Income Tax Severed Letters - 1996-05-17

Principales Questions:

20(1)(c)(iv) applicable si contrat de rente différé acquis avant 1990 devient un contrat de rente prescrit lorsque la rente débute

Position Adoptée:

Principal Issues:

Principal Issues:

How a loan from a corporate partner to its partnership should be taken into consideration in determining whether the shares of the corporate partner qualify as QSBCS.

Position:

It may be possible to consider the loan to the partnership as a loan made proportionately to each of the partners. On that basis, if any other partner were not a small business corporation connected with the lending corporation, a portion of the loan, representing that other partner's interest in the partnership, would not qualify.

Reasons:

Principal Issues:

Whether election in postamble of definition of "public corporation" has retroactive effect for purposes of RRSP "qualified investment" rules.

Position:

Yes.

Reasons:

Principal Issues:

Are unfunded pension liabilities included in capital for LCT purposes as a reserve or as other indebtedness when outstanding for more than 365 days and if so, is this a policy decision or requirement of the Act?

Position:

If the liability is a legal obligation, rather than a contingent one, the amount is not a reserve. It would be included in capital (of a non-financial institution) if it remained outstanding more than 365 days.

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.

Mr. Gordon R. White

Director
Financial Operations and 960181
Special Projects A.M. Brake
Agriculture Canada
Ottawa, Ontario
K1A 0C5

Attention: April Steel

May 1, 1996

Dear Sirs:

Re: Saskatchewan Safety Net Programs

Principal Issues:

Whether paragraph 28(1)(c) will apply where an individual receives proceeds from the disposition of eligible capital property which exceed the total of his farming loss and his inventory purchases on hand at the end of the year.

Position:

Paragraph 28(1)(c) will not apply.

Reasons:

Principal Issues:
employee benefit arising from payment of MBA tuition where course was taken at the recommendation of the employer

Principal Issues:

Proposed legislation of draft subsection 20.2(2) and what is the definition of borrowed money with respect to the distribution of a dividend.

Position:

This is an actual factual situation and as such gave general comments which are related to his transaction.

Reasons:

Principal Issues:

Whether a corporation that is for all its purposes an agent of the provincial Crown and whose property and income is deemed to be property of the Crown can have taxable income within the meaning of subsection 2(2) of the Act.

Position:

It cannot.

Reasons:

Principal Issues:

1.Whether, where a corporation is granted an option to acquire its own shares and the shares are subsequently sold to a Crown agent or a Crown corporation, subsection 149(10) will apply.

2.Whether, where the 90% or 100%, as the case may be, share ownership test is met, but a corporation has outstanding redeemable and retractable preferred shares, the corporation would be tax-exempt under paragraph 149(1)(d) of the Act.

Position:

1.If 100% in the case of a Crown agent or 90% in the case of a Crown corporation of the corporation's shares are acquired, subsection 149(10) will apply.
No comments in respect of the option to acquire shares.

2.The corporation would not be tax-exempt.

Reasons:

Principal Issues:

Foreign affiliate - Are deferred stripping costs related to mining eligible for the adjustment in Regulation 5907(2.1)?

Position:

No.

Reasons:

Position Adoptée:

Position Adoptée:

Principal Issues:

mandatory conversion of salary to flex credits

Position:

conversion of salary to flex credits creates a taxable event at the time of the conversion

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.

5-952002
XXXXXXXXXX J. Teixeira
(613) 957-8953

April 12, 1996

Dear Sir:

Re: Provincial or Territorial Jurisdiction where corporation earned its income

Principal Issues:

1.Whether one can be re-employed by the same employer after receiving a retiring allowance?
2.Is it possible to transfer a retiring allowance to one's RRSP when one has already received a retiring allowance from the same employer at a previous time?

Position:

1.Yes
2.Yes

Reasons:

Principal Issues:

Do recent changes to the Barbados Exempt Insurance Act enable a captive insurance company, which is a foreign affiliate of a corporation resident in Canada, to be considered, in the context of proposed Income Tax Regulations 5907(11)-(11.2) to be resident in Barbados for purposes of the Canada-Barbados Income Tax Agreement?

Position:

No

Reasons:

Principal Issues: