Income Tax Severed Letters - 1997-12-12

Administrative Letter

3 September 1997 Administrative Letter 972112A F - DÉDUCTIBILITÉ DES COMMISSIONS DE VENTE

Unedited CRA Tags
9 18.1

Principales Questions:

Lorsqu'une société administre et gère des fiducies de fonds commun de placements peut-elle déduire à titre de dépenses courantes, la totalité des commissions de vente qu'elle a encourues dans l'année?

Position Adoptée:

Ruling

30 November 1996 Ruling 9716313 - ASSET ROLL-DOWN- SERIES OF TRANSACTIONS

Unedited CRA Tags
55(3)(a) 55(2) 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.

XXXXXXXXXX							3-971631
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

Dear Sirs:

Re:XXXXXXXXXX
Advance Income Tax Ruling

30 November 1995 Ruling 9635243 - SHIFT OF PUC ON SECTION 86 REORGANIZATION

Unedited CRA Tags
86 186(4)(b)(ii)

Principal Issues:

section 86 reorganization to shift puc to restore shareholders to what puc would have been if they had purchased a separate class of shares

Position:

acceptable as long as it does not exceed arm's length acb

Reasons:

30 November 1995 Ruling 9641283 - SUPPLEMENTAL TO RULING 963524

Unedited CRA Tags
89(1) 186(4)

Principal Issues:

supplemental to ruling 963524-shares exchanged XXXXXXXXXX instead of 1 for 1

Position:

no impact on rulings given

Reasons:

Ministerial Correspondence

27 May 1997 Ministerial Correspondence 9710884 F - REGIME PRESTATION EMPLOYÉS EMPLOYEE BENEFIT PLAN

Unedited CRA Tags
6(1)(g)

Principales Questions:

Quel est le feuillet à utiliser pour les sommes versées d'un RPE?

Position Adoptée:

Technical Interpretation - External

8 December 1997 External T.I. 9721155 - JUDICIAL SALE AND FORECLOSURE

Unedited CRA Tags
79 79.1

Principal Issues:

1) Is a judicial sale subject to section 79 ?

Position:

1) NO, unless mortgagor plans for the sale and is the only bidder

Reasons:

8 December 1997 External T.I. 9730565 - INTEREST EXPENSE DEDUCTION

Unedited CRA Tags
20(1)(c)

Principal Issues:

Whether our position on interest deductibility on shareholder loan substituted for a bank loan originally used for purpose of redeeming shares or reducing PUC applies to public corporation debtor also.

Position:

Yes

Reasons:

3 December 1997 External T.I. 9729145 F - INTERETS

Unedited CRA Tags
20(1)(c)

Principales Questions:

Questions sur 20(1)(c) pour divers scénarios d'achat d'actions ordinaires et la position du IT-315..

Position Adoptée:

2 December 1997 External T.I. 9731045 - SURPLUS TRANSFER TO LIF

Unedited CRA Tags
147.1

Principal Issues:

Can the portion of pension surplus entitlements that may be used to provide additional pension benefits allowed under the Act be transferred to a RRIF?

Position:

No

Reasons:

2 December 1997 External T.I. 9727365 - SMALL BUSINESS DEDUCTION - INCLUSION OF A RESERVE

Unedited CRA Tags
34.2(5) 125(7) 125(1)

Principal Issues:

Whether, in a particular situation, the corporation would be entitled to a small business deduction (up to $200,000) in the current year with respect to the amount of the reserve included in income pursuant to subsection 34.2(5) of the Act that exceeds the corporation's share of the loss of the partnership.

Position:

In that particular situation, no.

Reasons:

2 December 1997 External T.I. 9730535 - INACTIVE OFFICER, RETIRING ALLOWANCE

Unedited CRA Tags
248(1)

Principal Issues:

1) Who can pay a retiring allowance? 2) Determination of whether inactive officer is employed?

Position:

1) Employer 2) Question of Fact

Reasons:

2 December 1997 External T.I. 9716305 F - DISPOSITION D'ACTIONS

Unedited CRA Tags
54 50(1)

Principales Questions:

1. Est-ce que le Ministère reconnaîtrait une disposition d'actions dans un genre de situation spécifique?

2. Quelles sont les formalités pour démontrer que les conditions du sous-alinéa 50(1)b)(iii) de la Loi sont réunies?

Position Adoptée:

2 December 1997 External T.I. 9640855 F - PERTE RÉPUTÉE NULLE EN VERTU

Unedited CRA Tags
40(2)e) 40(3.3) 40(3.4)

Principales Questions:

Une société dispose, à perte, d'une immobilisation en faveur de son actionnaire unique. Quelles sont les implications fiscales si la disposition est faite avant le 27 avril 1995 ou après le 26 avril 1995.

Position Adoptée:

2 December 1997 External T.I. 9720615 - 18(1)(l)

Principal Issues:

Whether membership fees in a golf club are deductible.

Position:

No.

Reasons:

28 November 1997 External T.I. 9730465 - RETIRING ALLOWANCE, PART-TIME WORK

Unedited CRA Tags
248(1)

Principal Issues:

Would agreement to work part-time immediately after retirement jeopardize the treatment of severance pay entitlement to be paid on retirement?

Position:

Yes

Reasons:

27 November 1997 External T.I. 9727905 - MORTGAGE REDUCTION, RRSP BENEFIT

Unedited CRA Tags
146(10)

Principal Issues:
An annuitant's RRSP holds a mortgage on an arm's length person's home and the arm's length person's RRSP holds a mortgage on the annuitant's home, would the simultaneous reduction of the mortgages result in a withdrawal or benefit being received out of the RRSP?

Position:
Question of Fact.

Reasons:
Appears that the parties may not deal at arm's length and the mortgages will not qualify unless annuitants deal at arm's length so only general comments were provided.

26 November 1997 External T.I. 9728435 - WITHHOLDING TAX EXEMPTION, RRSP

Unedited CRA Tags
212(1)(h)(v)

Principal Issues:

Can an amount exempt from non-resident withholding taxes under 212(1)(h)(v) retain its exemption after being transferred from the RPP to an RRSP?

Position: No

Reasons:

26 November 1997 External T.I. 9729015 F - C-69

Unedited CRA Tags
112(3)

Principales Questions:

Question sur application des mesures transitoires aux modifications à 112(3) à (3.32) dans C-69.

Position Adoptée:

26 November 1997 External T.I. 9726185 - US TREASURY BILLS, QUALIFIED INV

Unedited CRA Tags
146.3(1)

Principal Issues:

Would a U.S. Treasury Bill qualify as a qualified investment for a RRIF?

Position:

Yes

Reasons:

25 November 1997 External T.I. 9702835 - CHARITABLE DONATIONS

Unedited CRA Tags
118.1

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.

		970283
XXXXXXXXXX	M. Eisner

November 25, 1997

Dear XXXXXXXXXX

Re: Charitable Donations

This is in reply to your letter of January 10, 1997 concerning the above-noted subject. We apologize for the delay in replying.

24 November 1997 External T.I. 9729105 - QUALIFIED SMALL BUSINESS CORPORATION SHARE

Unedited CRA Tags
110.6(1) 186(4)

Principal Issues:

Is a loan from a corporation to an individual who uses the funds in a connected corporation an asset used in an active business for the QSBCS definition?

Position:

No

Reasons:

24 November 1997 External T.I. 9725105 - DEFERRED SALARY LEAVE PLAN

Unedited CRA Tags
6801(a)

Principal Issues:

Whether Plan meets requirements of section 6801 of the Regulations.

Position:

No

Reasons:

24 November 1997 External T.I. 9704245 - BENEFICIAL OWNERSHIP

Unedited CRA Tags
54

Principal Issues:

Whether an individual transferred ownership rights in respect of a residence for the purposes of the principal residence exemption when her two sons were included as legal owners.

Position:

No definitive opinion provided.

Reasons:

24 November 1997 External T.I. 9722845 - VALUE OF OPTIONS

Unedited CRA Tags
7(1.4) 7(1)(b)

Principal Issues:

a)Does 7(1.4) apply where the value of new options does not exceed the value of the old.
b) Acceptance of a valuation procedure.
c) Timing of the non-arm's relationship in 7(1.4).

Position:

a)This is one of the criteria.
b) Referred to TSO valuations section.
c) Immediately before and after transaction per 7(1.4).

Reasons:

24 November 1997 External T.I. 9728775 - DSLP

Unedited CRA Tags
REG 6801

Principal Issues:

Does deferred salary leave plan meet conditions of regulation 6801

Position:

No

Reasons:

24 November 1997 External T.I. 9716465 - CONSTITUTIONALITY OF THE INCOME TAX ACT

Unedited CRA Tags
2(2)

Principal Issues:

Is thee Income Tax Act Constitutional?

Position:Yes

Reasons:

21 November 1997 External T.I. 9714945 F - AUTOMOBILE UTILISÉE PAR LE CONJOINT D'UN ENTREPRENEUR

Unedited CRA Tags
6 18

Principales Questions:

Un particulier exploite une entreprise pour laquelle travaille son conjoint. Il met son automobile à la disposition du conjoint pour son utilisation personnelle. Est-ce que le conjoint reçoit un avantage imposable pour l'usage et le fonctionnement d'une automobile qui doit être ajouté à son revenu d'emploi? Est-ce que le particulier peut déduire la totalité des dépenses d'automobile encourues?

Position Adoptée:

21 November 1997 External T.I. 9727985 - COST BASIS - FOREIGN TRIANGULAR AMALGAMATION

Unedited CRA Tags
53

Principal Issues:

Cost basis of shares of foreign corporation (Targetco) held by a Canadian parent as a result of a triangular amalgamation of non-resident corporations, where merger shares of the Canadian parent have been contributed to a predecessor corporation as part of the amalgamation.

Position:

The Targetco shares have an adjusted cost basis equal to the fair market value of the shares of the target corporation acquired through this particular triangular amalgamation.

Reasons:

19 November 1997 External T.I. 9724675 - RETIRING ALLOWANCE CONTINUED EMPLOYMENT WITH AFFILIATE

Unedited CRA Tags
60(j.1)

Principal Issues:

Whether retiring allowance may be paid where an employee leaves employment with a community college to accept a position with a university.

Position:

There is no loss of employment if the employers are affiliated However this is a question of fact.

Reasons:

19 November 1997 External T.I. 9725545 - RETIRING ALLOWANCE TRANSFER TO RRSP

Unedited CRA Tags
60(j.1)

Principal Issues:

Reporting of retiring allowances due in one year but paid in the next year, and deductions on the transfer of these to rrsps.

Position:

Report in the year actually received. Deduction under 60(j.1) available in the same year if contribution made within a specified time frame. Amounts may otherwise be treated as normal rrsp contributions.

Reasons:
Reply based on wording of the relevant provisions.

19 November 1997 External T.I. 9729095 F - ABRIS FISCAUX (LOGICIELS)

Unedited CRA Tags
REG 1100(20.1) 20(1)(a)

Principales Questions:

Dans une situation où la première mesure d’allègement transitoire s’applique à l’égard d’un logiciel acquis par une société de personnes, est-ce que les membres de la société de personnes seraient visés par les nouvelles règles proposées sur les abris fiscaux (logiciels) et est-ce que ces nouvelles règles s’appliqueraient à un contribuable qui est membre d’une société de personnes du seul fait que le contribuable soit devenu membre de la société de personnes à une date subséquente au 6 août 1997.

Position Adoptée:

19 November 1997 External T.I. 9726065 - RCA REFUNDABLE TAX CALCULATION

Unedited CRA Tags
207.5

Principal Issues:

Questions on RCA refundable tax and the lending of RCA funds to a contributing employer.

Position:

Directed writer to relevant provisions of the RCA Guide and noted position that could be developed concerning lending of funds contributed to an RCA.

Reasons:

18 November 1997 External T.I. 9700045 F - CATÉGORIE 1 - BÂTISSE EN PANS DE BOIS

Unedited CRA Tags
CLASS 6 CLASS 1

Principales Questions:

Un bâtiment en pans de bois fait-il partie de la catégorie 6 s'il est érigé sur une base de béton de 6 pouces d'épaisseur posée sur le sol avec une bordure de 10 à 12 pouces d'épaisseur?

Position Adoptée:

18 November 1997 External T.I. 9719095 - TAXATION OF CONTRIBUTIONS

Unedited CRA Tags
6(1)(a) 6(3) 56(1)(a)

Principal Issues:

18 November 1997 External T.I. 9728875 - SHORT-TERM PREFERRED SHARES

Unedited CRA Tags
248(1)

Principal Issues:

Whether modification to issuer's redemption powers causes shares to become "short-term preferred shares".

Position:

Question of fact.

Reasons:

18 November 1997 External T.I. 9728825 - BACK PENSION INCOME INCLUSION

Unedited CRA Tags
56(1)(a)

Principal Issues:

Can any legislative or administrative relief be provided to reduce the tax burden where an underpayment of prior year pension benefits is paid in one year?

Position:

No.

Reasons:

18 November 1997 External T.I. 9728835 - CONSTITUTIONALITY OF ALL LAWS

Unedited CRA Tags
2(1)

Principal Issues:

Is the Income Tax Act constitutional ?

Position:

Yes

Reasons:

17 November 1997 External T.I. 9727485 - VENTURE CAPITAL CORPORATIONS

Unedited CRA Tags
204.81 39(4)

Principal Issues:

Venture Capital corporations Criteria

Position:

Case by case review

Reasons:

14 November 1997 External T.I. 9728365 - RETIRING ALLOWANCE UNINCORPORATED BUSINESS

Unedited CRA Tags
60(j.1)

Principal Issues:

1. For 60(j.1), does employment include:
a.employment with an unincorporated business of a related person;
b. a period carrying on a business as a partner or a proprietor;
c. employment with a wholly owned corporation
2. Must service be continuous?

Position:

1.a. Yes; b. No; c. Yes. 2. No

Reasons:

13 November 1997 External T.I. 9629185 F - DON D'UNE POLICE D'ASSURANCE-VIE

Unedited CRA Tags
118.1

Principales Questions:

Est-ce que le contribuable peut réclamer un don de bienfaisance en vertu de l'article 118.1 de la Loi à l'égard des primes d'une police d'assurance-vie si le contribuable donne la couverture de base de cette police à un organisme de bienfaisance et désigne son conjoint comme bénéficiaire irrévocable pour tous les avenants de la police excédant la couverture de base?

Position Adoptée:

13 November 1997 External T.I. 9719195 - STRUCTURED SETTLEMENTS

Unedited CRA Tags
56(1)(d)

Principal Issues:

1. Paragraph 5(c) of IT-365R2 (one of the conditions of a structured settlement) states that "the claimant and the casualty insurer must have reached agreement under which the latter is committed to make at least periodic payments to the claimant for either a fixed term or the life of the claimant." When a court, pursuant to the Courts of Justice Act, orders that damages in respect of personal injury or death be paid in periodic payments and the arrangement otherwise satisfies the conditions in paragraph 5 of IT-365R2, will the arrangement qualify as a structured settlement?

2. Can an arrangement qualify as a structured settlement when the related periodic payments are indexed to a fluctuating percentage rate that is linked to the Consumer Price Index published by Statistics Canada?

Position:

1. Yes. However, as is the case with all structured settlements, there is the concern that the claimant may be entitled to a lump sum which is then used to purchase the related annuity contract. The relevant circumstances can be considered on an advance income tax rulings basis.

2. Yes.

Reasons:

13 November 1997 External T.I. 9729925 - IT-148R3

Unedited CRA Tags
18(1)(l)

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.

		972992
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

November 13, 1997

Dear Sirs:

Re: Interpretation Bulletin IT-148R3
Recreational Properties and Club Dues

13 November 1997 External T.I. 9727725 - SALARY DEFERRAL AND CONSTRUCTIVE RECEIPT

Unedited CRA Tags
248(1)

Principal Issues:

Will there be constructive receipt in an employee incentive arrangement where no entitlement to amounts exist before a specific date but the employees can direct the form funds will be invested in.

Position:

File deals with an actual proposal so no specific answer was provided. We restated our 1984 round table answer and advised that in general no constructive receipt should arise in such arrangements.

Reasons:

13 November 1997 External T.I. 9714855 - PERSONAL DAMAGES

Unedited CRA Tags
56(1)(d)

Principal Issues:

Whether individuals who suffer from Hepatitis C and file a claim for damages can be regarded as having made a claim "in respect of personal injury or death" (one of the condition set out in paragraph 5 of IT-365R2).

Position:

Such a claim could satisfy that condition. However, it is necessary to review all the relevant facts and documentation to determine whether periodic payments are non-taxable by virtue of the general position in paragraph of IT-365R2.

Reasons:

13 November 1997 External T.I. 9724485 - UK PERSONAL PENSION SCHEMES

Unedited CRA Tags
56(1)(a) ART 17 uk treaty

Principal Issues:

For purposes of article 17 of the Canada, UK Income Tax Convention, are amounts received from a UK personal pension scheme, pension or annuity income.

Position:

We previously stated that we have accepted a general position that plans will not be pension plans where only an employee has made contributions. We are not prepared to provide more specific comments except in response to an advance ruling request relating to a proposed plan. Furthermore, if the particular plan presently exists comments must be requested through the appropriate tax services office.

Reasons:

13 November 1997 External T.I. 9724465 F - BATEAU DE PECHE - CRÉDIT D'IMPOT A L'INVESTISSEMENT

Unedited CRA Tags
127(9)

Principales Questions:

admissibilité des coûts de rénovations au CII

Position Adoptée:

12 November 1997 External T.I. 9724895 - RRSP INVESTMENTS

Unedited CRA Tags
4900 146

Principal Issues:

Discussion of the method and consequences of writing off or disposing of non-performing investments held in an RRSP.

Position:

Outlined possible tax consequences and noted RCT does not approve or rule on the valuation or propriety of such transactions

Reasons:

12 November 1997 External T.I. 9727975 F - DÉDUCTIBILITÉ DES COMMISSIONS DE VENTE-SUITE CCM 972112

Unedited CRA Tags
9

Principales Questions:

Demande de précision sur le document ccm # 972112 - Déductibilité des commissions de vente

Position Adoptée:

10 November 1997 External T.I. 9728445 - U.S. Limited Liability Company - Check-the-Box RULES

Principal Issues:

Whether the New U.S. Check-the-Box Rules have any Effect on our Position the U.S. LLCs are not Residents of the U.S. for Purposes of the Canada-U.S. Income Tax Convention

Position:

No. Would only be a resident if LLC elected to be taxed in the U.S. as a domestic C corporation.

Reasons:

10 November 1997 External T.I. 9725655 - GOLF-RELATED EXPENSES

Unedited CRA Tags
18(1)(l)

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.

		972565
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

November 10, 1997

Dear Sir:

Re: Interpretation Bulletin IT-148R3
Recreational Properties and Club Dues

7 November 1997 External T.I. 9721545 - LIFE INSURANCE POLICY PREMIUMS PAID BY A TRUST

Unedited CRA Tags
105(1)

Principales Questions:

application subsection 105(1) of the Act where a corporation is the beneficiary of a life insurance policy but a trust is the policyholder

Position Adoptée:

6 November 1997 External T.I. 9715955 F - DÉFINITION DU TERME AUTOMOBILE - FOURGONNETTE OU PICK-UP

Unedited CRA Tags
248(1)

Principales Questions:

1. Est-ce que certains véhicules décrits sommairement seraient considérés comme des automobiles aux fins de la Loi?

2. Demande de détails concernant l'exclusion de l'alinéa 248(1)d) de la définition du terme "automobile" pour certains véhicules à moteur de type pick-up ou fourgonnette ou d'un type analogue.

Position Adoptée:

6 November 1997 External T.I. 9714165 F - POMPIER VOLONTAIRE

Unedited CRA Tags
6(1)(b) 5

Principales Questions:

Quelle est la distinction entre un pompier volontaire et un pompier à temps partiel?

Position Adoptée:

6 November 1997 External T.I. 9714425 F - TERRAIN BOISÉ - BIEN AGRICOLE ADMISSIBLE

Unedited CRA Tags
110.6(2) 110.6(1) 9 39

Principales Questions:

Est-ce qu'un particulier aura droit à la déduction pour gains en capital pour bien agricole admissible à l'égard du gain provenant de la vente d'un terrain boisé?

Position Adoptée:

6 November 1997 External T.I. 9728755 - BENEFIT CONFERRED ON ISSUANCE OF SHARES

Unedited CRA Tags
15(1) 69(1)(b)

Principal Issues:

Whether subsection 15(1) would apply in a situation where a shareholder exchanges his shares in a corporation pursuant to 51(1) or 86(1) for other shares of the corporation with a fair market value in excess of the fair market value of the original shares. The corporation has one other shareholder and the shareholders are unrelated.

Position:

Yes and paragraph 69(1)(b) could also apply to deem that the other shareholder has disposed of part of his economic interest.

Reasons:

6 November 1997 External T.I. 9723435 - SMALL BUSINESS BECOMES PUBLIC CORP (FOREIGN PROPERTY)

Unedited CRA Tags
206(1)

Principal Issues:

If a Small Business Investment becomes a Public Corporation, would an RRSP or RRIF be considered over the maximum allowable for the purposes of foreign content limit as per s.s. 206(1).

Position:

No, subject to all s.s. 206(1) requirements.

Reasons:

3 November 1997 External T.I. 9703635 F - APPLICATION DE SUITE A UNE VÉRIFICATION

Unedited CRA Tags
163(1)

Principales Questions:

Dans quelles situations la pénalité prévue au paragraphe 163(1) de la Loi s'applique-t-elle?

Position Adoptée:

29 October 1997 External T.I. 9726645 F - FOURNISSEURS DE SERVICES-PARTI DANS LA PRODUCTION VIDÉO

Unedited CRA Tags
125.4(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.

5-972664

XXXXXXXXXX Michel Lambert CA, M. Fisc.

A l'attention de XXXXXXXXXX

Le 29 octobre 1997

Mesdames, Messieurs,

Objet: Demande d'opinion
Paragraphe 125.4(4) de la Loi de l'impôt sur le revenu

28 October 1997 External T.I. 9720645 - OPTIONAL INVENTORY ADJUSTMENT - STANDING CROP

Unedited CRA Tags
28(1)(b)

Principal Issues:

Whether unharvested grain can be inlcuded in the calculation of the optional inventory adjustment.

Position:

yes

Reasons:

28 October 1997 External T.I. 9716215 - CHOICE OF DEDUCTIONS FOR COMMISSIONED SALES EMPLOYEE

Unedited CRA Tags
8(1)(f) 8(1)(h) 8(1)(j) 8(1)(i)

Principal Issues:
When can a commissioned sales employee (who earns both commission income and salary income) choose to apply paragraph 8(1)(f) as opposed to 8(1)(h), (h.1), or (i) of the Act?

Position:
If employee chooses 8(1)(h) and/or (h.1), cannot claim deduction for any expense under 8(1)(f). In this case, home office expenses would have to be claimed under 8(1)(i)(ii) and (iii).

Reasons:
Because of mutual exclusivity imposed by 8(1)(h)(iv) and 8(1)(h.1)(iv).

27 October 1997 External T.I. 9727645 - CONSTRUCTION OF PERMANENT DYKES

Unedited CRA Tags
20(1)(a) Class 1(q) 13(7.1) 12(1)(x)

Principal Issues:

The classification of a dyke and the income tax consequence of Government assistance for constructing such a dyke.

Position:

Dyke is a class 1 property. Government assistance reduces the capital cost of the dyke.

Reasons:

30 September 1997 External T.I. 9639935 F - BIEN PRET A ETRE MIS EN SERVICE - AJOUT

Unedited CRA Tags
13(27)b) 13(26) 13(27) 13(27)i)

Principales Questions:

Est-il possible, pour les fins de la "règle de deux ans" prévue à l'alinéa 13(27)b) de la Loi, de considérer une dépense effectuée dans une année subséquente à l'année d'acquisition d'une pièce d'équipement (e.g. frais de livraison, frais d'installation, ajouts ou réparations majeures de la pièce d'équipement) comme constituant le coût du bien acquis?

Position Adoptée:

29 September 1997 External T.I. 9720175 - INDIAN ACT EXEMPTION - GUIDELINES 3 AND 4

Unedited CRA Tags
81(1)(a)

Principal Issues:

(1) Status Indian employee of a reserve-based organization: whether duties performed on a reserve but only "constitute approximately XXXXXXXXXX% of the services provided" are enough for tax exemption under Guideline 3.

(2) Whether tax exemption under Guideline 4 available.

Position:

(1) Exemption cannot be granted.

(2) Exemption cannot be granted.

Reasons:

10 September 1997 External T.I. 9700035 - 122.3WHERE EMPLOYEE RELATED TO SPECIFIED EMPLOYER?

Unedited CRA Tags
122.3 122.3(1.1)

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.

PRINCIPAL ISSUE:

Whether an individual is entitled to claim the overseas employment tax credit ("OETC") pursuant to section 122.3 of the Act in a situation where the individual is related to the specified employer (employee's spouse controls the employer).

Position TAKEN:

14 July 1997 External T.I. 9636215 F - SI 85(4) OU 40(3.6) S'APPLIQUE AUX SITUATIONS DÉCRITES?

Unedited CRA Tags
85(4) 40(3.6) 245(2) 112(3)

Principales Questions:

Conference

4 November 1997 CTF Roundtable, 9718416 - REQUEST FOR WAIVING WITHHOLDING TAX

Unedited CRA Tags
212(1)

Principal Issues:

Whether the administrative policy regarding withholding requirement of non-cash taxable benefits would be extended to withholding of Part XIII tax where there is no actual payment

Position:

No

Reasons:

Technical Interpretation - Internal

17 November 1997 Internal T.I. 9713577 - EMPLOYEE'S AUTOMOBILE EXPENSES

Unedited CRA Tags
6(1)(b) 8(1)(h) 8(1)(h.1)

Principal Issues:

1)Can employees of a CA firm deduct expenses against an allowance received ?
2)Can the employees claim CCA ?

Position:

1)Question of fact to be determined on a case by case basis
2)Employee would need to show that time available basis is more accurate than distance travelled basis

Reasons:

6 November 1997 Internal T.I. 9726817 F - DÉDUCTION D'UNE PENSION ALIMENTAIRE EN 1997

Unedited CRA Tags
60b) 56.1(4)

Principales Questions:

Est-ce que la pension alimentaire pour enfants réduite en vertu d'une ordonnance rendue le XXXXXXXXXX est déductible du revenu de Monsieur, sachant qu'un accord conditionnel a été signé entre les parties le XXXXXXXXXX.

Position Adoptée:

31 October 1997 Internal T.I. 9726707 - DISPUTE RE PBE

Unedited CRA Tags
104(14)

Principal Issues:

Availability of preferred beneficiary election. Dispute between father and minor children.

Position:

Election is not available.

Reasons:

24 October 1997 Internal T.I. 9727827 - INDIANS - INDIAN ACT EXEMPTION

Unedited CRA Tags
81

Principal Issues:

1. Whether certain non-reserve lands can be treated as reserve lands?
2. Whether 87(1)(a) of the Indian Act provides for tax exemption for income?
3. Did the 1985 amendment to the Indian Act prevent the Income Tax Act from applying thereafter to Indians?
4. Do Indians not have full exemption from tax on the basis that subsection 87(2) of the Indian Act states that "No Indian or band is subject to taxation"?

Position:

1. No.
2. No.
3. No.
4. No.

Reasons:

16 October 1997 Internal T.I. 9724987 - EXEMPT INCOME

Unedited CRA Tags
21(1) 21(3)

Principal Issues:

1.If a corporation is an "exempt" corporation (per 149(1)(d)), does it earn "exempt income" as that term is used in subsection 21(1) and 21(3) ??
2.If an election under 21(1) or (3) is made, is it necessary that there be a direct relationship between the assets acquired and the borrowed money or is it sufficient that there be increases in outstanding indebtedness when assets were acquired.

Position:

1. No.
2.Must be a direct relationship

Reasons:

15 October 1997 Internal T.I. 9721216 - APPLICATION OF 161(7) WHERE 110.5 ADDBACK

Unedited CRA Tags
161(1) 161(2) 161(7) 110.5

Principal Issues:

Application of 161(7) where there is an addback to taxable income pursuant to section 110.5.

Position:

No interest payable in this scenario under subsections 161(1) and(2).

Reasons:

6 October 1997 Internal T.I. 9718627 - EMPLOYMENT INCOME

Unedited CRA Tags
5(1) 6(1)(a)

Principal Issues:

Are voluntary payments made by an employer to an employee taxable in the hands of the employee.

Position:

Yes, the payments would be considered employment income pursuant to subsection 5(1) or paragraph 6(1)(a) of the Act.

Reasons:

3 October 1997 Internal T.I. 9720296 - MEDICAL EXPENSES - MUSIC THERAPY

Unedited CRA Tags
118.2(2)(e)

Principal Issues:

Whether the office of a music therapist qualifies as an other place for the purposes of paragraph 118.2(2)(e) of the Act.

Position:

No.

Reasons:

26 September 1997 Internal T.I. 9717736 - FTC IN RESPECT OF U.S. AMT AND MTC

Unedited CRA Tags
art XXIX of Canada-U.S. Treaty 126

Principal Issues:

Whether foreign tax credit should be granted for U.S. alternative minimum tax and whether the U.S. credit for prior year minimum tax would affect the computation of Canadian foreign tax credit

Position:

Assuming that the U.S. AMT arises solely as a result of the application of the rule limiting alternative minimum tax foreign tax credit to 90% of tentative minimum tax, Canadian foreign tax credit is allowed for the portion of U.S. AMT on U.S. source income resourced to Canada only. To the extent that the U.S. credit for prior year minimum tax is attributable to Canadian source income for which no Canadian tax credit has previously been granted, such U.S. credit would not affect the amount of the U.S. federal tax otherwise payable for the purposes of computing Canadian foreign tax credit.

Reasons:see memo

3 September 1997 Internal T.I. 9710907 - PARTNERSHIP

Unedited CRA Tags
96(3) 249.1(4)

Principal Issues:

year end election partner in a partnership

Position:

Reasons:

11 August 1997 Internal T.I. 9711857 - TAXABLE BENEFIT - SERVICES PROVIDED BY EMPLOYER

Unedited CRA Tags
6(1)(a)

Principal Issues:

Whether a taxable employee benefit for services provided free by a dentist to his employees would be a deductible business expense to the dentist.

Position:

Only outlays or expenses, if any, incurred in providing the free dental services to the employees can be deducted in computing income. No deduction can be claimed with respect to the value of the dentist's labour.

Reasons:

Ministerial Letter

21 October 1997 Ministerial Letter 9723338 - VACATION TIMESHARING XXXXXXXXXX

Unedited CRA Tags
9

Principal Issues:

taxation of vacation timesharing arrangements

Position:

While it depends on structure of the arrangement, the value of accommodation received as part of a bartering transaction is income

Reasons: