Income Tax Severed Letters - 1996-05-31

Principal Issues:

allowances for room & board, & transportion to and from special work site

Position:

reasonable allowance is exempt if conditions of 6(6) are met

Reasons:

Principal Issues:

whether the XXXXXXXXXX offers specialized programs for learning disabled students & whether the basic fees paid for 2 students is deductible as a medical expense

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.

		960774
XXXXXXXXXX	M.P. Sarazin

Attention: XXXXXXXXXX

May 24, 1996

Dear Sirs:

Re: Foreign Property and Mortgages

Principal Issues:

Whether deposit paid to XXXXXXXXXX school constitutes a charitable donation when forfeited.

Position:

No.

Reasons:

Principal Issues:

Whether Extended cab pick-up trucks that seat the driver and in excess of 2 passengers are class 10 or Class 10.1.

Position:

Determination of fact based on the use of the truck in the year acquired. A passenger vehicle as defined in subsection 248(1) of the Income Tax Act (the "Act") "means an automobile...". The definition of automobile as contained in subsection 248(1) of the Act would otherwise include a regular or extended cab truck unless it fell within one of the exceptions set out in paragraphs (b) through (e). Since the trucks seat the driver and more than two passengers, they cannot fit within the subparagraph 248(e)(i) exclusion.

Reasons:

Principal Issues:

Whether amount of cash and investments of corporation may be reduced by amount of loan from shareholders so that 90% of fmv test of assets can be met.

Position:

Question of fact whether cash is used in active business, but fact that it is borrowed from shareholders is irrelevant.

Reasons:

Principal Issues:
Whether the Department would apply subsection 110.6(8) in a situation where the payment of dividends was prohibited by corporate law tests of liquidity and solvency.

Principal Issues:

whether legal fees incurred in connection with the enforcement of court ordered payments are deductible under the circumstances described.

Position:

1)legal fees to enforce payment of a lump sum payment of support which is not subject to tax are not deductible.

2)legal fess incurred to enforce payment of arrears of periodic support payments are deductible to the extent that they are incurred for the purpose of producing income from a property and are not outlays of a capital nature. They would only be deductible to the extent that they related to the enforcement of the pre-existing right to alimony or maintenance which would otherwise be taxable. This will be a question of fact.

Reasons:

Principal Issues:

Investment in a business corporation as a qualified investment for an RRSP

Position:

Routine reply on 4900(6) and (12) with update for October 31/95 passage of amendments (no discussion of transitional rules with respect to property acquired between Dec. 2/92 and November 29/94).

Reasons: N/A

Principales Questions:

Une créance dont les intérêts sont payés au moins annuellement à un taux égal au plus élevé du taux en vigueur à l'émission de la créance et du taux à la date du paiement de l'intérêt, est-il une créance prescrite?

Position Adoptée:

Principal Issues:

Application of attribution rules to income arising from various joint investments.

Position:

Question of Fact as to extent attribution rules will apply. General comments provided.

Reasons:

Principal Issues:

Clarification and correction of our opinion 960911 dated May 1, 1996 concerning the carry back of Unused Part I.3 Tax Credits flowed through from a subsidiary on a winding-up to a tax year of the parent that ended prior to the winding-up.

Position:

Yes.

Reasons:

Principal Issues:

Are deferred leasing costs and leasehold inducement expenses deductible to the parent in the year, the related asset is sold to the subsidiary?

Position:

No, deductible over the years the expenses relate

Reasons:

Principal Issues:

General discussion of taxation consequences on death of RRIF annuitant where beneficiaries are the children and grandchildren.

Position: N/A

Reasons: N/A