Income Tax Severed Letters - 2016-04-27

Ruling

2015 Ruling 2015-0621341R3 - Structured Settlement

CRA Tags
56(1)(d)

Principal Issues: Will the payments to be received pursuant to the structured settlement agreement be taxable in the claimant's hands under the circumstances described?

Position: No

Reasons: The terms of the structured settlement are consistent with the CRA's position as set out in paragraph 5 of Interpretation Bulletin IT-365R2

Technical Interpretation - External

15 December 2015 External T.I. 2015-0602671E5 F - Pompier volontaire

CRA Tags
118.06, 81(4)
Summary Under
Tax Topics - Income Tax Act - Section 118.06 - Subsection 118.06(1)
interpretation of "volunteer firefighter" not changed by Bourgeois
Words and Phrases
volunteer firefighter

Principales Questions: Quelle est la position de l’ARC concernant la notion de « pompier volontaire » aux fins du paragraphe 81(4) et de l’article 118.06 de la Loi suite au jugement rendu par la Cour du Québec dans la cause Bourgeois c. Agence du revenu du Québec?
What is the CRA's position regarding the notion of "volunteer firefighter" for the purposes of subsection 81(4) and section 118.06 of the Act following the judgment issued by the Cour du Québec in the case Bourgeois c. Agence du revenu du Québec?

Position Adoptée: Position prise dans le document 2012-0444461E5 est maintenue. Position taken in document 2012-0444461E5 is maintained.

Raisons: Voir dessous. See below.

26 October 2015 External T.I. 2015-0599021E5 - Establishment of a MIC

CRA Tags
130.1(6)
Summary Under
Tax Topics - Income Tax Act - Section 130.1 - Subsection 130.1(6) - Paragraph 130.1(6)(d)
CRA confirms that the MIC shareholding tests apply cannot be satisfied through a parent

Principal Issues: Whether a corporation would qualify as a mortgage investment corporation if it is wholly-owned by a publicly traded holdco

Position: No.

Reasons: Paragraph 130.1(6)(d) requires that there be a minimum of 20 shareholders of which none would hold more than 25% of the shares of any class of the capital stock of the corporation.

Conference

21 January 2016 Roundtable, 2016-0624851C6 F - Spousal sharing of charitable gifts made by will

CRA Tags
118.1(1) "total charitable gifts", 118.1(5)
Summary Under
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts
gifts made by will of the deceased can no longer be treated as gifts by a surviving spouse

Principales Questions: Whether the existing administrative position to allow a charitable gift made by will to be included in the “total charitable gifts” of the deceased individual's spouse or common law partner will continue to apply as of the 2016 taxation year?

Position Adoptée: No.

Raisons: Clause (c)(i)(C) of the definition of "total charitable gifts" in subsection 118.1(1) does not refer to gifts made by the estate of an individual's spouse or common-law partner.

21 January 2016 Roundtable, 2016-0624871C6 F - Colloque CPA- Frais médicaux - medical expenses

CRA Tags
118.2(2)(a), 118.2(2)(g), 118.4(2)
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(d)
nursing home can be part of a facility
Words and Phrases
nursing home
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(a)
expenses of doctor travel and of Quebec naturopaths and osteopaths excluded

Principales Questions: 1) Whether a private seniors’ residence is a “nursing home” for the purpose of the medical expense tax credit (METC). 2) Whether travel expenses of an orthodontist paid by a taxpayer to receive dental services from the orthodontist, would qualify as medical expenses for the purpose of the METC. 3) Whether osteopaths and naturopaths in Quebec are medical practitioners for the purpose of the federal medical expense tax credit

Position Adoptée: 1) Question of fact, depending on whether the private seniors’ residence has the equivalent features and characteristics of a nursing home; 2) No; 3) No.

Raisons: 1) General guidelines provided regarding the characteristics of a nursing home which distinguish between the requirement for nursing care as opposed to attendant care; and between the requirement for on-site nursing presence in sufficient number to provide 24/7 nursing care as opposed to on-call availability of nursing personnel. 2) The wording in 118.2(2)(h) which only allows for travel expenses incurred in respect of the patient (or an attendant, in specific circumstances).
3) Previous positions, namely 2015-0585011I7

21 January 2016 Roundtable, 2016-0625131C6 F - Farming losses

CRA Tags
9
Summary Under
Tax Topics - Income Tax Act - Section 31 - Subsection 31(1)
traditional CRA policy on s. 31 is still reflective of its position post-Craig

Principal Issues: In a situation where an individual retires, receiving many types of pension income, whether subsection 31(1) would apply if he incurs losses with respect to his farming activities.

Position: General comments provided. Devoting more time to the farming activities because of his retirement is not sufficient to conclude that the losses from the farming activities are deductible or are not subject to subsection 31(1).

Reasons: Question of fact. Previous positions.

21 January 2016 Roundtable, 2016-0625161C6 F - Résidence principale habitée par un enfant

CRA Tags
54 "principal residence"
Summary Under
Tax Topics - Income Tax Act - Section 54 - Principal Residence - Paragraph (a)
related occupant of a principal residence can be charged FMV rent

Principales Questions: Est-ce qu’un immeuble peut faire l’objet d’une désignation de « résidence principale » lorsque cet immeuble est loué par le fils du propriétaire? Whether a property can be designated as a principal residence if it is rented by the son’s owner?

Position Adoptée: Oui, si toutes les autres conditions sont respectées. Yes, if all other conditions are met.

Raisons: La définition de résidence principale ne prévoit pas qu’un immeuble loué ne peut pas constituer une résidence principale lorsque le locataire qui habite cet immeuble est l’une des personnes mentionnées à l’alinéa a) de cette définition. The definition of principal residence does not provide that a leased property cannot be a principal residence when the tenant who lives in the property is one of the persons mentioned in paragraph a) of this definition.

21 January 2016 Roundtable, 2016-0624811C6 F - Employee Assistance Program

CRA Tags
6(1)(a)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(iv)
restricted to advice, valued at hypothetical cost

Principales Questions: Whether an employer confers a benefit to an employee by paying premiums with respect to an Employee Assistance Program.

Position Adoptée: It depends on the type of services provided to the employee. For example, some services may be for the principal benefit of the employer or some other services may be excluded by virtue of subparagraph 6(1)(a)(iv). If a benefit is conferred because of the use of the services provided by the Employee Assistance Program and is not excluded by one of the subparagraphs (i) to (vi), the value of such benefit will be equal to the services provided to the employee (the cost for the employee to obtain such services).

Raisons: Wording of the Act.

21 January 2016 CPA Personal Income Tax Roundtable Q. 7, 2016-0625731C6 F - Fees related to a voluntary disclosure

CRA Tags
9, 18(1)(a), 20(1)(cc), 60(o)
Summary Under
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(o)
professional fees incurred after a voluntary disclosure is accepted commence to be deductible
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(cc)
VDP fees deductible if re business

Principales Questions: Are professional fees deductible under paragraph 60(o) where they relate to the defence of a taxpayer's filing positions under a voluntary disclosure once it has been accepted?

Position Adoptée: Yes. However, for greater certainty, professional fees are not deductible to the extent they relate to the filing of the voluntary disclosure unless they relate to a business, in which case they may be deductible under 20(1)(cc).

Raisons: Prior positions.

21 January 2016 Ordre des CPA du Québec Personal Taxation Roundtable Q. 9, 2016-0625141C6 F - Principal residence - duplex

CRA Tags
40(2)(b), 54
Summary Under
Tax Topics - Income Tax Act - Section 54 - Principal Residence
interior access door to other unit in duplex occupied by elderly parent, and meal sharing, not sufficient to render as one housing unit
Words and Phrases
housing unit

Principales Questions: 1)Whether, for the purposes of the principal residence exemption in paragraph 40(2)(b), the two units of a duplex can be considered as one “principal residence” as defined in section 54, in a situation where the owner occupies one unit while her aging parent occupies the other?
2) Is the fact that an internal access has been added between the two units and that the owner and her parent share most of their meals in the same unit a sufficient indication that the two units are one “principal residence”?

Position Adoptée: 1) Likely not. 2) No.

Raisons: 1) and 2): Prior positions. Each unit appears to be one housing unit for the purposes of the principal residence exemption.