Principal Issues:
1. Whether an Indian band can be considered to be a public body performing a function of government in Canada within the meaning of paragraph 149(1)(c)?
2. Is the Indian band a "municipality" for purposes of subparagraph 110.1(a)(iv) and paragraph (d) of the definition of "total charitable gifts" contained in subsection 118.1(1)
Position:
1. Yes.
2. No.
Reasons:
1. The band is and performs the functions of a local government.
2. XXXXXXXXXX - see Statement of Principal Issues
Principal Issues: Will certain transactions undertaken to unwind an NRO structure permit debts owed to the NRO to be transferred to a limited partnership and interest on those debts to continue to be deductible by Canco?
Position: Yes. The transactions have the effect of winding up the NRO into the limited partnership and, subject to the thin capitalization rule, the interest on the debts involved will continue to be deductible to Canco.
Principales Questions:
1. Est-ce que les intérêts payés lors de l'acquisition d'un titre de créance sont inclus dans le calcul du coût de la créance? Considérer les cas où les détenteurs sont des régimes enregistrés et les cas où ils sont des individus.
2. Est-ce que l'alinéa 53(2)l) s'applique pour réduire le coût des titres de créances? Considérer les cas où les détenteurs sont des régimes enregistrés et les cas où ils sont des individus.
Position Adoptée:
1. Oui dans les deux cas, si les titres sont des biens en immobilisation.
2. Oui dans les deux cas, si les dispositions de l'alinéa 20(14)b) sont rencontrées?
Principal Issues: (1) Whether a particular corporation meets the "more than 5 full-time employees" requirement in the definition of "specified investment business" in ss. 125(7) of the Act. (2) Whether the shares of the corporation may be considered "qualified small business corporation shares" under ss. 110.6(1) of the Act.
Position: (1) Question of fact, but likely no. (2) Question of fact, but likely no.
Reasons: (1) The corporation must employ in the business more than 5 full-time employees to avoid being considered a specified investment business. Although the corporation has more than 5 full-time employees on its payroll, it appears that the corporation is carrying on separate businesses, and in each business it does not employ more than 5 full-time employees throughout the year. (2) If the corporation does not carry on an active business, it cannot be considered a small business corporation.
Principal Issues:
Whether, a payment (the "Fee") made in the course of a borrowing of money, as consideration for a lender agreeing to charge a borrower a lower interest rate than the borrower could otherwise negotiate with another lender, is a payment made by the borrower in respect of borrowed money as consideration for a reduction in the rate of interest payable such that the Fee would be deductible under subsection 18(9.1).
Submitted by narmstrong on Sat, 05/20/2023 - 19:06
W2 amounts likely not an appropriate basis for establishing proper s. 6(6) allowance amounts
A Canadian resident is employed on a temporary basis by a US employer at a construction site in the US is paid an amount to cover travel,...
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Principale Question:
Un résident canadien occupe un emploi de nature temporaire sur un chantier de construction situé aux Etats-Unis auprès d'un employeur américain. L'employeur américain lui verse une rémunération qui inclut un montant pour couvrir ses frais de déplacements, de logement et de subsistance.
Le montant raisonnable payé par un employeur américain et inclus dans la rémunération figurant sur le feuillet W-2 d'un travailleur canadien pour défrayer ses frais de transport et de pension lors de son séjour aux États-Unis entre-il dans le cadre de l'exception prévue au paragraphe 6(6) de la Loi de l'impôt sur le revenu?
Position Adoptée:
Aucune. Cependant, peu probable selon les faits fournis.
Principal Issues: A Canadian company ("Canco") and its foreign subsidiary enter into a Funding Agreement whereunder the foreign subsidiary agrees to make a payment to Canco equal to the stock option benefit ("price differential") enjoyed by the foreign subsidiary's employees on the exercise of options to acquire shares of Canco. The issue is the tax consequences of a payment which is in respect of a price differential which accrues for the period before the Funding Agreement is entered into.
Position: The payment would be included in the income of Canco.
Principal Issues: Whether an allowance is reasonable for purposes of the special work site exclusion subsection 6(6) of the Income Tax Act (the Act).
Position: Question of fact
Reasons: When determining the taxable status under the Act of an allowance received by an employee, the amount is considered reasonable if it is designed to cover the out-of-pocket costs that the employee will incur for the particular purpose for which the allowance is given. This would generally hold true for subsection 6(6) allowances as well.
Principal Issues:
Are benefits payable to a status Indian under Part II of the EI Act taxable?
Position:
Generally, yes. However, a deduction from income under paragraph 110(1)(g) may be available for assistance related to the payment of certain tuition fees.
Reasons:
Because Part II EI benefits are not related to the Indian's prior exempt employment income, they are not situated on reserve. The connecting factors test is not normally satisfied. The Part II EI benefits are therefore taxable under subparagraph 56(1)(r)(ii).
Principal Issues:
Can a "tuition fee discount" for spouses and children of employees of a university be received as a "tuition fee scholarship" by the student at the employees' option?
Position: No.
Reasons:
A tuition fees discount which is available to spouses and dependent children of all eligible employees is a taxable benefit to the employee and is not a scholarship or bursary that would be taxable in the hands of the student. Benefit is dependent upon the recipient's employment and is available to all employees in a specific group
Principal Issues:
Is a student/employee entitled to claim the tuition tax credit under section 118.5 where the employer pays the tuition fees but the student/employee subsequently reimburses the employer for these fees?
Position: Yes.
Reasons: The student has in effect paid the tuition fees.
Regulation, s. 5907(1), 5907(11.2) Canada Convention Treaty
Principal Issues: (1) Is a Barbados Society with Restricted Liability ("SRL") a corporation for purposes of the Act? (2) Are SRLs entitled to benefits under the Canada-Barbados Tax Agreement (the "Barbados Convention")? (3) Does Article XXVII(3) of the Barbados Convention apply to a transaction between the Canadian taxpayer and a Barbados SRL with whom the taxpayer does not deal at arm's length? (4) Are SRLs resident in a designated treaty country for purposes of Part LIX of the Income Tax Regulations (Canada) (the "ITR")?
Position: (1) Yes. (2) No for an International/Exempt SRL; but yes for a Non-Exempt SRL. (3) No. (4) Yes for both International/Exempt SRLs and Non-Exempt SRLs, assuming that they are resident in Barbados under the Canadian common law principles.
Reasons: (1) It has characteristics that more closely resemble a corporation under Canadian common law. (2) Article XXX(3) of the Barbados Convention applies to an International/Exempt SRL but does not apply to a Non-Exempt SRL. (3) The income arising for Canadian tax purposes to the Canadian taxpayer as a result of the transaction is not charged to tax in Barbados. (4) Assuming that they are resident in Barbados under Canadian common law principles, an International/Exempt SRL would satisfy the condition in paragraph 5907(11.2)(c) of the Income Tax Regulations (the "ITR") and a Non-Exempt SRL would satisfy the condition in paragraph 5907(11.2)(a).
Principal Issues:
1) Does subsection 1102(14) of the Regulations apply in this situation?
Position: YES
SECTIONS: ITA Subsection 13(21), Regulation 1102(14), Part XI and Schedules II and VI of the Regulations
Reasons:
1) An interest in land was acquired by the taxpayer from a person with whom the taxpayer was not dealing at arm's length and the property was property of a separate prescribed class of the person.
Principal Issues:
Should a T4A be issued for educational assistance amounts paid to a status Indian even if the amount is tax exempt?
Position: Yes
Reasons:
Paragraph 200(2)(a) of the Regulations requires the issuance of an Information Return when a person confers a scholarship or bursary. There is no exception for the situation in which the amount is tax exempt.
