Income Tax Severed Letters - 2013-07-31

Technical Interpretation - External

19 July 2013 External T.I. 2012-0458961E5 F - Stock option, cashless exercise

CRA Tags
7(1)(a)
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a)
cashless exercise through broker short sale - timing of acquisition

Principales Questions: When the cashless method of exercising an option is used, what is the time the security is acquired for the calculation of the benefit pursuant to paragraph 7(1)(a)?

Position Adoptée: In a situation of cashless exercise, the benefit under paragraph 7(1)(a) will be based on the fair market value of the security at the time the share is transferred by the employer, to the employee or the employee's broker.

Raisons: Previous positions and legislation analysis

28 June 2013 External T.I. 2013-0475531E5 - Prescribed Prize

CRA Tags
56(1)(n), ITR 7700
Summary Under
Tax Topics - Income Tax Regulations - Regulation 7700

Principal Issues: 1. Determination of whether a specific award constitutes a prescribed prize.

Position: 1. While the award meets the general requirements for a prescribed prize, the organization, in conjunction with the recipient must determine whether the amount can be regarded as compensation for services rendered or to be rendered.

Reasons: 1. The legislation.

30 April 2013 External T.I. 2013-0475271E5 F - CCTB - Marital Status Change

CRA Tags
122.61, 122.62(7), 122.6, 122.62
Summary Under
Tax Topics - Income Tax Act - Section 122.62 - Subsection 122.62(7) - Paragraph 122.62(7)(b)
timing of loss of CCTB when cohabitation commences

Principales Questions: Quelles sont les conséquences d'un changement d'état matrimonial lors du calcul de la PFCE.
If the marital status changes, will this change affect the CCTB payments?

Position Adoptée: La PFCE sera ajustée à compter du premier mois civil commençant après le changement d'état matrimonial.
The CCTB will be adjusted starting on the month following the month in which the marital status changes.

Raisons: La loi; The Act

18 April 2013 External T.I. 2012-0458231E5 - Refund of Premiums

CRA Tags
146(8.1), 60.011, 60(l), 146(1), 146.3(1)

Principal Issues: Various questions including whether (1) the Act permits a rollover of RRSP amounts to a trust established for the benefit of a mentally competent surviving spouse or common-law partner; (2) timing restrictions apply with respect to amounts designated under subsection 146(8.1) of the Act; and (3) an election under a RIF agreement or in the deceased annuitant's will which would constitute a valid election as provided under the definition of "retirement income fund" in subsection 146.3(1) of the Act?

Position: (1) No; (2) Election to be made for year in which RRSP proceeds are paid to the legal representative; and (3) the annuitant may elect as part of the RIF agreement or under a provision of the annuitant's will for payments to continue to be made to the annuitant's spouse or common-law partner after the annuitant's death.

Reasons: (1) No; (2) 146(8.1); and (3) 146.3(1) definition of "retirement income fund" and IC78-18R6, paragraph 12.

12 April 2013 External T.I. 2012-0460901E5 - Capital Gain on Sale of Property by NPO

CRA Tags
149(5), 149(5)(e)(ii)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(5)

Principal Issues: 1. Is the main purpose of the NPO to provide dining, recreational, and sporting facilities? 2. Does the capital gain resulting from the sale of the real property qualify for the exemption of tax under subparagraph 149(5)(e)(ii)?

Position: 1. Question of Fact. 2. Yes

Reasons: A NPO is not deprived of the exemption from the capital gain and loss provisions of subparagraph 149(5)(e)(ii) by reason only of occasional rental of its property to non-members

4 April 2013 External T.I. 2012-0444581E5 F - Frais de garde - hébergement en famille d'accueil

CRA Tags
63
Summary Under
Tax Topics - Income Tax Act - Section 63 - Subsection 63(3) - Child Care Expense
sport school camp expenses do not include accommodation expenses paid to a host family

Principales Questions: Les frais d'hébergement en famille d'accueil dans une situation particulière peuvent-ils être admissibles à titre de frais de garde d'enfants aux fins du paragraphe 63(3)? [TRANSLATION] : Can expenses for accommodation within a host family be eligible as child care expenses for purposes of subsection 63(3) in a particular situation?

Position Adoptée: Non. [TRANSLATION] : No.

Raisons: Nous sommes d'avis que les frais d'hébergement en famille d'accueil ne sont pas des montants versés à une école de sport offrant des services d'hébergement. [TRANSLATION] : We are of the opinion that expenses for accommodation within a host family are not amounts paid to a sports school that provides lodging services.

28 March 2013 External T.I. 2012-0468571E5 - RDSP - Qualifying Person

CRA Tags
146.4

Principal Issues: Whether certain legislative amendments announced in the 2012 federal budget apply to an RDSP arrangement entered into prior to June 29, 2012, the coming into force date.

Position: The arrangement was entered into prior to the effective date of June 29, 2012. As a result, these legislative amendments do not apply to the arrangement.

Reasons: Income Tax Act, subsection 146.4(1) definition of "qualifying family member".

26 March 2013 External T.I. 2012-0465121E5 - Medical Expense-Breast Milk-Supplement

CRA Tags
118.2(2)(n)(ii), 118.2(2)(n)(i), ITR 5701

Principal Issues: Does the cost of Human Donor Breast Milk qualify under the METC?

Position: A question of fact, general comments provided

Reasons: Legislation

26 March 2013 External T.I. 2012-0465001E5 - kiddie tax

CRA Tags
120.4
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Excluded Amount
child care benefit

Principal Issues: Are payments of dividends by a Canadian controlled private corporation (CCPC) to a minor child taxable under section 120.4?

Position: Depends on the facts but the dividends are probably taxable under section 120.4.

Reasons: The law.

22 March 2013 External T.I. 2013-0475071E5 - RRIF - 146.3(2)(g)

CRA Tags
146.3(2)(g)

Principal Issues: Whether the payment of bonus interest by a RIF carrier to an annuitant's RRIF would be a prohibited benefit for purpose of paragraph 146.3(2)(g), prior to March 23, 2011 (the effective date 146.3(2)(g) is repealed)?

Position: In general, no, provided the bonus interest is paid by the RIF carrier into the annuitant's RRIF

Reasons: The provisions of 146.3(2)(g), specifically, subparagraph 146.3(2)(g)(i). Also, our position regarding prohibited benefits for purposes of RRIFs is similar to our position regarding prohibited advantages and RRSPs.