Income Tax Severed Letters - 2015-03-11

Principales Questions: Whether the clause 55(3)(a)(i)(B) would apply in a particular situation where a corporation is disposing of a property, that meets all the conditions in subsection 110.1(1)(c), by way of gift to an unrelated person.

Position Adoptée: In this situation, yes.

Raisons: Under subparagraph 69(1)(b)(ii), except as expressly otherwise provided in the Act, where a taxpayer has disposed of anything to any person by way of gift inter vivos, the taxpayer shall be deemed to have received proceeds of disposition therefor equal to that fair market value. Thus, the disposition of the property would not be subject to the application of paragraph 55(3)(a)(i), as such disposition by the corporation will be deemed by subparagraph 69(1)(b)(ii) to be at fair market value. Then, the clause 55(3)(a)(i)(B) would apply.

Principal Issues: The taxpayer requests our opinion regarding whether an amount paid by an employer to an RCA constitutes a contribution to the RCA.

Position: Question of fact.

Reasons: It is a question of fact whether an amount paid by an employer to an RCA is a contribution or a bona fide loan. In order to make such a determination, it is necessary to review all of the relevant facts and documents surrounding a particular situation.

Principal Issues: What are the tax consequences where a Canadian resident withdraws amounts from a retirement account in the Isle of Man? Can amounts in the retirement account be transferred to an RRSP?

Position: Canadian resident taxed on worldwide income. All amounts withdrawn from the retirement income must be included in the Canadian resident taxpayer's income in the year received. A transfer from the retirement account to an RRSP is not possible.

Reasons: Section 3. Paragraph 60(j).