Income Tax Severed Letters - 2014-10-01

Ruling

2014 Ruling 2013-0511761R3 - Cross-border financing Canada - USA

CRA Tags
Treaties Article XXIXA(3), Treaties Article IV(7)(b)
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 29A
interest paid to U.S. sister of LLCs carrying on same business eligible under para. 3

Principal Issues: 1) Whether IV(7)b) of the Canada-USA tax treaty is applicable . 2) Whether the limitation of benefit clause denies the treaty benefits in regard of the interest paid by the Canadian Corporation to a related US Corporation.

Position: 1) No. 2) No.

Reasons: 1) The source of income, profit or gains receives the same treatment. 2) The active trade or business test is satisfied.

Ministerial Correspondence

25 May 2012 Ministerial Correspondence 2012-0444181M4 - Tuition tax credit - exam fees

CRA Tags
118.5
Summary Under
Tax Topics - Income Tax Act - Section 118 - Subsection 118(1) - Paragraph 118(1)(d)
family physician exam fees

Principal Issues: What examination fees paid by an individual to obtain his/her licence to practice as a family physician in the Province of Ontario qualify for the tuition tax credit?

Position: If the fee paid by an individual for an examination taken in the year, such as, for Part I and Part II of the Medical Council of Canada Qualifying Examination and the certification by examination by the College of Family Physicians of Canada, is required by the College of Physicians and Surgeons of Ontario to obtain professional status that allows the particular individual to practice their profession as a family physician in Ontario, the amount of any fees paid will qualify under subparagraph 118.5(1)(d) of the Act provided all other conditions are met for the tuition tax credit.

Reasons: The legislation.

Technical Interpretation - External

11 September 2014 External T.I. 2014-0530721E5 - Medical Expenses - out of country

CRA Tags
118.2(2)(o), 118.2(2)(g), 118.2(2)(h), 118.2(2)(a)

Principal Issues: Whether expenses incurred for surgery and travel outside of the country qualify as medical expenses for purposes of the medical expense tax credit?

Position: Question of fact.

Reasons: Wording of 118.2(2)(a), 118.2(2)(g), 118.2(2)(h) and 118.2(2)(o). Yes, as long as the requirements of those provisions are met.

11 September 2014 External T.I. 2014-0529901E5 - Medical Expense - Vasectomy Reversal

CRA Tags
118.2(2)(o), 118.2(2)(a), 118.2(2.1)
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(a)
vasectomy reversal

Principal Issues: Whether a vasectomy reversal would qualify as a medical expense for purposes of the METC?

Position: Likely yes, provided the requirements under paragraph 118.2(2)(a) are met.

Reasons: Generally, an amount paid to a medical practitioner for surgery that is not provided purely for cosmetic purposes qualifies as a medical expense.

5 September 2014 External T.I. 2014-0529101E5 - METC - Hyperbaric Oxygen therapy

CRA Tags
118.2(2)(a)
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(a)
hyperbaric oxygen therapy

Principal Issues: Whether hyperbaric oxygen therapy provided by a respiratory therapist qualifies as an eligible medical expense.

Position: Question of fact, but likely yes.

Reasons: It must be a medical service provided by a medical practitioner.

26 August 2014 External T.I. 2014-0528041E5 - Amount for the Eligible Dependant

CRA Tags
118(1)(b)

Principal Issues: 1. Can a taxpayer claim the amount for the eligible dependant where there is no existing court order or written agreement requiring support payments?

Position: 1. No position taken. General comments only.

Reasons: 1. The facts must be reviewed to ascertain whether the limitation in subsection 118(4)(b) of the Act could deny a claim where the parties have failed to agree on the sharing of personal tax credits.

26 August 2014 External T.I. 2014-0539581E5 - Home Buyers Plan - First time home buyer

CRA Tags
146.01(1)

Principal Issues: Whether the individual is considered a first-time home buyer when she lived in a home owned solely by her ex-husband.

Position: It is a question of fact, but likely yes.

Reasons: The taxpayer appears to meet the requirements of paragraphs (e) and (f) of the definition of Regular Eligible Amount in subsection 146.01(1).

21 August 2014 External T.I. 2014-0529511E5 - Medical expenses- Supplements and vitamins

CRA Tags
118.2(2)(n)

Principal Issues: 1. Whether the cost of over-the-counter supplements and vitamins qualify as a medical expense for the purposes of the medical expense tax credit.

Position: 1. Probably not.

Reasons: 1. The over-the-counter supplements and vitamins may be acquired without a prescription.

20 August 2014 External T.I. 2014-0529481E5 - Scholarship exemption

CRA Tags
56(3), 56(1)(n), 56(3.1)
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(3.1) - Paragraph 56(3.1)(b)
reduction where shortened enrolment

Principal Issues: What portion of an amount received as a bursary is eligible for the scholarship exemption?

Position: It is a question of fact

Reasons: A bursary will not be considered to be received in connection with the taxpayer's enrolment in an educational program except to the extent that it is reasonable to conclude that the bursary is intended to support the taxpayer's enrolment in the program. Generally a bursary is considered to support a taxpayer's enrolment in a program unless it significantly exceeds the taxpayer's tuition fees, living expenses and other expenses associated with undertaking the program.

19 August 2014 External T.I. 2014-0527921E5 - "Exempt Trust" under s. 233.2(1)

CRA Tags
233.2(1) "exempt trust", 233.3(1) "specified foreign property"
Summary Under
Tax Topics - Income Tax Act - Section 233.2 - Subsection 233.2(1) - Exempt Trust
Australian IPAC

Principal Issues: Whether the Australian "ipac select superwrap personal super plan" is an "exempt trust" as defined in subsection 233.2(1)?

Position: Question of fact.

Reasons: Where the plan is a trust and exempt from tax, then it may qualify as an exempt trust.

18 August 2014 External T.I. 2014-0528171E5 - Condominium Corporations and 149(1)(l)

CRA Tags
149(1)(l)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(l)
condominium solar revenue treated as members' income
Words and Phrases
incidental
Summary Under
Tax Topics - Income Tax Act - Section 9 - Exempt Receipts/Business
condominium solar revenue treated as members' income

Principal Issues: Whether leasing contract will jeopardize ability to claim exemption under 149(1)(l).

Position: No, as long as the income is the income of the unit owners and not the corporation. Otherwise, it may.

Reasons: Income either belongs to the unit owners or is available for the personal benefit of the members.

1 August 2014 External T.I. 2014-0525691E5 - Deductibility of support amounts

CRA Tags
60(b), Family Law Act of Alberta 62(2), Personal Income Tax Act of Alberta 1(2), Adult Interdependent Relationships Act of Alberta 3(2), Adult Interdependent Relationships Act of Alberta 1(1), Family Law Act of Alberta 56, Adult Interdependent Relationships Act of Alberta 3(1), 56.1(4), 248(1), Family Law Act of Alberta 62(1), Family Law Act of Alberta 57(1)

Principal Issues: Are amounts paid for adult interdependent (Alberta) support deductible under paragraph 60(b)?

Position: A question of fact.

Reasons: The amount must be a support amount under 56.1(4) of the Act.

31 July 2014 External T.I. 2013-0509291E5 - Research grants

CRA Tags
56(1)(o)
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(o)
reduction of faculty salary and receipt of research grant

Principal Issues: 1. Whether a faculty member at a university that has research as part of their normal employment responsibilities, can allocate a portion of their salary as a self-funded research grant for purposes of section 56(1)(o)?
2. Does this also apply to faculty members on sabbatical?

Position: 1. It is a question of fact. 2. It is a question of fact.

Reasons: Each case would need to be reviewed to determine if the requirements discussed in Folio S1-F2-C3 are met. The research project must not be connected to or be part of the individual's normal employment responsibilities. A reduction in the employee's salary must be representative of the proportion of time they will not be performing their normal employment responsibilities.

Technical Interpretation - Internal

16 September 2014 Internal T.I. 2014-0519801I7 - Document #2013-049684

CRA Tags
95(2)(a)(ii)(D)

Principal Issues: Is the position outlined in document 2013-049684 still our position?

Position: No.

Reasons: Subclause 95(2)(a)(ii)(D)(II) applies.

28 August 2014 Internal T.I. 2014-0529881I7 - Employer paid tuition

CRA Tags
6(1)(a), 56(1)(n), 118.5(1)(a)(iii)

Principal Issues: Whether an individual can choose to include in income the amount of tuition that has been paid for, or reimbursed by, their employer, but was considered not to be a taxable benefit, to allow for the amounts to be claimed for the tuition tax credit?

Position: No.

Reasons: Where the training is considered to be for the benefit of the employer, no taxable benefit is assessed to the employee, and it is a non-taxable amount to the employee.

21 August 2014 Internal T.I. 2014-0542121I7 - Payments from the province of BC

CRA Tags
63(1)
Summary Under
Tax Topics - Income Tax Act - Section 63 - Subsection 63(1) - Paragraph 63(1)(d)
parent compensation for teachers' strike
Summary Under
Tax Topics - Income Tax Act - Section 9 - Exempt Receipts/Business
parent compensation for teachers' strike

Principal Issues: Will payments made by the province of BC to parents affected by a possible teachers strike be taxable to recipients, and will the payments impact the recipients' ability to claim the child care expense deduction?

Position: It is a question of fact, general comments provided

Reasons: It is likely that the payments are not income from a source, and therefore will not be taxable. The payments could impact the child care expense deduction if they are tied to child care expenses.

30 July 2014 Internal T.I. 2014-0524321I7 - New Brunswick Drug Plan- Premiums

CRA Tags
248(1), 118.2(2)
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(q)
N.B. drug plan premiums

Principal Issues: Whether premiums paid to the New Brunswick Drug Plan are qualifying medical expenses pursuant to subsection 118.2(2) of the Income Tax Act?

Position: Yes.

Reasons: See response.