Income Tax Severed Letters - 1998-01-09

Miscellaneous

13 June 1997 Income Tax Severed Letter 9629001 - U.S. STATE INCOME TAXES

Unedited CRA Tags
ART XXIX (4) 126(1)

Principal Issues:

(i) credit for U.S. state income taxes on California pension income and (ii) treatment of taxable refunds of state income tax

Position:

(i) creditable in Canada but should not affect U.S. federal tax credit that the U.S. is required to provide under Article XXIV (4)(b) of the Canada-U.S. Income Tax Convention. (ii) Where tax credit has been previous granted for the U.S. state tax, our position is that no adjustment to the Canadian tax return need be made and the portion of the U.S. federal tax allocatable to the taxable refunds of state tax should be ignored in computing Canadian tax credit for the year of the refunds.

Reasons:

Ruling

1997 Ruling 9722483 - : Investment Tax Credit

Unedited CRA Tags
: 127(9) investment tax credit, 127(9) specified percentage, 127(9) qualified property, 127(11), ITR 4600(1)

Principal Issues:
Ruling requested as to (i) whether XXXXXXXXXX would be manufacturing and processing, and if so, (ii) whether a building used to carry out such activities would qualify for the investment tax credit (ITC).

Position:
Rulings given.
Activities described in (i) would be manufacturing and processing. However, the activity of XXXXXXXXXX would not so qualify.
Subject to certain provisos, the building, as described in (ii), would qualify for the ITC at 10% applicable to qualified property, in accordance with the meanings of "qualified property", "investment tax credit" and "specified percentage", as defined in the Act or the Regulations, as the case may be.

Reasons:
The activities of XXXXXXXXXX are in accordance with our position regarding the meaning of "manufacturing and processing", as described in IT-145R. Based on the facts and proposed transactions and on the provisos mentioned, the ITC would be available to a building used in respect of the particular activities.

30 November 1996 Ruling 9720343 - XXXXXXXXXX VS. NPO

Unedited CRA Tags
149(1)(l)

Principal Issues:

30 November 1996 Ruling 9721343 F - PROROGATION D'UNE SOCIÉTÉ

Unedited CRA Tags
54

Principales Questions:

conséquences fiscales de la prorogation d'une société

Position Adoptée:

30 November 1996 Ruling 9723573 F - VENTE D'ACTIONS

Unedited CRA Tags
84.1

Principales Questions:

application de 84.1 lorsqu'un particulier vend les actions qu'il détient dans une société à une société avec laquelle il a un lien de dépendance

Position Adoptée:

30 November 1996 Ruling 9723453 - EXCHANGE OF PROPERTY

Unedited CRA Tags
44(1)

Principal Issues:

Does the exchange of land qualify as a replacement property?

Position:

Yes, provided the T/P makes an election under subsection 44(1).

Reasons:

30 November 1996 Ruling 9723563 - CHANGE OF CONTROL - LISTED EVENT OF DEFAULT

Unedited CRA Tags
212(1)(b)(vii)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii)
change of control cured with offer to repurchase

Principal Issues:

Change of Control as a listed "event of default" in the trust Indenture for purposes of 212(1)(b)(vii)(C)

Position:

OK as for purposes of 212(1)(b)(vii)

Reasons:

30 November 1996 Ruling 9724733 - SUPPLEMENTAL RULING- CHANGE IN FACTS

Unedited CRA Tags
212(1)(b)(vii)

Principal Issues:

Supplemental to Ruling 972356. Changes in fact in the percentage of shareholding in XXXXXXXXXX by the XXXXXXXXXX, change in the in the description in the purpose of the proposed transaction, change in the date the proposed transaction must be completed by.

Position:

Ruling will continue to be binding. The changes are not significant enough to change the ruling given.

Reasons:

30 November 1996 Ruling 9726133 - MULTIPLE CLASSES OF UNITS OF MUTUAL FUND TRUST

Unedited CRA Tags
54
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition

Principal Issues:

We were asked to rule that 1) the reclassification of the issued and outstanding units in Class A units, the addition of a conversion feature to the Class A units and the creation of Class B units will not result in any disposition for the existing unitholders and 2) the conversion of a unit of one class into a unit of the other class of the same Fund will not be considered to be a disposition of the unit.

Position:

We concluded that the unitholders will not be considered to have disposed of their units.

Reasons:

30 November 1996 Ruling 9706043 - SURRENDER OF INCOME INTEREST

Unedited CRA Tags
106(2) 107(2)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 106 - Subsection 106(2)

Principal Issues:

30 November 1996 Ruling 9707583 F - NRO

Unedited CRA Tags
133 20(1)(c) 245(2)

Principales Questions:

(1)Est-ce que l'article 245 s'applique en raison de l'utilisation d'une NRO pour changer de l'intérêt en dividende?

(2)Est-ce que l'article 245 est applicable en raison du paiement de dividendes en action?

Position Adoptée:

Technical Interpretation - External

22 December 1997 External T.I. 9703685 - PRINCIPAL RESIDENCE

Unedited CRA Tags
54

Principal Issues:

Various aspects of principal residence legislation involved including land in excess of 1/2 hectare

Position:

Law generally explained

Reasons:

22 December 1997 External T.I. 9719575 - CONVERTING OWNERSHIP TYPE - WHETHER A DISPOSITION

Unedited CRA Tags
54(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition
Summary Under
Tax Topics - Income Tax Act - Section 54 - Disposition - Paragraph (e)

Principal Issues:

Whether the conversion of ownership from a joint tenancy to a tenancy in common would be considered a disposition for tax purposes.

Position:

Unlikely that it would constitute a disposition.

Reasons:

18 December 1997 External T.I. 9718465 - FARMING - WOODLOT, GREENHOUSE

Unedited CRA Tags
248(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.

									971846
XXXXXXXXXX							B. Kerr

Attention: XXXXXXXXXX

December 18, 1997

Dear Sirs:

Re: Definition of Farming

16 December 1997 External T.I. 9719245 - STRUCTURED SETTLEMENTS

Unedited CRA Tags
56(1)(d)

Principal Issues:

An individual sustained an injury and is entitled to non-taxable benefits under an long-term disability (LTD) policy. If the periodic payments are made by the insurer in a manner that is similar to a structured settlement (paragraph 5 of IT-365R2), would the payments still be regarded as being non-taxable?

Position:

No. On the basis that the payments will not be made in accordance with written terms in the LTD policy, the payments will give rise to income in the hands of the individual to the extent provided for in respect of annuity contracts under the Income Tax Act.

Reasons:

5 December 1997 External T.I. 9725365 - RENTAL OPERATION - WHETHER INCOME FROM BUSINESS

Unedited CRA Tags
9

Principal Issues:

Whether income from a 100 room hotel and 12,000 foot commercial area would be considered business income or rental income.

Position:

It is a question of fact whether the income would be business income or rental income.

Reasons:

4 December 1997 External T.I. 9726425 - MIC'S AND REAL ESTATE

Unedited CRA Tags
130.1(6)
Summary Under
Tax Topics - Income Tax Act - Section 130.1 - Subsection 130.1(6)
development or ancillary rental services are not part of investing undertaking

Principal Issues:

Can a MIC invest in real property either directly or indirectly through a trust?

Position:

This is a question of fact.

Reasons:

3 December 1997 External T.I. 9715195 - FOREIGN PENSION PLAN

Unedited CRA Tags
207.6 6(1)(g) 56(1)(x)
Summary Under
Tax Topics - Income Tax Act - Section 207.6 - Subsection 207.6(5)

Principal Issues:

Explanation how a foreign pension plan would affect a resident.

Position:

General description of contributions to a foreign pension plan.

Reasons:

3 December 1997 External T.I. 9622765 - NON-RESIDENT TRUST - ATTRIBUTION

Unedited CRA Tags
94(1) 75(2)
Summary Under
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2)
Summary Under
Tax Topics - Income Tax Act - Section 94 - old

Principal Issues:

Result where subsection 75(2) applies to trust described in subsection 94(1).

Position:

Subsection 75(2) is applied first.

Reasons:

28 November 1997 External T.I. 9729305 - SHARES IN A RRSP

Unedited CRA Tags
4900 4901 5000

Principal Issues:

Investment by an RRSP in shares of a corporation.

Position:

Description of what is permited by regulation.

Reasons:

28 November 1997 External T.I. 9728425 - RRSP DISCHARGE MORTGAGE

Unedited CRA Tags
R4900(1) 146(9) 214(2)

Principal Issues:

Default of a mortgage in an RRSP.

Position:

Mortgage in a RRSP is to be dealt with using normal commercial procedures.

Reasons:

27 November 1997 External T.I. 9727525 - BIKE ADAPTED FOR USE BY AMPUTEE NOT A WHEELCHAIR

Unedited CRA Tags
118.2(2)(i) REG 5700(i)

Principal Issues:

medical expense - whether a bicycle is a wheelchair

Position:

no

Reasons:

25 November 1997 External T.I. 9728635 - INDIAN ACT EXEMPTION - GUIDELINE 4

Unedited CRA Tags
81(1)(a)

Principal Issues:

(1) Indian Organization moving its head office from XXXXXXXXXX reserve to a XXXXXXXXXX reserve. Tax implication for its employees.

Position:

(1) General explanations regarding Guideline 4 given. Comments on potential application of Guideline 2 to employees working off-reserve but residing on a reserve.

Reasons:

20 November 1997 External T.I. 9723365 - INDIAN ACT EXEMPTION - GUIDELINE 4

Unedited CRA Tags
81(1)(a)

Principal Issues:

(1) Status Indian working for an Indian Organization which is resident off-reserve. Whether qualifies for Guideline exemption; whether any Indian Remission Order applicable to his case.

Position:

(1) Guideline 4 exemption cannot be granted; general explanations on Indian Remission Orders given.

Reasons:

19 November 1997 External T.I. 9721235 - PERSONAL SERVICES BUSINESS - GENERAL COMMENTS

Unedited CRA Tags
125(7) 56(2)

Principal Issues:

Whether a personal services business would exist.

Position:

General comments.

Reasons:

17 November 1997 External T.I. 9726045 - MEDICAL EXP.- MAKING NEW HOME WHEELCHAIR ACCESSIBLE

Unedited CRA Tags
118.2(2)(l.2)

Principal Issues:

Whether the additional costs of making a new house wheelchair-accessible are tax deductible.

Position:

Some costs may be deductible under 118.2(2)(m). None are deductible under 118.2(2)(l.2)

Reasons:

30 November 1996 External T.I. 970445A - RESOURCE ALLOWANCE, PRIME METAL STAGE

Unedited CRA Tags
125.1(3) Reg 1204(1)

Principal Issues:

Whether upgraded XXXXXXXXXX is beyond the prime metal stage or its equivalent for purposes of 125.1(3) of the Act and ss 1204(1) of the Regulations.

Position:

No

Reasons:

Conference

17 December 1997 CTF Roundtable Q. 65, 9731576 - EBP, SHARES, WITHHOLDING TAXES

Unedited CRA Tags
153(1)

Principal Issues:

Will administrative position regarding withholding taxes and shares received under a stock option be extended to withholding taxes and shares received under an employee benefit plan?

Position: N/A

Reasons:

Technical Interpretation - Internal

17 December 1997 Internal T.I. 9732546 - LEGAL FEES - TAXPAYER NOT SUCCESSFUL IN COURT

Unedited CRA Tags
8(1)(b)

Principal Issues:

Whether legal fees incurred while trying to establish an amount owed to the taxpayer further to his loss of employment is deductible per 8(1)(b), when the taxpayer drops his law suit in the course of the proceedings.

Position:

No.

Reasons:

25 November 1997 Internal T.I. 9727677 F - GAIN REGLEMEMT DETTES

Unedited CRA Tags
6(15.1)

Principales Questions:

Différence entre les versions anglaises et françaises des paragraphes 6(15.1) et 15(1.21) de la Loi?

Position Adoptée:

20 November 1997 Internal T.I. 9730137 F - ALLOCATION DE RETRAITE - CONGÉ MOBILE

Unedited CRA Tags
248(1)

Position Adoptée:

17 November 1997 Internal T.I. 9726496 - ABILS-DATE OF DISPOSITION

Unedited CRA Tags
50(1) 248(1) 40(2)(g)(ii)

Principal Issues:

in which year(s) an ABIL is available to shareholder. Corporation is a SBC and CCPC. In Nov 95, the corp. ceases all business operations and sells all assets except land and building. The building is listed for sale and rented from Nov 95 until sale date in September 96.

Position:

Number of assumptions made to work with example given. Scenario One: If rental income is income from an active business, and the full amount of the debt is bad as of December 31, 95 then (i) the corp is an SBC throughout the period until the land and building are sold, (ii) an ABIL on debt is deductible in 95 and (iii) no ABIL may be deducted on the shares until 96. If instead the debt is established by the taxpayer to only have become bad in 96, the ABIL on the debt would be available in 96. Scenario Two: If the rental income is not income from an active business, and the full amount of the debt is established to have become bad in 95 then (i) the corporation ceases to be an SBC in November 95, (ii) an ABIL on the debt is deductible in 95 and (iii) no ABIL on the share will be available in 95 (requirement in 50(1)(b)(iii)(B) not met) or 96 (not an SBC). If the debt was established by the taxpayer to have become bad in 96, no ABIL on the debt in 95 or 96.

Reasons: E58895, E9114535, E9502255, E9500567, E9337751

5 November 1997 Internal T.I. 9729246 - advance of future salary to striking 'ees

Unedited CRA Tags
5

Principal Issues:

whether salary advances to striking employees are taxable in year advance received

Position:yes.

Have not investigated whether employer is prohibited from making type of advances being comtemplated

Reasons:

24 October 1997 Internal T.I. 9726657 F - FIDUCIE VS USUFRUIT

Unedited CRA Tags
107(2) 104(5.3) 110.6(19) 104(21) 248(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.

Le 24 octobre 1997

B.S.F. de Québec Direction des décisions et de
Division des appels l'interprétation de l'impôt

Michel Lambert CA, M. Fisc.

A l'attention de (613) 957-8953
Mme Céline Gauthier
7-972665

XXXXXXXXXX

15 October 1997 Internal T.I. 9638486 - MODIFIED CO-INSURANCE

Unedited CRA Tags
REG 1400 REG 1401 REG 1402 138(3)

Principal Issues:

The comparison of traditional co-insurance and modco reinsurance arrangements and the determination of the amount of the reserve that the ceding company is entitled to pursuant to sections 1401 of the Regulations taking into account section 1402 of the Regulations under each arrangement.

Position:

The differences between the two arrangements should not affect the amount of the reserve computed pursuant to section 1401 of the Regulations and taking into account section 1402 of the Regulations.

Reasons:

Ministerial Letter

24 November 1997 Ministerial Letter 9724838 - TOOL ALLOWANCES AND MEAL EXPENSES

Unedited CRA Tags
6(1)(b) 8(1)(i) 67

Principal Issues:

deduction for tools for employees and meals deductions for employers

Position:

a tool allowance would be taxed, no deduction for tools (only for "supplies" if conditions are met), meal allowance deductible to employer usually if included in employees' income as well as if paid to workers at remote work locations

Reasons:

17 November 1997 Ministerial Letter 9724888 - Support payments to aged parents

Unedited CRA Tags
60

Principal Issues:

Support payments for aged parents

Position:

No relief in the law

Reasons: