Income Tax Severed Letters - 1997-07-11

Ruling

12 March 1997 Ruling 9641723 - Mutual fund trusts - Special warrants

Unedited CRA Tags
108(2)(b) 5000(7)

Principal Issues:

Are "special warrants" considered marketable securities for purposes of 108(2)(b)?

Position:

No

Reasons:

10 January 1997 Ruling 9641553 - taxability of dividends

Unedited CRA Tags
2

Principal Issues:

Under a separation agreement former spouse agreed to pay taxpayer one-half of any dividends (net after his taxes) he received from his corporation of which she is not a shareholder. Taxpayer asked us to rule that should she receive the gross amount, that she be taxed and not the former spouse as her marginal rate of tax is lower than his.

Position:

The matter on which she asked us to rule is not a subject for an advance income tax ruling.

Reasons:

1997 Ruling 9640033 - : Retiring Allowance

Unedited CRA Tags
: 9, 56(1)(a)(ii), 60(j.1), 248(1) retiring allowance

Principal Issues:
Payment of a retiring allowance by a corporation to its employee who is the owner.

Position:
The payment is a retiring allowance which may be transferred to an RRSP within the limits set by the Act.

Reasons:
The payment is made to an employee in respect of a loss of an office and employment.

30 November 1996 Ruling 9641563 - STRUCTURED SETTLEMENTS

Unedited CRA Tags
56(1)(d)

Principal Issues:

1996 Ruling 9638853 - : XXXXXXXXXX DPS

Unedited CRA Tags
: 248(1) dividend

Principal Issues:
Clarification of our understanding of facts for DPS Ruling.

Position:
Granted

Reasons:
This was always our understanding.

30 November 1995 Ruling 9640273 - DPS - CHANGE IN FACTS

Unedited CRA Tags
248(1)

Principal Issues:

Technical Interpretation - External

23 June 1997 External T.I. 9716125 - ARABLE ACRES SUPPLEMENTARY PAYMENT PROGRAM

Unedited CRA Tags
215

Principal Issues:

Whether payor is required to withhold taxes from payment to non-resident.

Position:

No.

Reasons:

17 June 1997 External T.I. 9620255 - RRIF PYAMENTS TO UK, GERMANY & MEXICO.

Unedited CRA Tags
212(1) art. 18

Principal Issues:

What are the withholding rates for payments from a RRIF made to residents of the UK, Germany and Mexico.

Position:

If the payment constitutes a "periodic pension payment" as defined in section 5 of the Income Tax Conventions Interpretation Act, then the rates are 0%, 15% and 15%, respectively. If not a periodic pension payment, the rates are 25%.

Reasons:

12 June 1997 External T.I. 9714305 - ADMIN FEES LOCKED-IN RRSP

Unedited CRA Tags
146(1)

Principal Issues:

Does our position relating to admin fees and RRSPs also apply to "locked-in" RRSPs?

Position: Yes

Reasons:

12 June 1997 External T.I. 9714285 - PARTNER, RETIRING ALLOWANCE

Unedited CRA Tags
248(1)

Principal Issues:

Can a partnership pay a retiring allowance to a former partner?

Position:

Question of Fact

Reasons:

11 June 1997 External T.I. 9714805 - REFUND OF PREMIUMS TWO SPOUSES

Unedited CRA Tags
146(8.1) 252(4)(a)

Principal Issues:

Can a deceased annuitant have a married spouse and a common law spouse for purposes of transferring an RRSP and/or a RRIF?

Position: Yes

Reasons:

3 June 1997 External T.I. 9229905 - BENEFIT, REFREEZE

Unedited CRA Tags
15(1)

Principal Issues:

Is a benefit conferred on the common shareholders when a re-freeze in undertaken/

Position: No.

Reasons:

1 April 1997 External T.I. 9641755 - DEDUCTIBILITY OF INTEREST

Unedited CRA Tags
20(1)(c)

Principal Issues:

Deductibility of Interest

Position:

Question of fact, 4 different scenarios given and would need more information to comment directly on scenarios. Gave general comments on the purpose of the use of funds and use of capital account for partners.

Reasons:

3 March 1997 External T.I. 9641365 - 401(K) TRANSFER TO IRA THEN TO RRSP

Unedited CRA Tags
60(j)(i) 60(j)(ii)

Principal Issues:

Can amounts in a 401(k) plan that is not eligible for 60(j)(i) deduction be transferred to IRA in order to qualify for 60(j)(ii)?

Position:

Probably not, would consider application of GAAR

Reasons:

3 March 1997 External T.I. 9640745 - 401(K), IRA TO RRSP

Unedited CRA Tags
60(j)

Principal Issues:

1) Is a 401(k) plan an FRA? 2) Is income earned by FRA allocated to period of residency and non-residency?

Position:

1) No 2) No, period of residency only important for periods of pension entitlements

Reasons:

27 February 1997 External T.I. 9641685 - PRIN RES -TRANS OF EXCESS LAND BETWEEN NEIGHBOURS

Unedited CRA Tags
54

Principal Issues:

principal residence designation -the effect of acquiring more land than in necessary for the use and enjoyment of the residence on the availability of the p/r designation in respect of the 10 hectares presently held (& presumed necessary for use and enjoyment) - the situation described involves an application for subdivision by a group of neighbours where 1 neighbour must transfer the excess land to another, in trust or otherwise, in order to sell the p/r. The neighbour receiving the property is concerned that holding the neighbour excess land pending approval of the subdivision, might affect the status of the 10 hectares presently held as a p/r

Position:

if additional land is acquired that is not necessary for use & enjoyment, the excess land won't qualify as a p/r but the holding of the excess land will not affect the determination of whether the original 10 hectares was necessary for the use and enjoyment of the housing unit -in the alternative, if the land is held in trust, then the trustee will not have increased his personal holdings so the issue would be moot

Reasons:

21 February 1997 External T.I. 9641315 - INVESTMENT MANAGEMENT FEES

Unedited CRA Tags
20(1)(bb)

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.

		964131
XXXXXXXXXX	M. Eisner

Attention: XXXXXXXXXX

February 21, 1997

Dear Sir or Madam:

Re: Investment Management Fees

This is in reply to your letter of December 2, 1996, concerning the above noted subject.

11 February 1997 External T.I. 9638785 - PRIVATE HEALTH SERVICE PLANS

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.

		963878
XXXXXXXXXX	M. Eisner

Attention: XXXXXXXXXX

February 11, 1997

Dear Sirs:

Re: Private Health Services Plans

This is in reply to your letter of November 4, 1996 concerning the above-noted subject.

11 February 1997 External T.I. 9640095 - POST-DATED CHEQUES, GRAIN

Unedited CRA Tags
76(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.

XXXXXXXXXX 964009

Attention: XXXXXXXXXX

February 11, 1997

Dear Sirs:

Re: Interest Bearing Post-Dated Cheques & Subsection 76(4)

3 February 1997 External T.I. 9640635 - LEASE AND SUB-LEASE

Unedited CRA Tags
REG 1100(1.1) CLASS 13

Principal Issues:

Lease and sublease rights under the lease exception represents "intangible property" ?

Position:

No

Reasons:

29 January 1997 External T.I. 9640135 - SUBSECTION 13(5.1) OF THE ACT

Unedited CRA Tags
13(5.1)

Principal Issues:

Does 13(5.1) apply to a leasehold interest in real property, in particular a leasehold interest in land.

Position:

Yes, however there is no class in which the land would come under in Schedule II

Reasons:

28 January 1997 External T.I. 9640915 - AUTO LEASING

Unedited CRA Tags
16.1

Principal Issues:

Auto Leasing - sale or lease

Position:

Depending on the facts

Reasons:

23 January 1997 External T.I. 9639585 - INVESTMENT COUNSEL FEES, RRSP

Unedited CRA Tags
20(1)(bb)

Principal Issues:

Are investment counsel fees contracted for by the annuitant expenses of the RRSP or RRIF trust?

Position:

No

Reasons:

22 January 1997 External T.I. 9641495 - STRIP COUPON IN RCA

Unedited CRA Tags
207.5(1) 12(4) 12(9) REG 7000(1)(b)

Principal Issues:

Whether increase in market value of a strip coupon in RCA subject to "refundable tax".

Position:

Deemed accrued interest is subject to the tax.

Reasons:

22 January 1997 External T.I. 9641505 - RELATED EMPLOYERS FOR 60(J.1)

Unedited CRA Tags
60(j.1)(iv) 251(2)(b)

Principal Issues:

Whether previous employer related to current employer.

Position:

General position.

Reasons:

21 January 1997 External T.I. 9640455 - RRSP DEPOSITS

Unedited CRA Tags
146(1) REG 4900

Principal Issues:
Are certain deposits qualified investments for an rrsp?

9 January 1997 External T.I. 9640105 - REIMBURSEMENT OF RRSP ADMIN FEES

Unedited CRA Tags
146(2)(c.4)

Principal Issues:

Whether payment of administration fee by RRSP agent (manager of mutual fund company) is a prohibited advantage under paragraph 146(2)(c.4).

Position:

No.

Reasons:

9 January 1997 External T.I. 9641115 - DENIAL OF DOWNSIZING BENEFITS ON RE-EMPLOYMENT

Unedited CRA Tags
REG 8505(2.1)

Principal Issues:

Description of downsizing rules restricting contract work with former employer.

Position:

Described Regulation 8505(2.1).

Reasons:

7 January 1997 External T.I. 9639505 - SMALL BUSINESS CORP ASSET TEST

Unedited CRA Tags
248(1)

Principal Issues:

How does one determine which assets are used in an active business for purposes of the definition of small business corporation.

Position:

Question of fact determined on a case by case bases.

Reasons:

3 January 1997 External T.I. 9639365 - REIMBURSEMENT OF RRSP ADMINISTRATION FEES

Unedited CRA Tags
146(5)

Principal Issues:

Whether reimbursement by annuitant of administration fee paid by RRSP trust is a payment of a premium.

Position:

Maybe.

Reasons:

23 December 1996 External T.I. 9639875 - RRSP INVESTMENT IN SMALL BUSINESS

Unedited CRA Tags
REG 4900

Principal Issues: How can RRSP invest in small business.

Position: Routine reply sent to taxpayer as requested.

Reasons: Routine

23 December 1996 External T.I. 9639425 - RRSP INVESTMENT IN SMALL BUSINESS

Unedited CRA Tags
REG 4900

Principal Issues:

How can RRSP invest in small business.

Position:

Routine reply sent to taxpayer with modifications for specific questions asked.

Reasons:

20 December 1996 External T.I. 9640865 - GUIDELINE 4 - XXXXXXXXXX

Unedited CRA Tags
81(1)(a)

Principal Issues:

17 December 1996 External T.I. 9639805 - DONATIONS TO THE CROWN

Unedited CRA Tags
SCH 118.1

Principal Issues:

Donations to the Crown

Position:

Gave position in ATR-63

Reasons:

Conference

Technical Interpretation - Internal

19 June 1997 Internal T.I. 9713916 - CHILD SUPPORT

Unedited CRA Tags
56.1 60.1

Principal Issues:

In general terms, subsection 60.1(3) of the Act (paragraph 56.1(3) of the Act is the converse of this provision) may result in the deduction of payments made before the date of an order or agreement where the date of the order or agreement is post-April 1997. However, where an agreement or order, made after April 1997, varies a child support amount payable from the last payment made before May, 1997, the day on which the first payment of the varied amount is required to be made is considered to be the "commencement day". (If there is a commencement day, child support payments payable on or after that day would be tax neutral - no deduction and no income inclusion)

The issue is whether there is a commencement day in respect of two examples.

In the first example, H paid C $300 a month is child support from September, 1996 to May, 1997 inclusive. In June, 1997, H increased the monthly payment to $400. H and C signed a separation agreement on October 15, 1997, which recognized the previous payments and increased the monthly child support to $500 starting on November 1, 1997.

In the second example, R and M separated in 1996. One of the two children lived with R and the other child lived with M. Before their court order was made on October 8, 1997, R paid M monthly support of $500. The court order grants custody of the two children to M. It also recognizes R's previous payments for the one child and requires continuing monthly support for both children of $500 (effective as of the date of the court order).

Position:

In the first example, the commencement day is June of 1997. In the case of the second example, the commencement day is October 8, 1997.

Reasons:

2 April 1997 Internal T.I. 9641607 - MANAGEMENT FEES

Unedited CRA Tags
9(1) 67 18(1)(a)

Principal Issues:

Are management fees to corporate shareholders deductible

Position:

Subject to the tests of reasonableness

Reasons:

18 February 1997 Internal T.I. 9639946 - BENEFIT ACCRUAL RATES, OPTIONS

Unedited CRA Tags
8503(3)(g)

Principal Issues:

Should a plan be registered if an optional benefit results in a benefit accrual rate exceeding 2%?

Position:

Yes

Reasons:

24 December 1996 Internal T.I. 9640647 - SALE OF TIMBER ON FARMLAND

Unedited CRA Tags
110.6

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.

		December 24, 1996
	Penticton Tax Service Office	HEADQUARTERS
	277 Winnipeg Street	A.M. Brake
	Penticton, B.C.	(613) 957-8953
	Attention:  Mike Callon
		964064

Sale of Timber on Farmland

4 December 1996 Internal T.I. 9639557 - EXCESS U.S. WITHHOLDING TAX

Unedited CRA Tags
20(11) ART x ART xi

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.

NOTE - The taxpayer is not a U.S. citizen so that the treatment provided for in paragraph 5 of Article XXIV of the Convention is not an issue.

		                                  December 4, 1996

St. John's Tax Centre Rulings Directorate

Ministerial Letter

14 January 1997 Ministerial Letter 9639618 - CALC OF TAX BENEFIT UNDER GROUP TERM LIFE INSURANCE

Unedited CRA Tags
6(4) REG 2702

Principal Issues:

explanation of why the taxable benefit from coverage under a group term life insurance policy will increase because of the deaths of other individuals covered under the policy

Position:

draft Regulation 2702 sets out the calculation of the benefit

Reasons: