Income Tax Severed Letters - 1998-01-23

Miscellaneous

3 November 1997 Miscellaneous 9524971 - DETERMINATION OF RESIDENCY - GENERAL

Unedited CRA Tags
ART 4 U.S. Treaty

Principal Issues:

Various issues connected to the determination of residency under an income tax convention, the Canada - U.S. Convention in particular.

Position:

Please see memorandum attached.

Reasons:

Ruling

30 November 1996 Ruling 9717643 - SERIES OF LOANS AND REPAYMENTS

Unedited CRA Tags
15(2) 15(2)(B) 214(3)(A)

Principal Issues:

Whether an arrangement whereby a loan is repaid or settled by offsetting against a dividend payment, should be considered "part of a series of loans or other transactions and repayments" for purposes of subsection 15(2).

Position:

No

Reasons:

30 November 1996 Ruling 9723463 - GAAR IDENTICAL PROPERTIES

Unedited CRA Tags
245(2) 7(1.3) 47(1)

Principal Issues:

Will GAAR ruling be extended to cover dispositions by a personal trust after the expiry of the escrow agreement thereby avoiding the application of subsection 47(1)?

Position:

No.

Reasons:

30 November 1996 Ruling 9727273 F - ACTIONS DE DÉTRESSE

Unedited CRA Tags
248(1) 112

Position Adoptée:

30 November 1996 Ruling 9730053 F - ACTIONS PRIVILÉGIÉS DE DÉTRESSE

Unedited CRA Tags
248(1) 112(1)

Position Adoptée:

Technical Interpretation - External

20 January 1998 External T.I. 9730575 - VERIFICATION OF LIFE INSURANCE

Unedited CRA Tags
110.6(15)(a)

Principal Issues:

Whether pursuant to subparagraph 110.6(15)(a)(ii) of the Act the fair market value of the proceeds of the insurance policy received by Opco will be deemed not to exceed the cash surrender value (within the meaning assigned by subsection 148(9) of the Act) of the life insurance policy immediately before the death of the individual - the shares of Opco (a QSBC) are owned by Holdco and Opco uses the proceeds of the insurance policy on the life of the deceased to redeem its shares and then Holdco uses the proceeds to redeem its shares owned by the deceased.

Position:

Yes - indirect use is permitted.

Reasons:

19 January 1998 External T.I. 9731675 F - ALLOCATION DE RETRAITE RETIRING ALLOWANCE

Unedited CRA Tags
56(1)(a)(ii)

Principales Questions: Routine

Position Adoptée: Routine

19 January 1998 External T.I. 9730925 F - ALLOCATION RETRAITE RETIRING ALLOWANCE

Unedited CRA Tags
56(1)(a)(ii)

Principales Questions:

Peut-on considérer que l'actionnaire principal d'une société a pris sa retraite si ses fonctions sont la gestion du portefeuille de placements de ladite société qui exploite maintenant une entreprise de placement?

Position Adoptée: Non.

15 January 1998 External T.I. 9732425 - PRINCIPAL BUSINESS OF LEASING "LEASING PROPERTY"

Unedited CRA Tags
REG 1100(16)(a) REG 1100(15)

Principal Issues:

Whether revenues from certain activities can be included in “gross revenues” for purposes of satisfying test in subsection 1100(16) of the Regs.

Position: General comments only.

Reasons:

15 January 1998 External T.I. 9727885 - PARTIAL CHANGE IN USE OF PRINCIPAL RESIDENCE

Unedited CRA Tags
45(1)(c) 40(2)(b)

Principal Issues:

Whether total proceeds on sale of house would be accepted for purposes of the principal residence exemption where there was a partial change in use of principal residence.

Position: Unlikely.

Reasons:

13 January 1998 External T.I. 9733375 - RETIRING ALLOWANCE PERSON RELATED TO EMPLOYER

Unedited CRA Tags
60(j.1)

Principal Issues:

The meaning of a person related to the employer for purposes of calculating the amount of a retiring allowance to be transferred to a RRSP.

Position:

There is an expanded meaning where the business was acquired or where service with a previous employer is recognized in determining the retiree's pension benefits.

Reasons:

13 January 1998 External T.I. 9733425 - 6801(D), DIRECTOR'S FEES

Unedited CRA Tags
6801(d)

Principal Issues:

Can Directors' committee fees be deferred under a 6801(d) plan?

Position: Yes

Reasons:

13 January 1998 External T.I. 9731985 - RETIRING ALLOWANCE - FORMER EMPLOYER

Unedited CRA Tags
60(j.1)

Principal Issues:

Can a corporation pay a retiring allowance to a related shareholder for services provided to a former related corporation, and to another related shareholder that was an officer but not active in the daily operations and was never remunerated.

Position:

A) Yes;
B) Employment is a question of fact.

Reasons: IT-337R2

7 January 1998 External T.I. 9733115 F - ALLOCATION RETRAITE

Unedited CRA Tags
56(1)(a)(ii)

Principales Questions: S/O

Position Adoptée: S/O

2 January 1998 External T.I. 9732155 - MORTGAGE POWER OF SALE

Unedited CRA Tags
146

Principal Issues:

An RRSP holds a mortgage on a property that is sold under a power of sale. There are no proceeds available for the RRSP. However, the annuitant obtains a judgment and is collecting $500 per month.

Position:

It is impossible to discuss the file without knowing all of the facts. Details should be provided to the TSO for their consideration and referral to us should that be necessary. General information can be provided.

Reasons:

12 December 1997 External T.I. 9642285 - LOSSES OF SUBSIDIARY ON WIND-UP

Unedited CRA Tags
88(1.1)

Principal Issues:

Utilization of a subsidiary's loss in year before wind-up.

Position:

Loss realized by subsidiary deemed to be a loss of the parent for the taxation year of the parent in which subsidiary's loss year ended.

Reasons:

12 December 1997 External T.I. 9721225 - CLERGYMAN'S RESIDENCE

Unedited CRA Tags
8(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.

5-972122
XXXXXXXXXX M. Azzi

Attention: XXXXXXXXXX

December 12, 1997

Dear XXXXXXXXXX

Re: Paragraph 8(1)(c) of the Income Tax Act

27 November 1997 External T.I. 9702035 - GRANDFATHERING

Unedited CRA Tags
112(3.2)

Principal Issues:

Ordering of disposition of grandfathered shares.

Position:

We will accept that the first shares disposed of will be grandfathered.

Reasons:

Technical Interpretation - Internal

8 January 1998 Internal T.I. 9732187 - INVESTMENT ALLOWANCE

Unedited CRA Tags
181.2(4)

Principal Issues:

Whether loans to individuals by a non-financial institution are eligible for the investment allowance.

Position: No

Reasons: The law

24 December 1997 Internal T.I. 9718317 - MAINTENANCE AND SUPPORT

Unedited CRA Tags
56(1)(b)

Principal Issues:

An agreement provided that an individual was to make monthly child support payments to his former spouse of $400. The agreement also included a clause which provided that the amount of the monthly child support would be reviewed by the Individual and the former spouse every six months. For each of the years 1985 to 1991, the individual paid support to the former spouse support that was excess of $4,800. Is the former spouse required to report amounts in excess of $4,800 for each of the years in question?.

Position: No

Reasons:

17 November 1997 Internal T.I. 9718287 F - ESPOIR RAISONNABLE DE PROFIT - XXXXXXXXXX

Unedited CRA Tags
9(1) 111(1)a) 18(1)a)

Principales Questions:

Est-ce que nous appuyons la position du bureau des services fiscaux à l'effet que XXXXXXXXXX exploité par le contribuable ayant entraîné des pertes de XXXXXXXXXX n'était pas exploité avec un espoir raisonnable de profit de XXXXXXXXXX?

Position Adoptée:

14 November 1997 Internal T.I. 9718226 - 212(13)(A) "RENT"

Unedited CRA Tags
212(13(a)

Principal Issues:

Whether annual payments for updates, maintenance and servicing of computer software used in the Canadian branch of a non-resident corporation can be considered to be "rent for the use in Canada of property" for purposes of paragraph 212(13)(a) of the Act.

Position:

No.

Reasons:

30 October 1997 Internal T.I. 9712086 - HISTORICAL CALCULATION OF UCC

Unedited CRA Tags
13(21) 80(5) 80(6)

Principal Issues:

Calculation of the UCC of a class of assets

Position:

Historical basis

Reasons:

21 October 1997 Internal T.I. 9717327 F - MODIFICATION DÉCLARATION - RÉSERVE ET DGC

Unedited CRA Tags
40(1)a)(iii) 127.52 110.6(2.1)

Principales Questions:

Est-ce qu'on peut accepter la demande du contribuable de réduire la réserve pour gains en capital qu'il a réclamée en vertu du sous-alinéa 40(1)a)(iii) de la Loi pour l'année 1995 (pour éviter le paiement d'un impôt minimum) et lui accorder une déduction pour gains en capital additionnelle pour la même année afin d'annuler le gain en capital imposable additionnel (ces modifications font en sorte que le contribuable sera assujetti à l'impôt minimum en vertu de l'article 127.52 de la Loi)?

Position Adoptée:

15 October 1997 Internal T.I. 9712367 - INVESTMENT TAX CREDIT, QUALIFIED PROPERTY

Unedited CRA Tags
127(9)

Principal Issues:

whether property is qualified property and specified percentage under 127(9)

Position:

question of fact and law

Reasons:

2 October 1997 Internal T.I. 9715797 - STOCK OPTIONS EXERCISED BY NON-RESIDENT

Unedited CRA Tags
115(1)(a)(i) 2(3)

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.

12 September 1997 Internal T.I. 9720777 - EXISTENCE OF A TESTAMENTARY TRUST

Unedited CRA Tags
108(1)

Principal Issues:

whether estate or beneficiaries should report income prior to property distribution where several years have passed following the death of benefactor

Position:

property has vested in beneficiaries although legal title of property has not been changed - beneficiaries report income

Reasons: