Income Tax Severed Letters - 1996-06-28

Miscellaneous

15 May 1996 Miscellaneous 961661A - USE OF 1983 INDIVIDUAL ANNUITY MORTALITY TABLE

Unedited CRA Tags
118.1(3)

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.

J. A. MacFarlane
XXXXXXXXXX 5-961661

Attention: XXXXXXXXXX

May 16, 1996

Dear Sir:

Re: Interpretation Bulletin IT-111R2

Ruling

2096 Ruling 9526693 - ORDINARY COURSE OF BUSINESS

Unedited CRA Tags
112(2.1)

Principal Issues:

1.Whether term preferred shares are acquired in the ordinary course of business
2. There are other potential tax consequences which arise from the exchange of debt and preferred shares - section 80 could apply to XXXXXXXXXX depending on the FMV of the preferred shares; and XXXXXXXXXX may have a gain/loss on disposition of debt.
3.Ruling B and C are confirmatory rulings since these rules apply by definition

Position:

1. No
2. XXXXXXXXXX has not requested rulings
3. We will provide favourable rulings

Reasons:

2096 Ruling 9527343 - REORGANIZATION

Unedited CRA Tags
55(3)(b)

Principal Issues: none

Position:

Reasons:

2096 Ruling 9533143 - XXXXXXXXXX DSLP

Unedited CRA Tags
REG 6801(a) 6(1)(g)

Principal Issues:

2096 Ruling 9600293 - FULL GROSS-BASIS BUTTERFLY, PERMITTED REDEMPTION, LOSSES

Unedited CRA Tags
55(3)(b)

Principal Issues:

full gross-basis butterfly, capital losses and terminal losses, whether the transfer of 50% of shares to 2 wings qualifies as a permitted exchange

Position:

2096 Ruling 9600933 - GIFT OF RESIDUAL CAPITAL INTEREST IN TRUST

Unedited CRA Tags
118.1(3)

Principal Issues:

Whether a gift of a residual interest in a trust to a U.S. charity will be treated as a gift to a registered charity for purposes of the Income Tax Act and will give rise to a tax credit within the prescribed limits of subsection 118.1(3) of the Act?

Position:

Yes

Reasons:

Technical Interpretation - External

25 June 1996 External T.I. 9613155 - GRANTS AS TAXABLE INCOME

Unedited CRA Tags
12(1)(x) 9(1)

Principal Issues:

Whether or not a payment under the XXXXXXXXXX is taxable

Position:

yes per 12(1)(x) or section 9 as reduction of expenses depending on how the expense is required to be treated under GAAP by the recipient

Reasons:

21 June 1996 External T.I. 9528355 - SPECIFIED PARTNERSHIP INCOME

Unedited CRA Tags
125(7)

Principal Issues:

Whether a separate calculation under the definition of specified partnership income is required when a partnership has two fiscal periods in the taxation year of the member corporation.

Position: No

Reasons: The Act, 903670 and 952033

19 June 1996 External T.I. 9611895 - RRSP AND DEATH OF ANNUITANT

Unedited CRA Tags
146(8.8)

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.

	                     	961189
XXXXXXXXXX		                            M.P. Sarazin

Attention: XXXXXXXXXX

June 19, 1996

Dear Sirs:

Re: Taxation of RRSP on Death of the Annuitant

19 June 1996 External T.I. 9612795 - "VESTED" EMPLOYER CONTRIBUTIONS

Unedited CRA Tags
60(j.1)(ii)(B)

Principal Issues:

Whether extra $1500 is available for member of defined benefit pension plan for years where no employer or employee contributions were required.

Position:

No.

Reasons:

17 June 1996 External T.I. 9522925 F - SENS DE PAYABLE - NOTE PROMISSOIRE

Unedited CRA Tags
104(24) 104(6) 104(18) 104(13) 104(13.1)

Principales Questions:

1-104(18) de la Loi s'applique-t-il si lorsqu'il y a un seul bénéficiaire dans la fiducie et que le fiduciaire a pouvoir discrétionnaire de payer les revenus 2- si l'acte de fiducie permet au fiduciaire d'émettre une note promissoire aux parents d'un bénéficiaire mineur, l'émission d'une telle note sera-t-elle considérée comme un montant payable au sens du paragraphe 104(24) de la Loi 3- si l'acte de fiducie prévoit que tous les revenus doivent être payés au bénéficiaire, le bénéficiaire peut-il refusé le paiement des revenus?

Position Adoptée:

17 June 1996 External T.I. 9616125 - RESERVE - QUALIFYING FISCAL PERIOD

Unedited CRA Tags
34.2 249.1

Principal Issues:

Whether an individual taxpayer that ceases to operate a professional practice on June 30, 1995 would be entitled to any reserve under subsection 34.2(4) of the proposed legislation concerning fiscal periods.

Position:

Yes, provided the election in subsection 25(1) is made, the taxpayer would be entitled to a reserve in the 1995 taxation year, but not in the 1996 taxation year.

Reasons:

12 June 1996 External T.I. 9613595 - RPP SURPLUS SHARING CONSTRUCTIVE RECEIPT

Unedited CRA Tags
56(1) 8503(15) 147.2

Principal Issues:

Is there constructive receipt of RRSP surplus when a surplus sharing agreement is entered into.

Position:

general reiteration of existing policy on constructive receipt.

Reasons:

12 June 1996 External T.I. 9602255 - APPROVED ASSOCIATION STATUS

Unedited CRA Tags
37(1)(a)(ii)

Principal Issues:

Outline criteria to be met in order to receive approved association status for the purposes of 37(1)(a)(ii)(A).

Position:

Outline of requirements provided.

Reasons:

12 June 1996 External T.I. 9609805 - RRSP INVESTMENT IN CCPC

Unedited CRA Tags
REG 4900(6) REG 4900(12)

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

11 June 1996 External T.I. 9619875 - ELIGIBLE FUNERAL ARRANGEMENT- CARE AND MAINTENANCE FUND

Unedited CRA Tags
148.1(1) REG 237 REG 204(3)(d) 148.1(3)

Principal Issues:

Does a Care and Maintenance Fund established pursuant to the Cemeteries Act (Revised) (Ontario) qualify as a trust governed by an eligible funeral arrangement (as defined in subsection 148.1(1) of the Act)?

Position:

Yes, if the contribution limit of $15,000 per individual for funeral services is not exceeded.

Reasons:

11 June 1996 External T.I. 9616545 - COMPENSATION FOR EXPROPRIATED LAND

Unedited CRA Tags
54 44(1)

Principal Issues:

Whether compensation for expropriated land is taxable.

Position: Yes.

Reasons:

10 June 1996 External T.I. 9611135 - LOSS OF SOURCE INTEREST DEDUCTIBILITY

Unedited CRA Tags
20.1 20(1)(c)

Principal Issues:

application of 20.1 to investment in limited partnership where the ACB of the partnership at the date of dissolution is lower than the original ACB

Position:

Depends on the reason for the decline in the ACB of the partnership interests

Reasons:

10 June 1996 External T.I. 9609315 - MORTGAGE, RRSP, QUALIFIED PROPERTY

Unedited CRA Tags
146(2) 146(1)

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.

	                              					960931
XXXXXXXXXX                            					 M.P. Sarazin

Attention: XXXXXXXXXX

June 10, 1996

Dear Sirs:

Re: Registered Retirement Savings Plan Qualified Investment

10 June 1996 External T.I. 9617625 - SELF-INSURED PHSP -HOW REIMBURSE. CAN BE PAID

Unedited CRA Tags
6(1)(a) 248(1)

Principal Issues:

can an employer reimburse an employee for hospital and medical expenses under a self funded PHSP by 1) giving a reimbursement chq. directly to the employee; 2) reimbursing the supplier of the service directly or 3) added to the employee's pay cheque?

Position:

so long as plan is a PHSP, can reimburse using method 1, 2 or 3. If added to pay cheque, amt. must be identified & segregated from amts subject to payroll deductions

Reasons:

5 June 1996 External T.I. 9618035 - INCOME OR PROFITS TAX FOR FOREIGN AFFILIATE RULES

Unedited CRA Tags
95(1) 5907(1)(l)

Principal Issues:

Can "income or profits tax" for purpose of foreign affiliate rules include Canadian tax?

Position:

Yes.

Reasons:

31 May 1996 External T.I. 9612815 F - TRANSACTION EN CONTRAVENTION AU DROIT CORP.

Unedited CRA Tags
85

Principales Questions:

Quel est le traitement fiscal de transactions proposées incluant une transaction qui est contraite a art 123.43 de la Loi sur les compagnies du Quebec.

Position Adoptée:

28 May 1996 External T.I. 9613915 - Tax Consequences Amend.-Cost Sharing-Health Benefit Plan

Unedited CRA Tags
6(1)(a) 6(1)(f) 6(4) REG 2700

Principal Issues:

In respect of employer provided health benefits, wage loss replacement benefits and group term life insurance benefits, does a change in the cost sharing arrangement, to provide for total employer funding, result in a taxable benefit to the employee?

If there is a coincidental negotiated decrease in the salary levels would the increased employer contributions remain non-taxable to the employee?

Are employer contributions under the amended arrangements deductible to the employer?

Position:

As long as employer contributions are in respect of benefits listed in subparagraph 6(1)(a)(i) then they would not be taxable to the employees.

If employment contracts are renegotiated to effect lower salary levels there would be no tax consequences. If increased employer contributions is really a redirection of amounts of salary legally due to the employee under a valid contract of employment, then taxable remuneration would not be decreased, the contributions would be employee contributions.

Contributions to health benefit plans that are actuarially determined and reasonable are deductible to the contributing employer.

Reasons:

28 May 1996 External T.I. 9608555 - proceeds of disposition

Unedited CRA Tags
13(21.1)

Principal Issues:

Confirmation of calculation of deemed proceeds resulting from application of paragaph 13(21)(b).

Position:

In agreement with client's calculation of deemed proceeds.

Reasons:

21 May 1996 External T.I. 9527855 F - ORG. SANS BUT LUCRATIF - DIVERS SUJETS PRÉCISÉS

Unedited CRA Tags
149(1)(l)

Principales Questions:

Demande de précisions l'interprétation de la définition d'organisation à but non lucratif dans les contextes suivants:

- l'association accorde des prêts à ses membres;

- l'association négocie afin d'obtenir des tarifs préférentiels exclusivement pour ses membres auprès de diverses entités et où l'association reçoit, pour ce service, une commission ou perçoit des honoraires de gestion;

- l'association détient la totalité des actions du capital-actions d'une société imposable.

Position Adoptée:

14 May 1996 External T.I. 9608985 F - PARC D'ATTRACTIONS AMUSEMENT PARK

Unedited CRA Tags
REG 1104 (12) ART 13(5)

Position Adoptée:

9 May 1996 External T.I. 9531485 F - SOCIÉTÉ FOURNISSANT DES SERVICES TECHNIQUES

Unedited CRA Tags
125(7) 18(1)a)

Principales Questions:

Est-ce que le Ministère reconnaît les sociétés mises sur pied par les professionnels dans le but d'exploiter via ces sociétés les activités non professionnelles de leur pratique professionnelle?

Position Adoptée:

6 May 1996 External T.I. 9611245 - SAFE INCOME-PROVISION FOR CAPITAL ITEM, DIVIDENDS

Unedited CRA Tags
55(5)((b)

Principal Issues:

computation of safe income (1) does an accounting provision for an accrued loss on a capital loan reduce safe income? (2) can safe income earned after the commencement of the series be applied to ordinary course dividends paid after the commencement of the series?

Position:

(1) no (2) yes.

Reasons:

6 May 1996 External T.I. 9530985 F - DÉFINITION «TRANSFORMATION IMPORTANTE» ET «CONVERSION»

Unedited CRA Tags
13(14) 13(21) 1100(1)v)

Principales Questions:

Qu'est-ce qu'on entend par «transformation importante» ou «conversion» dans la définition du terme «conversion» au paragraphe 13(21) de la Loi. Quelles dépenses en capital se qualifient à titre de «frais de conversion» aux fins de l'application du paragraphe 13(14) de la Loi et de l'amortissement accéléré prévu à l'alinéa 1100(1)v) du Règlement?

Position Adoptée:

29 April 1996 External T.I. 9614485 - PART XIII - RRSP OF DECEASED NON-RESIDENT

Unedited CRA Tags
212(1)(l) 146(8.8)

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 961448

Attention: XXXXXXXXXX

April 29, 1996

Dear Sirs:

Re: Taxation of RRSPs of Deceased Non-Resident

26 April 1996 External T.I. 9529835 F - AVOIR MINIER CANADIEN

Unedited CRA Tags
66(15) 248(1)

Principales Questions:

Est-ce que les droit d'extraction du granit et les droits de recevoir une redevance calculée en fonction du granit extrait d'une carrière de granit qualifient à titre d'avoir minier canadien selon le paragraphe 66(15) de la Loi?

Position Adoptée:

23 April 1996 External T.I. 9611405 - LIMITED RECOURSE AMOUNT

Unedited CRA Tags
143.2

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 961140

Attention: XXXXXXXXXX

April 23, 1996

Dear Sirs:

Re:Proposed Section 143.2 of the Income Tax Act (the "Act")

17 April 1996 External T.I. 9601865 - PROTECTIVE TRUST

Unedited CRA Tags
54 75(2)

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 ‚mis,

peut ne pas repr‚senter la position actuelle du ministŠre.

960186
XXXXXXXXXX G. Kauppinen
(613) 957-4363

April 17, 1996

Dear Sir:

13 February 1996 External T.I. 9604745 - RE-REGISTRATION OF MUTUAL FUND UNITS

Unedited CRA Tags
73(1)

Principal Issues:

Inter-spousal transfers of interest in mutual funds.

Position:

May qualify for rollover.

Reasons:

Technical Interpretation - Internal

10 June 1996 Internal T.I. 9610057 F - INDEMNITÉS POUR DOMMAGES CORPORELS DE CSST

Unedited CRA Tags
56(1)(v) 110(1)(f)(ii) REG 232

Principales Questions:

Est-ce que les indemnités versées par une commission des accidents du travail en raison de la surdité causée par l'emploi du particulier sont des sommes visées à l'alinéa 56(1)v) de la Loi de l'impôt sur le revenu et au sous-alinéa 110(1)f)(ii) de la Loi?

Est-ce qu'un feuillet T5007 devrait être émis?

Position Adoptée:

16 May 1996 Internal T.I. 9616950 - SALE OF TIMBER FROM PRIVATE LAND

Unedited CRA Tags
9 12(1)(g) 54

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.

1996 Calgary TSO - Alberta CA Roundtable

Question #5

13 May 1996 Internal T.I. 9612587 - LEASE CANCELLATION PAYMENTS

Unedited CRA Tags
IT 359R2

Principal Issues:

Lease Cancellation payment

Position:

Gave general position in IT-359R2

Reasons:

10 May 1996 Internal T.I. 9616490 - NON-RESIDENT WITHHOLDING TAX ON FEES

Unedited CRA Tags
REG 105 REG 102

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.

Calgary TSO Round Table - AICA

Q. 16 Non-Resident Withholding Tax as an Expense

Comments

You may wish to consider mentioning the following in the "Note for Presenter":

10 April 1996 Internal T.I. 9609467 - ITC-TSFR. ON DEATH

Unedited CRA Tags
127(9) 13(21)

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.

April 10, 1996

Kitchener-Waterloo Tax Services Office Resources, Partnerships
Mark Deakin and Trusts Division
Director F. B. Fontaine

Ministerial Letter

28 March 1996 Ministerial Letter 9607338 - SR&ED

Unedited CRA Tags
37(1) REG 2900(1) REG 2902

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.

March 28, 1996

20 March 1996 Ministerial Letter 9608528 - AWARDS

Unedited CRA Tags
6(1)(a) 15(1) 9(1)

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

March 20, 1996

Dear XXXXXXXXXX

I am replying to your letter of March 1, 1996 in which you asked about the tax consequences of a sales incentive program.