Principal Issues: Where subsection 98(5) applies on the transfer of all of the property of a partnership to one of the partners, it is not clear whether subsection 13(21.2) would apply.
Position: Question of fact, but no in the circumstances.
Reasons: Although there is no specific rule in the Act that provides an exception to the application of subsection 13(21.2) in the case of a rollover under subsection 98(5), this provision would not apply to the particular circumstances set out in the ruling.
Principal Issues: Whether expenses relating to a certain exploration and development program will qualify for inclusion under paragraph (f) or paragraph (g) to the definition of CEE. Whether a mine which may be established would be a "new mine" for purposes of paragraph (g) to the definition of CEE.
Position: Expenses incurred in respect of the proposed exploration and development program may potentially qualify under paragraph (f) or paragraph (g) to the definition of CEE. A mine to be established in accordance with the pre-feasibility study described herein would be a "new mine" for purposes of paragraph (g) to the definition of CEE.
Reasons: Based upon the facts and a written opinion from Natural Resources Canada.
Principal Issues: Whether a XXXXXXXXXX Co-op would be treated as a corporation for purposes of the Act?
Position: In the present instance, yes.
Reasons: The provisions of the foreign legislation and the articles creating the XXXXXXXXXX Co-op support the conclusion that this cooperative should be treated as a corporation for purposes of the Act.
Principal Issues: Can a capital gains reserve be claimed by a taxpayer in respect of the disposition of farmland to a closely held corporation.
Position: Unable to opine. Depends upon whether or not the corporation is controlled by the taxpayer, and, whether or not proceeds of disposition are payable to the taxpayer after the end of the year.
Reasons: The determination rests upon the resolution of matters which are a question of fact. The law.
Principal Issues: Whether baby wipes qualify under paragraph 118.2(2)(i)
Position: No
Reasons: The reference to other products in the statement "for or in respect of diapers, disposable briefs, catheter, catheter trays, tubing or other products" is restricted to the same class of products as diapers, disposable briefs, etc.
LEGISLATIVE REFERENCE: 118.2(2)(i.1)
HAA: No paper record.
Principal Issues: One time change from expense carryforward to credit carryforward and whether the unused medical expenses from Plan Year 1 could be used against new credits allocated in Plan Year 2.
Principal Issues: Is the full allocation of income earned from a husband / wife farming partnership to one spouse acceptable during a period in which the other spouse takes maternity leave from the business operations of the partnership and contributes no labour?
Position: Any allocation should be governed by the partnership agreement. However, a full allocation to the spouse providing all the labour to generate the income earned by the partnership would not normally be considered unreasonable.
Submitted by narmstrong on Sat, 05/30/2020 - 02:47
s. 74.2(1) inapplicable to transfer at FMV of property to a discretionary family trust, with capital gain on property subsequently distributed to spouse of transferor
An individual disposed of capital property to a discretionary trust (whose beneficiaries were the individual and spouse and their children) in...
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s. 74.2(1) inapplicable to transfer at FMV of property to a discretionary family trust, with capital gain on property subsequently distributed to spouse of transferor
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Principales Questions: Est que les règles d'attribution prévues au paragraphe 74.2(1) s'appliqueraient à une situation donnée?
Principal Issues: 1- Degree of independence and criteria to be met in choosing the trustee or trustees for a health and welfare trust. 2- Does a trust account need to be opened for each employee or is one trust account with a financial institution sufficient?
Position: 1- Question of fact. 2- Generally, a trust bank account for each employee is not necessary.
Reasons: 1- Question of fact as to whether trustee or trustees are independent of the employer. 2- Generally, it would not be necessary to keep a separate trust bank account for each employee. Proper internal records for each employee should be maintained to ensure compliance with the Income Tax Act and its reporting requirements.
Principal Issues: 1) Does the definition of construction activities under Ssec 238(1) of the Regulations include well drilling?
Position: 1) Yes.
Reasons: 1. The definition of construction activities "includes the... excavation, (and) installation... of all or any part of a... structure, surface or "sub-surface" construction, or any similar property". A structure has been defined in the courts as something that is in one place, that is affixed somehow and which is built up of parts and is intended to remain on a foundation. A drilled well is a structure created in the ground by drilling to access ground water in underground aquifers.
Principal Issues: Are legal fees deductible if incurred to (1) settle an estate and (2) to secure the payment of dividends?
Position: (1) No. (2) Possibly
Reasons: (1) Generally, legal fees incurred for the purpose of settling an estate (taking possession of the property of the deceased, obtaining probate, distribution of a deceased's property) are personal expenses that are non-deductible. (2) Legal fees incurred to establish a right to income are generally considered to be capital in nature and non-deductible. Where it can be demonstrated that there is a pre-existing right to property income (such as dividends) and there is a direct connection between the legal fees incurred and efforts to enforce the payment of that property income, the expense may be deductible in the taxation year in which it was incurred.
Principal Issues: Can farm land previously owned by a sibling of a taxpayer, neither of the siblings has ever farmed the land, qualify as QFP under subsection 110.6(1), if the land was owned before the sibling by the parent of the taxpayer that actively farmed the land?
Position: No.
Reasons: The period of continuous ownership of the property by the parent and the taxpayer was interrupted by the acquisition of the property by the sibling of the taxpayer.
Principal Issues: 1) Whether three farm properties owned by a taxpayer would be eligible for the capital gains exemption in respect of qualified farm property. 2) Whether income under "sharecropping arrangement" received by a farmer from a tenant in lieu of rent is considered to be rental income or farming income.
Principal Issues: 1.will rooftop solar panels & equip qualify for inclusion in class 43.2 under various scenarios subject to the specified energy rules limiting CCA . 2.will claiming cca jeopardize the principal residence exemption?
Position: 1.provided expenses incurred for the purpose of producing income & other conditions of the class are met; 2. the principal residence claim will not be jeopardized provided no cca claim is made on the building itself & the earning of income is ancillary to the residence use.
Submitted by narmstrong on Sat, 05/30/2020 - 17:50
replacement property rules re involuntary disposition of secondary residence in country could apply to replacement property in city
If the property being involuntarily disposed of is a secondary residence, could a second home in the same or different tourist region, or with...
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Principales Questions: 1. Dans le cas où l'ancien bien qui fait l'objet d'une disposition involontaire est une résidence secondaire, l'acquisition d'une autre résidence secondaire ayant différents attributs peut-elle constituer un bien de remplacement selon le paragraphe 44(5) de la Loi de l'impôt sur le revenu?
2. L'acquisition d'une part indivise dans une résidence secondaire peut-elle respecter les conditions énoncées au paragraphe 44(5) de la Loi?
3. Si un transfert d'une part indivise dans une résidence personnelle s'effectue entre conjoints, quel est l'impact sur l'application des règles sur les biens de remplacement?
Position Adoptée: 1.Question de fait. Possiblement.
2. Une part indivise dans une résidence secondaire peut, selon les faits, constituer un bien de remplacement aux termes du paragraphe 44(5).
3. Le fait qu'un bien de remplacement soit acquis d'un conjoint ne vient pas, de ce seul fait, empêcher l'application des règles sur les biens de remplacement.
Portuguese home of Canadian resident could qualify for the principal residence exemption
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Principales Questions: 1) Est-ce qu'un gain en capital réalisé par un citoyen portugais résident du Canada et découlant de la disposition d'un immeuble situé au Portugal serait imposable au Canada ?
2) Dans l'affirmative, le particulier pourrait-il invoquer le bénéfice du paragraphe 1 de l'Article 23 de la Convention Canada - Portugal ?
Position Adoptée: 1) Oui.
2) Non.
Raisons: 1) et 2) Libellé de la LIR et de la Convention Canada - Portugal.
Submitted by narmstrong on Sun, 05/31/2020 - 01:14
individual fully taxable on s. 7 benefit without carve-out for portion that had accrued prior to immigration to Canada
An individual, who had been granted stock options by Chinaco as an employee, immigrated to Canada to work for a Canadian affiliate at a time that...
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Principales Questions: En tenant compte de l'application du paragraphe 128.1(1) de la Loi lorsqu'un contribuable immigre au Canada, comment calculer l'avantage imposable du contribuable, aux fins de l'application des dispositions de l'alinéa 7(1)a) de la Loi, lorsqu'une partie de l'appréciation de la valeur de ces actions a eu lieu durant la période où il était un non-résident?
Position Adoptée: Selon l'alinéa 7(1)a), l'avantage est égal à l'excédent de la valeur des actions au moment où il les a acquises sur la somme qu'il a payée à la société pour les actions et le droit de les acquérir.
Raisons: Lorsque le contribuable devient un résident canadien, il n'est pas réputé avoir disposé de ses droits d'achat d'actions en vertu d'une convention visée au paragraphe 7(1). L'avantage (dont la partie qui reflète l'augmentation de la valeur de l'action alors que le contribuable n'était pas un résident du Canada), calculé selon l'alinéa 7(1)a), est donc imposable au Canada à titre de revenu d'emploi (et non, par exemple, à titre de gain en capital résultant de la disposition réputée de certains biens lors de l'immigration) même si l'option lui a été octroyée alors qu'il était un non-résident.
S. 55 TA; ss 54(2) TA; ss. 57(1) TA; ss.57(2) TA; ss 56(1) TA
Principal Issues: Does CMT apply to a life insurance death benefit? 2) Can CMT payable be reduced by paying a taxable or capital dividend?
Position: 1) Yes; 2) No
Reasons: 1) life insurance benefits included in net income for accounting purposes are included in adjusted net income for CMT purposes. 2) There is no reduction to net income for CMT purposes for taxable or capital dividends paid or payable.
Principal Issues: Whether the adjusted cost basis is a reasonable proxy for "cost" of an interest in a life insurance policy in applying the deeming provisions of 248(35) with respect to a gift to a qualified donee in certain circumstances.
Position: Yes, generally.
Reasons: There is no definition of "cost" for interests in life insurance policies in the Act.
Principal Issues: 1. Is a disability insurance policy excluded from the deemed disposition rules in s. 128.1 where an individual ceases to be a resident of Canada?
2. If a disability insurance policy is subject to the deemed disposition rules, can the CRA confirm that the proceeds of disposition would be NIL for the purposes of this provision?
Position: 1. No.
2. No.
Reasons: 1. The exclusion in subsection 128.1(10) refers to a life insurance policy. Where a disability policy is not a life insurance policy, the exclusion does not apply.
2. The disposition is at fair market value. The fair market value of a disability policy is a question of fact.
insurance policy premium rebate generally deductible by insurance advisor payor and included under s. 12(1)(x) in client’s income
108
Principal Issues: Where an insurance advisor or salesperson pays a rebate to a client who has purchased a life insurance policy:
1. What is the tax treatment of the rebate to the insurance advisor?
2. What is the tax treatment of the rebate to the policyholder?
3. Alternatively, can the policyholder reduce the adjusted cost basis of the policy?
Position: 1. Subject to the general limitations in the Act (e.g., sections 18 and 67), the rebate is deductible pursuant to subsection 9(1).
2. Taxable pursuant to paragraph 12(1)(x).
3. No.
Reasons: 1. The rebate is a general business expense.
2. The rebate is property income of the policyholder.
3. There is nothing in subsection 148(9) to allow the reduction in the adjusted cost basis and no election, similar to subsection 53(2.1) available.
Principal Issues: Whether a change in ownership of a life insurance policy or a change in beneficiary designation due to the CRA's new assessing practice related to corporate-owned life insurance announced in 2009 would result in the loss of grandfathered status for the purposes of subsections 112(3) to (3.32)?
Position: None.
Reasons: Grandfathering for the purposes of the stop-loss rules is fact dependent and will be determined on a case-by-case basis. Subsection 245(2) could apply where the change would result in one corporation being the beneficiary of the policy without also being the policyholder of the policy.
Principal Issues: What is the impact to the CRA's longstanding administrative policy not to tax commission income earned by a life insurance salesperson, whether employed or self-employed, as essentially described in paragraph 27 of IT0470R as the result of the TCC decision in Bilodeau.
Submitted by narmstrong on Sat, 10/22/2022 - 02:20
potential s. 246(1) benefit where Parent holds and pays premiums on policy of which its subsidiary is beneficiary
S. 246(1) could apply where a corporation (Parentco) holds a life insurance policy for which it pays the premiums and designates its subsidiary...
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Principal Issues: 1) Does 15(1) apply in circumstances where
a) Parentco is the policyholder of a life insurance policy and its subsidiary is the beneficiary.
b) Same situation but Subco reimburses Parentco the payment of the premium.
c) Sisterco 1 and Sisterco 2 are wholly-owned by an individual. Sisterco 1 owns the policy, Sisterco 2 is the beneficiary and would reimburse Sisterco 1 the amount of the premium paid.
2) In situations 1b) and c), will the ACB to the policyholder be affected by the reimbursement?
Position: 1a) No but subsection 246(1) may apply to Subco.
1b) and 1c) Subsection 9 and paragraph 12(1)(x) could apply to include in the income the reimbursement received. Subsection 15(1) is not applicable to Parentco if the reimbursement is included in its income. Subsection 15(1) is not applicable to Sisterco 1.
2)No
Reasons: 1)a),b),c) 15(1) applies to a shareholder who receives a benefit and that determination is a question of fact.
