Income Tax Severed Letters - 1998-04-17

Principal Issues:

tax consequences arising from a contribution of property to a joint venture by a venturer who reports income on the cash basis

Position:

no gain or loss is recognized at the time of contribution unless the joint venture is in fact a partnership

Reasons:

Principales Questions:

Est-ce que 70(2) est applicable à un paiement d’aide aux études ou à un paiement de revenu accumulé?

Position Adoptée: Non.

Principal Issues:

Will an individual's bankruptcy affect his or her RRSP deduction limit?

Position:

No

Reasons:

Principal Issues:
Whether amounts qualify as retiring allowance

Position:
To the extent they are paid for the loss of an employment

Reasons:
Position in IT-337R2

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.

5-973321
XXXXXXXXXX J. Gibbons

Attention: XXXXXXXXXX

March 27, 1998

Dear XXXXXXXXXX:

Principal Issues:

Where the foreign branch of a Canadian financial institution enters into repurchase transactions and reverse repurchase transactions with a foreign counterparty, will clause 212(1)(b)(iii)(E) apply to exempt certain amounts paid under the arrangement such as the repo spread, lending fee and compensation payments from non-resident withholding tax?

Position:

For the exemption in clause 212(1)(b)(iii)(E) to apply, certain requirements must be met. One such requirement is that the amount must be interest payable in a foreign currency on any obligation entered into in the course of carrying on a business in a foreign country. The word “obligation” as used in clause 212(1)(b)(iii)(E) has a broad meaning. It appears that the requirement to repurchase the securities at the end of a repurchase transaction or the requirement to return the securities at the end of a reverse repurchase transaction can be considered to be an obligation for the purposes of the exemption in clause 212(1)(b)(iii)(E). Accordingly, if the amounts in question constitute interest, the exemption in clause 212(1)(b)(iii)(E) would be available provided that the other requirements in the provision are met. It is a question of fact whether the other requirements in clause 212(1)(b)(iii)(E) are met.

Reasons:

Principales Questions:

Est-ce qu’un don à une fondation universitaire, créée par la Loi sur les fondations universitaires (1996 chapitre 48), constitue, aux fins de l’application de l’alinéa 110.1(1)b) et de la définition de “total des dons à l’État” au paragaphe 118.1(1), un don fait en faveur du chef du Canada ou d’une province?

Position Adoptée:

Principales Questions:

1. Des terrains (mines de minéral industriel) acquis dans le but de les utiliser dans l'entreprise sont-ils des "actifs utilisés principalement dans une entreprise que la société exploite activement principalement au Canada" aux fins de la définition de "société exploitant une petite entreprise" prévue au paragraphe 248(1) de la Loi, et ce même s'il ne sont pas immédiatement mis à contribution dans l'exploitation de l'entreprise?
2. Des terrains (mines de minéral industriel) qui ont servis dans l'entreprise mais qui ne sont plus utilisés, sont-ils des "actifs utilisés principalement dans une entreprise que la société exploite activement principalement au Canada " aux fins de la définition de "société exploitant une petite entreprise" prévue au paragraphe 248(1) de la Loi?

Position Adoptée:

Principal Issues:

Will we rule that, for purposes of computing the prescribed amount under subsection 8517(1) of the Regulations, the member's age in the year the RPP was supposed to be terminated can be used instead of the member's age on the transfer date?

Position:

No

Reasons:

Principal Issues:

partnership a person for purposes of section 260?

Position:

No

Reasons:

Principal Issues:

Whether subsection 15(1) would apply to the shareholder in a wholly-owned corporation situation.

Position:

No.

Reasons:

Principal Issues:

Discussion of payments, involving shares, that can be made by a cooperative corporation pursuant to an allocation in proportion to patronage.

Position:

Described three situations and tied to section 135.

Reasons:

Principal Issues:

do accounting reserves set up prior to an acquisition of control reduce the safe income on hand earned after the change of control when the amounts are expended and deducted for tax purposes

Position: No

Reasons: see response

Principal Issues:

Does section 12.2 apply where an individual owns a deferred annuity contract issued by a U.S. insurance corporation?

Position:

Yes

Reasons:

Principal Issues:

Whether the U.S. charitable organization can be considered to be a qualified donee for purposes of section 149.1 of the Act pursuant to Article XXI(6) of the Canada-United States Income Tax Convention (the "Convention")

Position:

No

Reasons:

Principal Issues:

Whether a taxpayer who transferred or lent property to a specified foreign trust while he was a non-resident of Canada is required to file an information return under subsection 233.2(4) if he was a resident at the end of the trust's year.

Position:

Yes.

Reasons:

Principal Issues:

Whether 118.94 applies to deny a deduction under 118.6 where the individual has no income from whatever source.

Position:

No

Reasons:

Principal Issues:

what is investor in film

Position:

no response

Reasons:

Principal Issues:

Whether shares and indebtedness of a corporation qualify as a family farm corporation. Whether two corporations are related.

Position:

Question of fact. Gave general guidelines on family farm corporation. The corporations are related.

Reasons:

Principal Issues:

whether 2 corporations are connected for purposes of Part IV tax

Position:

yes

Reasons:

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.

971905
XXXXXXXXXX Tim Kuss

Attention: XXXXXXXXXX

October 29, 1997

Dear Sirs:

Re: Subsection 91(4) - Foreign Accrual Tax

Principal Issues:

Whether tax paid to foreign country pursuant to that country's domestic law should be considered an "income or profits tax" where such tax is not payble under that country's tax convention with Canada

Position:

No

Reasons: