Income Tax Severed Letters - 1996-11-15

Ruling

30 November 1995 Ruling 9626133 - BUTTERFLY

Unedited CRA Tags
55(3)

Principal Issues:

This ruling was issued as a replacement for 3-962147 dated XXXXXXXXXX 1996 (the "Original Ruling"). The only difference between this and the Original Ruling is the ordering of the transactions. In the Original Ruling, XXXXXXXXXX transferred certain of its assets into subsidiary corporations and then carried out a butterfly transaction. In this ruling, XXXXXXXXXX butterflies assets to Newco and Newco transfers those assets to subsidiary companies. The reordering of the transactions was necessitated by the concerns of the XXXXXXXXXX which is the principal lender to XXXXXXXXXX, regarding security for its loans.

Position:

Reasons:

30 November 1995 Ruling 9606403 F - DISSOLUTION D'UNE ASSOCIATION OUVRIERE

Unedited CRA Tags
ART 149(1)(k) ART 54 ART 39(1) ART 8(1)(i)

Position Adoptée:

Technical Interpretation - External

28 October 1996 External T.I. 9625575 F - AUGMENTATION DU CAPITAL VERSE

Unedited CRA Tags
84(1)(c.3)(iii)

Principales Questions:

Est-ce que 84(1)(c.3)(iii) est applicable si le montant de la réduction du capital versé a été passé en réduction du déficit et que le contribuable créé par la suite un surplus d'apport en débitant ses BNR et ensuite convertit le surplus d'apport en capital versé?

Position Adoptée:

22 October 1996 External T.I. 9627685 - EMPLOYER-PROVIDED AUTOMOBILES

Unedited CRA Tags
6(1)(e) 6(1)(k) 6(2)

Principal Issues:

1.In 1996, can the 6(1)(k) benefit be avoided if the amounts paid by employer are reimbursed in full? 2. If two vehicles are used by the employee, one for less than 10% peronal use and one for slightly more, is there an averaging out? 3. Where a vehicle is transferred to another province and another PST incurred, how is the second PST treated for standby charge purposes? 4. Does the position regarding proration of terminal charge or credit apply if there is less than 100% unanimity or all returns of affected employees are available for reassessment? 5. If a lease is structured to drop the monthly charge to a nominal amount for the latter part of the lease, is there a requirement to even out the monthly charge?

Position:

1.Paragraph 6(1)(k) has not changed in that regard. 2. The standby charge is computed separately for each vehicle unless there is no assignemnt of a specific vehicle. 3. The cost of the vehicle for standby charge purposes includes any PST charges incurred. 4. No, the opportunity for matching the charge ideally is lost if certain returns are not available or employees are not in agreement. 5. Using the same principle as set out in paragraph 13 of IT-63R5 to the prorating of beginning lumpsum payments to the rest of there term we expect monthly charges to be spread evenly over the term of the lease, however, there is room for case by case consideration.

Reasons:

17 October 1996 External T.I. 9623675 - ENDURING POWER OF ATTORNEY

Unedited CRA Tags
251(5)(b) 256(1.4)(a)

Principal Issues:

Whether 251(5)(b) and 256(1.4)(a) apply to an enduring power of attorney?

Position:

It depends on the relevant provisions of the EPA.

Reasons:

17 October 1996 External T.I. 9622215 F - PERTES AUTRES QU'EN CAPITAL

Unedited CRA Tags
111(1)(a) 111(3)(a)

Principales Questions:

Est-ce que le Ministère peut modifier le montant des pertes autres que des pertes en capital utilisées dans une année d'imposition après la période normale de nouvelle cotisation?

Position Adoptée:

16 October 1996 External T.I. 9625675 - PRINCIPAL RESIDENCE EXEMPTION - TRANSFER TO TRUST

Unedited CRA Tags
54 69(1)

Principal Issues:

Transfer of property to trust by parents. Land not severable, ownership repercussions and eligibility for principal residence exemptions.

Position:

Since land is not legally severable, parents cannot retain beneficial ownership of only a portion of it. Disposition on transfer of property to trust. Any gain could be fully or partially offset by the principal residence exemption if applicable. Possibility of principal residence exemption for trust regarding the residence and necessary land.

Reasons:

30 September 1996 External T.I. 9632445 - PARAGRAPH 9 OF IT-113R4

Unedited CRA Tags
7(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.

G. Moore
XXXXXXXXXX  							952-1506
									5-963244

September 30, 1996

Dear XXXXXXXXXX

Re:Interpretation Bulletin IT-113R4
Benefits to Employees - Stock Options

27 September 1996 External T.I. 9630155 - SAFE INCOME - ACCOUNTING WRITE-DOWN PROVISIONS

Unedited CRA Tags
55(2)

Principal Issues:

Where a corporation writes down the carrying value of a capital asset for accounting purposes, will this reduce safe income on hand?

Position:

No.

Reasons:

17 September 1996 External T.I. 9625255 - ACB OF PARTITIONED INTEREST.

Unedited CRA Tags
248(21)(b)

Principal Issues:

ACB OF NEW INTEREST UPON A PARTITION OF A PROPERTY.

Position:

ACB OF NEW INTEREST EQUAL TO ACB OF UNDIVIDED INTEREST IN PROPERTY BEFORE THE PARTITION.

Reasons:

Conference

14 June 1996 CTF Roundtable Q. 15, 9620760 - 55(3)(A) TIMING OF RELATED TEST

Unedited CRA Tags
55(3)(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.

Canadian Tax Foundation
Corporate Management Tax Conference
June 14, 1996

Question 15 - Related Person Test in Paragraph 55(3)(a)

Can Revenue Canada clarify the point in time when the related person test in paragraph 55(3)(a) should be determined:

12 June 1996 CTF Roundtable Q. 16, 9620770 - BUTTERFLY - MEANING OF "REORGANIZATION"

Unedited CRA Tags
55(3)(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.

Canadian Tax Foundation
Corporate Management Tax Conference
June 14, 1996

Question 16 - Meaning of "Reorganization" for Butterfly Transaction

12 June 1996 CTF Roundtable Q. 17, 9620780 - POST-BUTTERFLY TRANSFERS

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

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.

Canadian Tax Foundation
Corporate Management Tax Conference
June 14, 1996

Question 17 - Post-Butterfly Transfers of Property

14 June 1996 CTF Roundtable Q. 18, 9620790 - PRE-BUTTERFLY TRANSACTIONS

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

Canadian Tax Foundation
Corporate Management Tax Conference
June 14, 1996

Question 18 - Pre-Butterfly Transactions

14 June 1996 CTF Roundtable Q. 19, 9620800 - BUTTERFLIES - TOLERANCE LEVELS

Unedited CRA Tags
55(3)(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.

Canadian Tax Foundation
Corporate Management Tax Conference
June 14, 1996

Question 19 - Net Butterfly

Technical Interpretation - Internal

30 September 1996 Internal T.I. 9623867 - ABIL

Unedited CRA Tags
39(1)(c) 39(12)

Principal Issues:

Payment of $XXXXXXXXXX to a bankruptcy trustee by a shareholder of a bankrupt company. The taxpayer guaranteed debt of the corporation. How should the payment be treated?

Position:

ABIL

Reasons:

13 September 1996 Internal T.I. 9624067 - EQUIVALENT TO MARRIED-CHANGE IN CUSTODY

Unedited CRA Tags
118(1)(b) 118(5)

Principal Issues:

whether any flexibility in 118(5) to allow client choice of not deducting alimony/maintenance and then to claim equivalent to married under 118(1)(b)

Position:

cannot claim 118(1)(b) amount

Reasons:

11 June 1996 Internal T.I. 9620810 - WIND-UP BUMP DIVIDENDS

Unedited CRA Tags
88(1)(d) 88(1.7)

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.

CORPORATE MANAGEMENT TAX CONFERENCE ROUND TABLE

June 11, 1996

Question 2

Paragraph 88(1)(d) and Pre-Change-of-Control Dividends

11 June 1996 Internal T.I. 9620820 - BENEFIT ON CONVERSION

Unedited CRA Tags
51(2) 86(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.

CORPORATE MANAGEMENT TAX CONFERENCE ROUND TABLE

June 1996

Question 13

Convertible property

11 June 1996 Internal T.I. 9620830 - PLANS OF ARRANGEMENT

Unedited CRA Tags
245

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.

CORPORATE MANAGEMENT TAX CONFERENCE ROUND TABLE

June 1996

Question 9

Plan of Arrangement - What is it for Tax Purposes?

Ministerial Letter

28 August 1996 Ministerial Letter 9623248 - INDIAN - EMPLOYMENT INCOME

Unedited CRA Tags
81(1)(a)

Principal Issues:

Whether a particular individual's employment income is taxable.

Position:

Taxable.

Reasons: