paragraph 12(1)(x) of the ITA.

Reasons: 1. The Act.

27 March 2013 Ministerial Correspondence 2013-0480711M4 - long-term health care insurance plan

CRA Tags
118.2(2)(q)

Principal Issues: Whether a taxpayer's contribution to a long-term health care insurance plan qualifies for the medical expense tax credit.

Position: It depends on whether the amounts were paid to a "private health services plan" as defined in subsection 248(1) of the Act.

Reasons: Paragraph 118.2(2)(q)

14 March 2013 Ministerial Correspondence 2013-0477251M4 - Prescribed Prizes, Lottery Winnings, Insurance

CRA Tags
148(1), 56(1)(n), 40(2)(f)

Principal Issues: 1. The taxpayer is expressing general concerns about the difference in taxation of lottery winnings, Olympic prize money and the cash surrender value of life insurance policies.

Position: 1. Generally lottery winnings are not income from a source, however Olympic prize money and the cash surrender value of a life insurance policy are income from a source.

Reasons: 1. The Act.

5 March 2013 Ministerial Correspondence 2013-0475251M4 - Minister's Correspondence - Tenancy Issues

Principal Issues: 1. The taxpayer is expressing concern about recent rent increases in his mobile home park.

Position: 1. Advise taxpayer that tenancy issues fall within provincial jurisdiction.

Reasons: 1. CRA is not responsible for tenancy issues.

Technical Interpretation - External

10 May 2013 External T.I. 2013-0485501E5 - Disposition of Intellectual Property

CRA Tags
9, 12(1)(g), 14, 38
Summary Under
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Copyright
sale of IP by video game developer would be business income

Principal Issues: How should amount received on the disposition of intellectual property be reported?

Position: General comments provided.

Reasons: The tax treatment of amounts received depends, on the nature of the transferor's business, the nature of the payments received, and the nature of the property in the transferor's hands (e.g., inventory, capital property, depreciable property or eligible capital property).

7 May 2013 External T.I. 2013-0486461E5 - Determination of Income, Writer

CRA Tags
18(1)(a), 9(1), 18(1)(b)

Principal Issues: What expenditures can be claimed in determining the business income of a writer for income tax.

Position: Reference materials provided.

Reasons: Whether certain expenditures are deductible is a question of fact and our position regarding specific deductions are contained in a number of ITs.

1 May 2013 External T.I. 2012-0459541E5 - Capital interest in a trust

CRA Tags
85(1.1), 85(1), 108(1), 107(1), 248(1), 54 (1)
Summary Under
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1)
trust capital interest

Principal Issues: Will a capital interest in a personal trust qualify as 'eligible property', as defined in subsection 85(1.1) of the Act, for the purposes of subsection 85(1)?

Position: Yes, provided it is determined to be a capital property of the taxpayer.

Reasons: Pursuant to the provisions of section 54, subsections 107(1), 108(1) and 248(1) of the Act.

18 April 2013 External T.I. 2013-0484631E5 - Employee Bursary & Education Tax Credit

CRA Tags
Regulation 200(2), 6(1)(a), 118.5, 118.6

Principal Issues: Change in position taken in Document 2012-043551

Position: ETC is in fact available to an individual taking a course in connection with his or her employment, provided all other requirements for the ETC are met.

Reasons: Change in the legislation.

18 April 2013 External T.I. 2013-0481951E5 - Volunteer Firefighters Tax Credit

CRA Tags
118.06
Summary Under
Tax Topics - Income Tax Act - Section 118.06 - Subsection 118.06(1)
Words and Phrases
on-call

Principal Issues: 1. Meaning of on call.
2. Do hours devoted to fundraising qualify as eligible volunteer firefighting services?

Position: 1. The CRA expects that each fire department will certify time for services, including on call hours, in accordance with its own expectations, operational requirements, policies and procedures.
2. Only fundraising activities which directly involve the use of firefighting training, skills or equipment qualify as eligible volunteer firefighting services.

Reasons: 1. Generally a question of fact.

19 March 2013 External T.I. 2012-0470381E5 - medical expense tax credit

CRA Tags
118.2(3)(b)

Principal Issues: Is the refundable Ontario Healthy Homes Renovation Tax Credit (OHHRTC) considered an amount that a taxpayer is "entitled to be reimbursed" for the purposes of paragraph 118.2(3)(b) of the Income Tax Act (the "Act")?

Position: Depends of the facts, but likely yes.

Reasons: The definition of reimburse is sufficiently broad to encompass the OHHRTC.

19 February 2013 External T.I. 2012-0447471E5 - Principal Residence Designation

CRA Tags
54, 40(2)(b)

Principal Issues: 1. Can two strata units be considered one residence for the purposes of the definition of a principal residence?

Position: 1. Probably not.

Reasons: 1. It is the responsibility of the local TSO to make a factual determination.

Technical Interpretation - Internal

25 March 2013 Internal T.I. 2013-0482291I7 - Home Buyers' Plan - Motor Home

CRA Tags
146.01

Principal Issues: 1. Whether a motor home is considered to be a qualifying home.
2. Whether a motor home is considered to be a principal place of residence.

Position: 1. No. 2. Unlikely.

Reasons: 1 & 2. See response.