Income Tax Severed Letters - 1996-01-26

Principal Issues:

Whether borrowings by a US parent to acquire flow-through shares of its Canadian subsidiary would be "effectively connected" to the business carried on by the US parent through a PE in Canada.

Position:

Question of fact, generally, no.

Reasons:

Principales Questions:

Demande de confirmer leur interprétation de la Loi concernant divers produits d'assurance-vie dans le cadre de situations hypothétiques impliquant des prestations au décès versées du vivant de l'assuré.

Position Adoptée:

Principal Issues:

Are contributions to a 401(k) plan taxed twice in Canada?

Position:

No

Reasons:

Principal Issues:

Lease inducement payments on re-leasing of space

Position:

Amortization required over the term of the lease

Reasons:

Principal Issues:

Effect of carry-forward of net capital losses on ACB of units of unit trust.

Position:

ACB of units reduced by amount of net capital losses.

Reasons:

Principal Issues:

Whether RRIF can be established to name spouse successor annuitant and children irrevocable beneficiaries upon spouse's death.

Position:

Yes

Reasons:

Principal Issues:

Whether RRIF can be established to name spouse successor annuitant and children irrevocable beneficiaries upon spouse's death.

Position:

Yes

Reasons:

Principal Issues:

Whether paragraph 3 of Article XXI of the Canada-U.S. Treaty will apply to deny the U.S. charity exemption from Canadian where the charity is receiving, among other sources, Canadian source "farm income"?

Position:

Possibly.

Reasons:

Principal Issues:

Where an RRSP Issuer interpleads the property held in an RRSP, would the transfer of property to a court result in an income inclusion to the annuitant?

Position:

No

Reasons:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

5-952726
XXXXXXXXXX Carole Pronovost
(613) 957-8953

A l'attention de XXXXXXXXXX

Le 5 janvier 1996

Mesdames, Messieurs,

Objet: Demande d'interprétation technique du paragraphe 55(2) de la Loi de l'impôt sur le revenu du Canada (ci-après la "Loi").

Principal Issues:

When is an individual entitled to the additional 1500/year under 60(j.1)(ii)(B)?

Position:

routine

Reasons:

Principales Questions:

1- Le sous-alinéa 75(2)a)(i) s'applique-t-il si le capital de la fiducie est remis à l'auteur uniquement en vertu des dispositions du Code civil du Québec à défaut de bénéficiaire dans la fiducie et 2- les dispositions du paragraphe 107(2) s'appliqueront-elles lors de la remise de biens à l'auteur? 3- Quelles sont les conséquences fiscales pour les bénéficiaires d'une renonciation à leur participation dans la fiducie?

Position Adoptée:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		952735
XXXXXXXXXX	S. Leung

January 2, 1996

Dear XXXXXXXXXX:

Re: Definition of Spouse, Deductions by a Management Company, etc.

Principal Issues:

Whether surface lease payments are on account of capital or income and whether they are subject to withholding tax if paid to a non-resident.

Position:

Question of fact as to whether they are on account of capital or income. Subject to withholding under 212(1)(d) of the Act if on account of income and subparagraph 115(1)(b)(i) and subsections 116(2) and 116(5) apply if on account of capital.

Reasons:

Principal Issues:

application of subsection 55(2) to a dividend

Position:

question of fact

Reasons:

Principales Questions:

Est-ce que les montants payés à un organisme professionnel pour des séminaires et des cours offerts soit dans le cadre d'un programme de formation continue ou soit, dans le cadre d'un autre programme de formation sont des frais de scolarité admissibles aux fins du paragraphe 118.5(1) de la Loi?

Position Adoptée:

Principales Questions:

Demande de confirmer la position du Ministère concernant des intérêts reçus à la suite d'un congédiement injustifié.

Position Adoptée:

Principal Issues:

1. rent free periods
2. lease inducement payments

Position:

1. no income or expense
2. amortization required over the term of the lease

Reasons:

Principal Issues:

Whether a plan meets the requirements under the ITA to be a deferred salary leave plan.

Position:

Provided regulation 6801 of the Regulations are followed to qualify it as a prescribed plan it would qualify.

Reasons:

Principal Issues:

The impact of temporary work carried on in Canada on an employee's eligibility to claim Overseas Employment Tax Credit

Position:

Work is to be taken into account for purpose of "all or substantially all" test in subsection 122.3(1) of the Act.

Reasons:

Principal Issues:

no relevant research value; taxpayer told to request ruling

Position: N/A

Reasons:N/A

Principal Issues:

Whether a U.S. "S" Corporation is a resident of the U.S. for purposes of Canada-U.S. Income Tax Convention

Position:

Yes

Reasons: