Income Tax Severed Letters - 1996-08-09

Ruling

2096 Ruling 9603783 - XXXXXXXXXX

Unedited CRA Tags
XXXXXXXXXX XXXXXXXXXX

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

									3-960378
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sir:

Re:XXXXXXXXXX
Advance Income Tax Ruling

2096 Ruling 9526263 - LOSS CONSOLIDATION

Unedited CRA Tags
20(3) 20(1)(c)

Principal Issues:

Loss Consolidation on transfer of interest income within a related group of corporations

Position:

Rulings given

Reasons:

2096 Ruling 9604763 - PARTNERSHIP LOSSES - SIMILAR PROPERTIES

Unedited CRA Tags
37(6.1)(b)(i)(B) 111(5)(a)(ii) 127(9.1)(d)(i)(B) 88(1.1)(e)(ii) 88(1)(e.3)(ii)(C)(I)

Principal Issues:

1. Would the XXXXXXXXXX be "similar properties" for purposes of subparagraphs 88(1.1)(e)(ii) and 111(5)(a)(ii), clause 37(6.l)(b)(i)(B) and 127(9.1)(d)(i)(B), and subclause 88(1)(e.3)(ii)(C)(I) of the Act?

Position:
1. Yes.

Reasons:

2096 Ruling 9531093 - C.G. EXEMPTION - INTERNAL CRYSTALLIZATION

Unedited CRA Tags
110.6(8) 110.6(2.1) 54

Principal Issues:

1.Whether the transfer of common and special shares to a corporation in exchange for other shares of the corporation constitutes a disposition within the meaning of section 54 of the Act?

2.Whether subsection 110.6(8) will apply to deny the capital gains exemption claimed under subsection 110.6(2.1) of the Act?

3.Whether GAAR would apply to the proposed transactions?

Position:

1.The transfer would constitute a disposition.

2.Subsection 110.6(8) will not apply.

3.GAAR will not apply.

Reasons:

2096 Ruling 9606693 - STRUCTURED SETTLEMENTS

Unedited CRA Tags
56(1)(d)

Principal Issues:

2096 Ruling 9600243 - RELATED GROUP LOSS UTIL SCHEME

Unedited CRA Tags
20(1)(c)

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.

									3-960024

XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: Advance Income Tax Ruling
XXXXXXXXXX

2096 Ruling 9612483 - STRUCTURED SETTLEMENTS

Unedited CRA Tags
56(1)(a) 12.2

Principal Issues:

2096 Ruling 9600343 - C.G. EXEMPTION - REDEMPTION OF SHARES

Unedited CRA Tags
84(3) 85(2.1) 110.6(8) 110.6(1)

Principal Issues:

1.Whether subsection 85(2.1) of the Act will apply to reduce the paid-up capital of shares issued in the course of a subsection 85(1) rollover which took place prior to November 21, 1985.

2.Whether shares which qualify as "shares of the capital stock of a family farm corporation" will constitute "qualified farm property" within the meaning of subsection 110.6(1) of the Act.

3.Whether subsection 110.6(8) of the Act will apply to deny the taxpayer the capital gains deduction to which he would otherwise be entitled under subsection 110.6(2) of the Act.

Position:

1.Subsection 85(2.1) will not apply.

2.The shares will qualify as "qualified farm property".

3.Subsection 110.6(8) will not apply.

Reasons:

2096 Ruling 9525393 F - SOCIÉTÉ DE PENSION

Unedited CRA Tags
149(1)(o.2)(iii)

Principales Questions:

L'achat d'une option d'achat dans une propriété va-t-il entrainer l'application de 149(1)o.2)(ii)?

Position Adoptée:

2096 Ruling 9600363 - RELATED BUSINESS

Unedited CRA Tags
149.1(2)

Principal Issues:

Whether registered charity status would be revoked if charity under takes a proposed XXXXXXXXXX program.

Position:

NO.

Reasons:

2096 Ruling 9603763 - REORGANIZATION

Unedited CRA Tags
55(3)(b) 55(3.1)

Principal Issues: whether 55(3.1) applies

Position:no

Reasons:wording of provisions

13 March 1996 Ruling 9524483 - XXXXXXXXXX

Unedited CRA Tags
104(14) 2800(1)

Principal Issues:

1.authority of trustees to make a preferred beneficiary election
2.ordering of will clauses
3.calculation of preferred beneficiary election where default clauses very broad
4.whether potential appointee under special power of appointment is a beneficiary prior to actual appointment

Position:

1.trustees had the authority to make election
2.logically read in succession
3.preferred beneficiaries included all those potential residuary default beneficiaries
4.issue researched but no conclusion drawn as ruling was withdrawn on issue 3

Reasons:

Technical Interpretation - External

25 July 1996 External T.I. 9624895 F - RS&DE - DROIT D'EXPLOITER LE RESULTAT

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

Principales Questions:

Une entreprise peut-elle rencontrer le critère du droit d'exploiter les résultats de la recherche pour les fins de l'alinéa 37(1)a)(ii) de la Loi si elle ne possède pas la propriété intellectuelle des projets de RS&DE?

Position Adoptée:

24 July 1996 External T.I. 9617285 - EMPLOYER-PROVIDED PARKING

Unedited CRA Tags
6(1)(a)

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.

									961728
XXXXXXXXXX							M. Eisner
(613) 957-2138

Attention: XXXXXXXXXX

July 24, 1996

Dear Sirs:

Re: Employer-Provided Parking

This is in reply to your letter of May 14, 1996 concerning the above-noted subject.

23 July 1996 External T.I. 9615915 - TIMING OF REVENUE RECOGNITION S

Unedited CRA Tags
9(1) 12(1)(a) 12(1)(b)

Principal Issues:

The timing of the recognition of revenue and expenses in that segment of the service industry where services is performed upon the property of the client.

Position:

Revenue is recognized at the time the performance of the service contract is billed or able to be billed

Reasons:

23 July 1996 External T.I. 9621615 - XXXXXXXXXX - Group insurance arrangements

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

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.

									962161
XXXXXXXXXX							J.A. Szeszycki
(613) 957-2135

Attention: XXXXXXXXXX

July 23, 1996

Dear Sirs:

Re: XXXXXXXXXX
Group Insurance Arrangements

23 July 1996 External T.I. 9618085 - COMMISSIONS EARNED BY SECURITIES

Unedited CRA Tags
5(1)

Principal Issues:

Whether commissions earned by a securities salesperson on transactions involving his or her personal account are taxable or do they fall within the position set out in paragraph 27 of IT-470R.

Position:

Yes.

Reasons:

19 July 1996 External T.I. 9623625 - PATRONAGE ALLOCATIONS / DIVIDENDS

Unedited CRA Tags
135(7) 125(1) 125.1 20(1)(v.1) 1204R

Principal Issues:

Whether income received an allocation in proportion to patronage (subsection 135(7)) is income from an active business (and eligible for the small business deduction or the M&P deduction) and/or is income included in determining resource profits.

Position:

No opinion - patronage dividends may represent adjustment in price of product or distribution of profits.

Reasons:

17 July 1996 External T.I. 9621505 - AGRICULTURE ADAPTATION GRANTS

Unedited CRA Tags
12(1)(x)

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 Special Projects	962150
Agriculture Canada						A.M. Brake
Ottawa, Ontario
K1A 0C5

Attention: April Steel, CMA

July 17, 1996

Dear Sirs:

Re: Agriculture Adaptation Grants

17 July 1996 External T.I. 9615465 - TAX IMPLICATIONS OF CICA 3860

Unedited CRA Tags
181(3) 181.2(3)(i) 190(2) 18(4) 181.2(3)(a)

Principal Issues:

1.Whether high-low preferred shares issued in the course of an estate freeze would be treated as capital stock or as debt for Part I.3 purposes in light of section 3860 of the CICA handbook? If they are treated as debt, which paragraph of the definition of "capital" in subsection 181.1(3) would they fall into?
2.If the preferred shares are treated as capital stock, would the amount added to capital under paragraph 181.1(3)(a) be the stated capital of the shares or the redemption amount as shown on the balance sheet?
3.If the corporation adopts an alternate presentation that shows the difference between the redemption value and the stated capital as a separate, negative component of shareholders' deficiency described as "Provision for redemption of preferred shares," would the provision be deductible in calculating the corporation's capital? If so, would the net of the provision and retained earnings be deducted as a deficit under paragraph 181.2(3)(i)?
4.Whether handbook section 3860 would affect the determination of capital for Part VI purposes?
5.Whether the preferred shares would be treated as debt or shares for the purposes of subsection 18(4).
6.If a deficit results from the application of handbook section 3860, can the negative adjustment be excluded in determining the corporation's retained earnings for the purposes of subsection 18(4) or, if the corporation adopts the alternate presentation, must the provision for redemption of preferred shares be deducted?
7.If dividends on preferred shares are deducted as interest expense or financing costs for income statement purposes in accordance with handbook section 3860, are there any circumstances under which that amount would not be added back in reconciling book income with income or loss for tax purposes?

Position:

1.Capital stock.
2.Amount reflected on the balance sheet in accordance with GAAP which appears to be the redemption amount.
3.Not deductible.
4.Generally same implications as for Part I.3.
5.Shares.
6.The negative adjustment is included in computing retained earnings to the extent that the amount of retained earnings is reduced to nil. If the alternate presentation is adopted, the provision for redemption of preferred shares is not deducted in computing retained earnings.
7.Generally, no.

Reasons:

16 July 1996 External T.I. 9612305 - Regulation 2702 - Meaning of "Paid"

Unedited CRA Tags
REG 2702(2) 6(4)

Principal Issues:

1.whether the calculation of the "average daily cost of insurance" has changed now that the wording is slightly different in draft Regulation 2702.
2.whether in circumstances where amounts are not paid directly to policyholder those amounts are still considered "paid" for purposes of the calculation.

Position:

1.Essentially, the calculation is the same. The added feature is the reduction of the C amount by that portion of the experience rated refund or dividend that is distributed to individuals insured under the policy
2.The term "paid" in this context includes amounts unconditionally credited to the policyholder or individual insured under the policy, i.e., constructively received by the "payee".

Reasons:

16 July 1996 External T.I. 9622405 - POST-DATED CHEQUES

Unedited CRA Tags
76(1) 76(4)

Principal Issues:

Timing of income to a cash basis farmer with respect to postdated cheque received for payment of grain. The cheque includes an interest factor based on time (date grain was delivered to the date of the cheque 2 or 3 years later) and current investment rates.

Position:

Subsection 76(4) provides for a deferral to the following year "where a cash purchase ticket or other form of settlement prescribed pursuant to the Canada Grain Act or by the Minister is issued to a taxpayer in respect of grain delivered in a taxation year of a taxpayer to a primary elevator or process elevator and the ticket or other form of settlement entitles the holder thereof to payment by the operator of the elevator of the purchase price, without interest, ..." While a Deferred Cash Purchase Ticket for Grain is essentially a cheque, (though it has been described as a negotiable instrument, with additional prescribed information) in our view, a bare post-dated cheque that is not as described above would not qualify, even without interest, for deferral under subsection 76(4) and certainly a post-dated cheque, with interest, would not. Hence, no deferral under subsection 76(4). The amounts would be income under 76(1) when post-dated cheque is received in full settlement of the debt that was payable at the time the grain was delivered. This position is set out in paragraph 6 of IT-433R.

Reasons:

16 July 1996 External T.I. 9617885 - TUITION TAX CREDIT

Unedited CRA Tags
118.5

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.

									961788
XXXXXXXXXX							M. Eisner

July 16, 1996

Dear Sir:

Re: Tuition Tax Credit

This is in reply to your letter of March 1, 1996, sent to the Winnipeg Tax Services Office and forwarded to us for reply.

15 July 1996 External T.I. 9617645 - DEREGISTERED RPP TRANSFER TO FOREIGN PLAN

Unedited CRA Tags
REG 6804

Principal Issues:

Effect of 6804 election on Trustee

Position:

Discussed provisions in general terms.

Reasons:

10 July 1996 External T.I. 9516205 - : Spousal Trust and U.S. Treaty

Unedited CRA Tags
: 70(6), Treaty US Article XXIX

Principal Issues:
Is a revocable living trust established by a person resident in the U.S. a trust described in subsection 70(6) of the ITA for the purposes of paragraph 5 of Article XXIX B of the CDA/US Income Tax Convention - 3rd Protocol.

Position:
No.

Reasons:
A trust described in subsection 70(6) must be established by a t/p's will. Since a revocable living trust is established inter vivos and not by a t/p's will, it is not a trust described in subsection 70(6) for the purposes of paragraph 5 of Article XXIX B.
XXXXXXXXXX

10 July 1996 External T.I. 9609035 F - MONTANTS D'ASSISTANCE FINANCIERE

Unedited CRA Tags
ART 56(1)(n) ART 153(1) REG 200(2)

Principales Questions:

1. Les allocations de formation, de frais de garde d'enfants, d'éloignement, de trajets quotidiens sont-elles sujettes à imposition pour l'immigrant qui bénéficie des services d'intégration linguistique visés par le Règlement sur les services d'intégration linguistique et sur l'assistance financière?

2. Des déductions à la source doivent-elles être faites et des feuillets de renseignements complétés?

Position Adoptée:

9 July 1996 External T.I. 9622525 - PENSION TRANSFER TO RRSP AND RCA

Unedited CRA Tags
8(1)(m.2) 147.3

Principal Issues:

Large payout of RPP funds 1. can excess be contributed to an RCA by employee and deducted 2. Can surplus payout be transfered as a refund of contributions.

Position:

1. No.
2. A refund of contributions can be made. Explained rules (but not likely of any real benefit in the case at hand)

Reasons: Routine explanation of law.

4 July 1996 External T.I. 9612265 - SMALL BUSINESS CORPORATION - CASH

Unedited CRA Tags
248(1)

Principal Issues:

Whether a corporation whose only asset is cash would qualify as a "small business corporation".

Position:

Cannot confirm that corporation has commenced to carry on a business or that cash is used in the business.

Reasons:

27 June 1996 External T.I. 9605225 - ARTICLE XII US CONVENTION - PAYMENTS FOR USE OF DATABASE

Unedited CRA Tags
ART XII

Principal Issues:

Article XII paragraph 3 of the U.S. Convention - Are payments for the use of a database for the use of information concerning commercial experience?

Position:

Yes based on these facts (agreements provided). Still question of fact if meets second requirement for exemption that not in connection with a rental or franchise agreement.

Reasons:

26 June 1996 External T.I. 9616115 - STOCK BONUS PLAN

Unedited CRA Tags
6 7

Principal Issues:

Whether stock bonus plans are subject to section 7.

Position:

Yes.

Reasons:

26 June 1996 External T.I. 9614805 - XXXXXXXXXX DSLP

Unedited CRA Tags
REG 6801(a)

Principal Issues:

Review of 6801(a) plan.

Position:

Gave comments.

Reasons:

11 June 1996 External T.I. 9620265 - PAYMENTS FROM A LIFE INCOME FUND TO A NR

Unedited CRA Tags
212(1)(q)

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.

									962026
XXXXXXXXXX							Jim Wilson

Attention: XXXXXXXXXX

June 11, 1996

Dear Sirs:

Re: Payments from a Life Income Fund to a Non-Resident

7 June 1996 External T.I. 9619535 - CASH PAYMENT

Unedited CRA Tags
9(1)(a) 18(1)(a)

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.

									5-961953
XXXXXXXXXX							J. Teixeira
(613) 957-2095

Attention: XXXXXXXXXX

June 7, 1996

Dear Sirs:

28 May 1996 External T.I. 9610735 F - AIDE FINANCIERE ACCORDEE AUX PRODUCTEURS

Unedited CRA Tags
125.4

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.

									5-961073
XXXXXXXXXX							Michel Lambert
(613) 957-8953
A l'attention de XXXXXXXXXX

Le 28 mai 1996

Mesdames, Messieurs,

Objet: Aide financière accordée aux producteurs

27 May 1996 External T.I. 9509105 F - SOMME PAYABLE A UN BENEFICAIRE D'UNE SUCCESSION

Unedited CRA Tags
104(24) 104(6)b)

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.

									5-960910
XXXXXXXXXX							Michel Lambert
(613) 957-8953

A l'attention de XXXXXXXXXX

Le 27 mai 1996

Mesdames, Messieurs,

Objet: Sommes payables à un bénéficiaire d'une succession

22 May 1996 External T.I. 9609365 - PATRONAGE ALLOCATIONS/DIVIDENDS

Unedited CRA Tags
135(7)

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.

									960936
XXXXXXXXXX							Denise Dalphy
(613) 957-9231

Attention: XXXXXXXXXX

May 22, 1996

Dear Sirs:

Re: Patronage Allocations

22 May 1996 External T.I. 9609295 F - ENTRAINEUR/JOUEUR IMPOSABLE AU CANADA OU EN SUISSE?

Unedited CRA Tags
ART xv ART XVII ART XXII

Principales Questions:

Est-ce que le salaire d'un résident du Canada qui travaille en Suisse à titre de joueur/entraîneur d'une équipe de hockey et qui demeure à l'étranger pour plus de 183 jours serait imposable qu'en Suisse aux termes des articles XV et XVII de la convention fiscale Canada-Suisse?

Position Adoptée:

Technical Interpretation - Internal

8 July 1996 Internal T.I. 9620857 - RETIRING ALLOWANCE VESTING PENSION

Unedited CRA Tags
60(j.1)

Principal Issues:

Clarify when employer pension contributions remain vested in retiring employee

Position:

As long as any future benefits or lump sums are payable

Reasons:

26 June 1996 Internal T.I. 9616687 - WHETHER "SPOUSE" IS SEPARATED

Unedited CRA Tags
146(1) 146(5.1)

Principal Issues:

Whether legally married separated individual has a "spouse".

Position:

Yes.

Reasons:

24 June 1996 Internal T.I. 9612907 - CREDITABILTY OF U.S. BRANCH PROFITS TAX

Unedited CRA Tags
126

Principal Issues:

Whether U.S. Branch Profits Tax is a Creditable Tax

Position:

Yes

Reasons:

Ministerial Letter

24 July 1996 Ministerial Letter 9621888 - AUDITOR GENERAL'S REPORT ON 2 TRUSTS THAT LEFT CANADA

Unedited CRA Tags
104(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.

MINISTER/DEPUTY MINISTER'S OFFICE 96-04401M
ADM'S OFFICE

RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS ST.

PENDING

July 24, 1996

XXXXXXXXXX

Dear XXXXXXXXXX

16 July 1996 Ministerial Letter 9621468 - AUDITOR GENERAL'S REPORT ON FAMILY TRUSTS

Unedited CRA Tags
104(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.

MINISTER/DM'S OFFICE 96-04213M
ADM'S OFFICE

RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS ST.

PENDING

July 16, 1996

XXXXXXXXXX

Dear XXXXXXXXXX

16 July 1996 Ministerial Letter 9622638 - AUDITOR GENERAL'S REPORT ON FAMILY TRUSTS

Unedited CRA Tags
104(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.

MINISTER/DM'S OFFICE 96-04151M
ADM'S OFFICE

RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS ST.

PENDING

July 16, 1996

XXXXXXXXXX

Dear XXXXXXXXXX

16 July 1996 Ministerial Letter 9619618 F - COMMENTAIRES SUR FIDUCIES FAMILIALES DES AINEES

Unedited CRA Tags
104(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.

MINISTER/DM'S OFFICE YS# 96-03826M
ADM'S OFFICE

RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS ST.

PENDING

Le 16 juillet 1996

XXXXXXXXXX

Monsieur,