Income Tax Severed Letters - 1996-05-03

Principal Issues:

Principal Issues:

1.Whether our position concerning the allocation of patronage dividends when shares of a co-op are held by a member's RRSP conflicts with an earlier opinion relating to bonus interest payments made by a credit union on deposits in RRSPs.

2.What would the Department consider to be "proper documentation" when a member's equity in a co-op is transferred to an RRSP.

Position:

1.There is no conflict.

2.No comment.

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.

XXXXXXXXXX 5-961056

A l'attention de XXXXXXXXXX

Le 25 avril 1996

Mesdames, Messieurs,

Objet: Utilisation des pertes autres qu'en capital d'une société

Principal Issues:

Whether the beneficial ownership of a mortgage acquired by a MIC pursuant to the terms of a trust agreement would qualify as a debt owing to the MIC that was secured on residential property for the purposes of subparagraph 130.1(6)(f)(i).

Position:

This is a question of fact which can only be determined after a review of the terms of the trust agreement.

Reasons:

Principal Issues:

Where an employer corporation amalgamates with its parent, would the amalgamated corporation be considered an affiliate of the employer corporation for purposes of retiring allowance payment?

Position:

Yes

Reasons:

Principal Issues:
Correction of 5-950432

Position:
Wording 7(1)(e)

Reasons: N/A

Principal Issues:

1) is the purchase of a unit of a partnership involved in an active business considered investment of funds for 132(6)(b)(i)?

2) Can a DPSP invest in Fund where fund holds debt of an employer participating in the DPSP?

3) Can fund hold foreign currency on temporary basis?

4)Is writing of put option and covered call options investing of funds?

Position:

1) No 2) No 3) No 4) Yes

Reasons:

Principal Issues:

whether family member must report interest income earned on investments purchased by that family member

Position:

he must report the interest earned on the GICs purchased with money gifted by him to his grandchildren even though the interest is being placed in their accounts

Reasons:

Principal Issues:

Alphabet Shares - Are they taxable preferred shares ?

Also - if a separate subsidiary is incorporated to carry on separate lines of business, will the shares of the subsidiary be considered to have been acquired in the "ordinary course of business" for puposes of 112(2.1) ?

Position:

Question of fact - yes if dividend entitlement is limited by virtue of share terms or agreement relating to shares. See file #940103 for analysis.

Question of fact, but generally no - see 1984 Round Table - Question #62

Reasons:

Principal Issues:

Whether, capital cost allowance can be claimed by a taxpayer who has a remainder interest in property.

Position:

CCA cannot be claimed in respect of the remainder interest. However, the taxpayer may be able to claim capital cost allowance if he has a leasehold interest in the property.

Reasons:

Principal Issues:

A parent corporation that is controlled by one individual sells an automobile to its subsidiary for proceeds equal to fair market value. The issue is whether the standby charge for the purposes of subsection 6(2) of the Income Tax Act (the Act) should be computed on the basis of the cost of the automobile to the parent or by reference to the cost of the automobile to the subsidiary.

Position:

The original cost to the parent would be used.

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.

		961212
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

April 15, 1996

Dear Sir/Madam:

Re: Subparagraph 18(1)(l)(i) of the Income Tax Act (the "Act")

Principales Questions:

1-Une société opérant un site d'enfouissement sanitaire reçoit des sommes de ses clients pour, entre autres, des services qui seront offerts lors de la fermeture du site et l'entretien après la fermeture du site. Peut-elle prendre une provision annuelle en vertu de l'alinéa 20(1)m) de la Loi de l'impôt sur le revenu sur les sommes reçues visant de tels services, incluant les revenus d'intérêts gagnés sur les fonds de réserve?

2- Si une partie des sommes reçues sont déposées dans un compte en fiducie, la société doit-elle s'imposer sur les revenus d'intérêts?

Position Adoptée: