Income Tax Severed Letters - 1998-04-03

Administrative Letter

3 September 1997 Administrative Letter 972112B F - DEDUCTIBILITE 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 1997 Ruling 9802093 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6(1)

Principal Issues:

Whether land owned by the taxpayer and used in the business of farming in Canada is "qualified farm property".

Position:

The property qualifies as "qualified farm property".

Reasons:

Technical Interpretation - External

30 March 1998 External T.I. 9730805 - ENTITLED TO RECEIVE

Unedited CRA Tags
13(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.

		973080
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

March 30, 1998

Dear Sirs:

Re: Application of Paragraph 13(7.1)(f) of the Income Tax Act. (the "Act")

23 March 1998 External T.I. 9701885 - OPEN ACCOUNT RECEIVABLE OF CASH-BASIS FARMER.

Unedited CRA Tags
97(2) 76(1) 85(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.

J. Gibbons
XXXXXXXXXX 5-970188

Attention: XXXXXXXXXX

March 23, 1998

Dear XXXXXXXXXX

20 March 1998 External T.I. 9732295 - GIFTS BY WILL

Unedited CRA Tags
118.1(5) 118.1(1)

Principal Issues:

Whether a gift to a registered charity by a testamentary trust qualifies as a charitable donation under subsection 118.1 of the Act under the following circumstances:

1) The deceased taxpayer’s will clearly outlines which charities are to receive donations and how much each is to receive. The deceased’s will provides that upon the death of his spouse, the estate is to pay a fixed dollar amount to a registered charity or charities. The surviving spouse has an income interest in the trust and consequently will be entitled to receive all the income earned by the trust annually. The children of the taxpayer have a capital interest in the trust. The trustees cannot encroach on the capital of the trust.

2) Same as (1) except the deceased taxpayer’s will only lists a number of charities who would be entitled to receive donations. The will places a maximum dollar value on the total donations to be made. The trustees have discretion as to how much of a donation is to be made (up to the maximum) and which charities will receive donations.

3) Same as (1) except that the trustees have the power to encroach on the capital of the trust.

4) Same as (2) except that the trustees have the power to encroach on the capital of the trust.

Position:

1) Yes, subsection 118.1(5) would apply and the donation can be claimed on the deceased taxpayer’s individual income tax return pursuant to subsection 118.1(3). When the payment is eventually made to the registered charity after the death of the spouse, the trust cannot claim a non-refundable tax credit for a charitable donation under subsection 118.1(3) on the trust return because the deceased taxpayer is the donor, not the trust.

2) In order for subsection 118.1(5) to apply, the terms of the will must expressly state that a specific gift is to be made to the registered charity. This requirement cannot be met if there is discretion on the part of the trustees as to whether or not a gift will be made to the charity.

When there is a distribution from the capital of the trust to the registered charity at the direction of the trustee, the trust can claim a non-refundable tax credit for the charitable donation under subsection 118.1(3) on the trust return.

3) and 4) In cases where the size of a residual or equitable interest at the time of the donation cannot reasonably be determined, such as when a trustee has a right to encroach on the capital of the trust, subsection 118.1(5) does not apply. This position is discussed in paragraphs 3 and 6 of IT-226R, Gift to a Charity of a Residual Interest in Real Property or an Equitable Interest in a Trust.

If a donation is made to a registered charity by the trust, the trust can claim a non-refundable tax credit for the charitable donation pursuant to subsection 118.1(3) of the Act on the trust return.

Reasons:

19 March 1998 External T.I. 9801565 - CCA MEANING OF STABLE EQUIPMENT

Unedited CRA Tags
Class 10

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.

J. Gibbons
XXXXXXXXXX 5-980156

Attention: XXXXXXXXXX

March 19, 1998

Dear XXXXXXXXXX

16 March 1998 External T.I. 9721135 F - RÉGIMES D'ASSURANCE COLLECTIVE

Unedited CRA Tags
6(1)a)

Principales Questions:

Est-ce que les primes versées par une société pour une assurance invalidité en faveur de l'employé-actionnaire peut être jumelée au régime offert à ses autres employés par l'intermédiaire de la CCQ pour former un seul régime collectif ?

Position Adoptée:

16 March 1998 External T.I. 9800835 - Hogs/Nursery and finishing stages - FARMING

Unedited CRA Tags
248(1)

Principal Issues:

Whether nursery and finishing stage of the production of hogs is farming where a) gain is an average of 25 Kg at the nursery stage and 85 kilograms at the finishing stage and b) producer is guaranteed to receive a minimum amount monthly.

Position:

Yes

Reasons:

13 March 1998 External T.I. 9733195 - HOUSING CO-OPERATIVES

Unedited CRA Tags
149(1)(l)

Principal Issues:

1. Can the by-laws of a housing co-operative provide for payment of patronage dividends to its members without the co-op losing its exempt status as a non-profit organization (NPO) under paragraph 149(1)(l)? Is there an administrative position that would allow a housing co-operative to keep its exempt status as an NPO under paragraph 149(1)(l) even though its by-laws permit it to pay patronage dividends to its members?

Position:

1. No. The housing co-op would lose its exempt status as an NPO under paragraph 149(1)(l) if its by-laws permitted the payment of patronage dividends to its members. There is no departmental administrative position which would allow the housing co-operative to keep its exempt status when it does not meet the conditions of paragraph 149(1)(l).

Reasons:

12 March 1998 External T.I. 9705465 F - ÉCRIVAIN - DÉPENSES DÉDUCTIBLES ET RÉSIDENCE

Unedited CRA Tags
9 18(1)h)

Principales Questions:

1. Quel est le statut de résidence d'une personne qui habite sur un voilier et qui navigue dans les eaux canadiennes quatre mois par année?
2. Quelles dépenses un écrivain peut-il déduire lorsqu'il débute un projet d'écriture de livre?

Position Adoptée:

11 March 1998 External T.I. 9703585 - SELF-INSURED LIFE INS IS AN EBP PAYING A DEATH BENEFIT

Unedited CRA Tags
6(4) 56(1)(a)(iii) 248(1)

Principal Issues:

income inclusion for an employee relating to a self-insured life insurance benefit (by way of an ASO contract with an insurance company)

Position:

a self-insured life insurance benefit is a promise to provide a death benefit - no amount is included in income under 6(4) but the survivor includes the amount of any death benefit as determined under the Act in income. Since the provision of a death benefit is not provided by means of a group term life insurance policy, the entire plan will be an employee benefit plan, unless the insurer segregates the contributions, income and disbursements relating to the death benefit from the rest of the plan

Reasons:

11 March 1998 External T.I. 9802775 - computer service fees

Unedited CRA Tags
118.5

Principal Issues:

Will mandatory $700 paid a technical college each year for use of a laptop computer and applicable software together with access to the college's server still qualify for tuition tax credit if the college were to provide the student with the option to acquire the computer at the end of the student's program at a price based on fair market value.

Position:

The option should not taint the tuition fees.

Reasons:

11 March 1998 External T.I. 9801545 - PROMOTION EXPENSES - GOLF TOURN.

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.

		980154
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

March 11, 1998

Dear Sir:

Re: Advertising & Promotion costs related to a Corporate Golf Tournament

11 March 1998 External T.I. 9731995 - ALIMONY ARREARS, SETTLEMENT

Unedited CRA Tags
60

Principal Issues:

Whether lump sum payment of $XXXXXXXXXX in settlement of $XXXXXXXXXX of accumulated arrears of periodic payments resulting from a court order is deductible/taxable.

Position:

Not deductible/taxable

Reasons:

11 March 1998 External T.I. 9721115 F - DIMINUTION DE SALAIRE VS ASSURANCE COLLECTIVE

Unedited CRA Tags
6(1)a)

Principales Questions:

Lors de négociations entre l'employeur et les employés, il est entendu que les employés vont accepter une baisse de salaire correspondant à la part des primes d'assurance collective qui sera maintenant assumée par l'employeur. Est-ce que le ministère pourrait invoquer l'article 245 de la Loi pour imposer l'employé sur le salaire brut.

Position Adoptée:

10 March 1998 External T.I. 9730895 F - PAIEMENT CONTRACTUEL - RECHERCHE SCIENTIFIQUE

Unedited CRA Tags
127(9) 127(18)

Principales Questions:

Quelle est la partie du paiement contractuel qui sera appliquée en réduction des dépenses admissibles d'un projet de recherche scientifique et de développement expérimental lorsque le paiement contractuel pourrait couvrir des dépenses non admissibles?

Position Adoptée:

10 March 1998 External T.I. 9716155 - ASSETS USED PRINCIPALLY IN AN ACTIVE BUSINESS

Unedited CRA Tags
248(1) 110.6(1)

Principal Issues:

Whether properties are used principally in an active business. Certain properties do not meet the 50% requirement, but 57% of total acreage is used in a farming business, does this mean all of the acreage is considered used principally in active business.

Position:

No.

Reasons:

10 March 1998 External T.I. 9710565 F - STATUT EMPLOYE VS TRAVAILLEUR AUTONOME

Unedited CRA Tags
5(1)

Principales Questions:

Est-ce que les travailleurs sont des employés ou des travailleurs autonomes si le seul critère qui diffère entre les deux travailleurs est le degré de contrôle exercé par le payeur?

Position Adoptée:

5 March 1998 External T.I. 9801555 - TRANSFER TUITION CREDITS

Principal Issues:

Pecking order for transfer of student tuition credits.

Position:

Student; Excess, by spouse if credit claimed under section 118 or 118.8; in the absence of spouse not claiming under 118 or 118.8, it would be the parent or grandparent who claimed a credit under 118; and any other case, the parent or grandparent designated by the student.

Reasons:

4 March 1998 External T.I. 9800215 - MEALS AND ACCOMODATION PROVIDED TO EMPLOYEES

Unedited CRA Tags
5 67

Principal Issues:

a) Whether rent paid instead of hotel is deductible
b) What is a fair and reasonable daily amount for meals
c) Is the furniture in the rented apartment deductible

Position:

Cannot provide answer

Reasons:

3 March 1998 External T.I. 9802335 - HOME OFFICE EXPENSES

Unedited CRA Tags
8(1)(I)

Principal Issues:

Whether or not home office expenses can be deducted from employment income, under two different scenarios.

Position:

No, under both situations.

Reasons:

25 February 1998 External T.I. 9730365 - GIFTS BY WILL

Unedited CRA Tags
118.1(5)

Principal Issues:
Gift by will for purposes of subsection 118.1(5) of residue of estate to be divided among such registered charities as trustees in their discretion consider appropriate.

Position:
Not a gift by will.

Reasons:
The name of the charity and the amount of the gift should be clearly stated in the will. In some circumstances the residue of the estate could be accepted as a specified amount if a named charity was to receive a specified portion, say 50%, and another named charity was to receive the other 50%. In the absence of the charities being named, subsection 118.1(5) will not apply.

25 February 1998 External T.I. 9731345 - Gift with conditions

Unedited CRA Tags
118.1 110.1 118.1(12)

Principal Issues:

Whether or not certain transaction result in gifts.

Position:

General comments on gifts.

Reasons:

23 February 1998 External T.I. 9730095 - PRINCIPAL RESIDENCE

Unedited CRA Tags
54

Principal Issues:

What portion of land can be considered a principal residence.

Position:

No position given.

Reasons:

23 February 1998 External T.I. 9800205 - PRINCIPAL RESIDENCE

Unedited CRA Tags
54

Principal Issues:

Principal Residence - land in excess of 1/2 hectare

Position:

Law generally explained

Reasons:

17 February 1998 External T.I. 9730875 - GIFT BY WILL

Unedited CRA Tags
118.1(5)

Principal Issues:

Whether a gift to a registered charity by a testamentary trust where the trustees have discretion as to whether or not a gift is to be made to the charity can qualify under subsection 118.1(5) of the Act.

Position:

No

Reasons:

5 February 1998 External T.I. 9729535 - ASSISTANCE

Unedited CRA Tags
125.4(1) Reg 1106

Principal Issues:

Meaning of "assistance" for the purposes of the film tax credit under section 125.4. Various scenarios provided. However, in all, the repayment of loans made to the production company by private third parties would depend on projected film revenue.

Position:

Question of fact dependent on the terms of the particular agreement. Where repayment depends on film revenue and it is unlikely that the loan will be repaid, the loan could be forgivable. Accordingly, the loan would be considered as assistance. As well, if the lender is committed to forgive the loan because of insufficient revenue or for any other reason, the loan would be considered to be a forgivable loan.

Reasons:

27 January 1998 External T.I. 9716725 - RRSP - PERSONAL TRUST

Unedited CRA Tags
248(1)

Principal Issues:

24 December 1997 External T.I. 9729125 - GIFT TO MUNICIPALITY

Unedited CRA Tags
110.1(1)

Principal Issues:

Whether supplying natural gas to a Canadian Municipality for free can be considered a gift when at the same time the taxpayer is entering into a contract for the storage and handling of the supply of the gas.

Position:

Determination of fact.

Reasons:

28 November 1997 External T.I. 9731355 F - DEMANDE D'AGREMENT

Unedited CRA Tags
37(1)(a)(ii)(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.

5-973135
XXXXXXXXXX Michel Lambert, CA M.Fisc

A l'attention de XXXXXXXXXX

Le 28 novembre 1997

Mesdames, Messieurs,

Objet: Demande d'agrément à titre
d'institut de recherches agréé

Technical Interpretation - Internal

11 March 1998 Internal T.I. 9718547 - INTEREST ON CAPITAL ASSETS ASSIGNED TO BANKRUPTCY TRUSTEE

Unedited CRA Tags
128(2) 128(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.

		March 11, 1998
	Winnipeg Taxation Centre	HEADQUARTERS
	Enquiries and Adjustments	J. Gibbons
(613) 957-8953
	Attention:  Brenda Gibb
		7-971854

Proposal Pursuant to Bankruptcy Act

10 March 1998 Internal T.I. 9707647 F - INDIENS - EXONÉRATION DES REVENUS D'INTÉRET

Unedited CRA Tags
81(1)a)

Principales Questions:

Est-ce que le revenu d'intérêt généré d'un investissement à une succursale de la XXXXXXXXXX située dans une réserve indienne est un revenu exonéré pour un indien inscrit?

Position Adoptée:

4 December 1997 Internal T.I. 9728097 F - APPLICATION DE LA LOI

Unedited CRA Tags
ITA 67.1(2)c)

Principales Questions:

Le contribuable, un contracteur général, paye des frais de transport et pension à ses employés pour les contrats effectués à l'extérieur de ses centres administratifs. Certains de ces contrats sont de type "cost plus", le contrat prévoit que le contribuable sera remboursé par le client pour les frais de pension qu'il encourt. La facture émise par le contribuable au client n'indique pas le montant relatif aux dépenses de repas. Toutefois, le client a accès aux livres du contribuable et aux factures et pourrait ainsi déterminer le montant. Est-ce que les frais de repas sont exemptés de l'application du paragraphe 67.1(1) de la Loi en vertu de 67.1(2)c) de la Loi ?

Position Adoptée:

Ministerial Letter

18 March 1998 Ministerial Letter 9722188 - MEALS AND ENTERTAINMENT AT GOLF CLUBS

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.

MINISTER/DEPUTY MINISTER'S OFFICE 97-05001M
ADM'S OFFICE 97-05114M
RETURN TO 15TH FLOOR, ALBION TOWER 97-05400M

March 18, 1998

XXXXXXXXXX

Dear XXXXXXXXXX

11 March 1998 Ministerial Letter 9722808 - 50% LIMITATION OF MEAL EXPENSES FOR TRUCKERS

Unedited CRA Tags
67 8 6(1)(a)

Principal Issues:

WHY GOVERNMENT TRUCK DRIVERS CAN RECEIVE A NON-TAXABLE $45 PER DAY MEAL ALLOWANCE WHEN SELF-EMPLOYED TRUCKERS CAN ONLY DEDUCT 50% OF MEAL EXPENSES

Position:

Explains difference between taxable allowances and limitations on deductions as well as limitations on employees to deduct expenses

Reasons:

11 March 1998 Ministerial Letter 9801838 - mechanics tools

Unedited CRA Tags
8(1)(I)(III)

Principal Issues:
XXXXXXXXXX has expressed concerns that there is no provision in the Income Tax Act which permits a deduction to employees for the cost of acquiring mechanics’ tools.

Position:
Subparagraph 8(1)(i)(iii) refers to the “cost of supplies consumed” but this does not contemplate the deduction of mechanics’ tools since they cannot be consumed.

The Standing Committee on Finance examined the issue of employment expenses, including the non-deductibility of mechanics’ tools. The Committee received submissions from the Canadian Automobile Repair and Service Institute regarding this issue and presented its report to the House of Commons on June 10, 1992. The Committee concluded that the issue of employment expenses was complex and therefore, no recommendations were made regarding legislative changes.

I spoke to Robert Dubrule at the Department of Finance on February 27, 1998, and he indicated that there are no proposed legislative changes regarding the deduction of mechanics’ tools.

Reasons:
A copy of the Committee’s report will be sent to XXXXXXXXXX for his information. As he has already sent a copy of his letter to the Minister of Finance, no further action is required .

10 March 1998 Ministerial Letter 9733818 - T3 SLIPS - FILING DEADLINE

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.

ADM'S Office (2) 97-07547M
Return to Rulings, 15th Floor, Albion Tower
Pending

XXXXXXXXXX

Dear XXXXXXXXXX

26 January 1998 Ministerial Letter 9800108 - INDIAN EXEMPT EMPLOYMENT INCOME

Unedited CRA Tags
81(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.

ADM'S OFFICE (2) ADM972874
RETURN TO 15TH FLOOR, ALBION TOWER

January 26, 1998

XXXXXXXXXX

Dear XXXXXXXXXX