Income Tax Severed Letters - 1998-09-04

Principal Issues: time for determining tax shelter

Position: before investing, ie, prospective basis

Reasons: wording of definition and intent of law

Principal Issues:

1. Can land and timber be considered "qualified farm property" under subsection 110.6(1) of the Act?
2. What is the tax treatment of timber and land if they are sold separately?
3. Do they answers to 1 & 2 change if the property was transferred to the taxpayers son in 1985?
4. When a taxpayer engaged in "forest planting" dies, is an unharvested crop (standing timber) considered a “right or thing”?
5. Can the land and timber be considered a capital asset in a "forest planting" situation?

Position:

1. Perhaps
2. If the timber is considered a capital property, a capital gain may result which is not eligible for the enhanced capital gains exemption.
3. All of the comments in 1 & 2 would apply to the son.
4. It depends.
5. The sale of timber is considered income from the business of farming.

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.

XXXXXXXXXX 981685
Denise Dalphy

Attention: XXXXXXXXXX

August 18, 1998

Dear Sirs:

Re: Application of Section 78 to a Non-Resident-Owned Investment Corporation (“NRO”)

Principal Issues: partnership rollover and capital gains balance

Position: 53(1)(r) bumps acb (re ECGB) before 98(5) roll

Reasons: wordings of Act

Principal Issues:

Whether Canadian City may issue a tuition certificate to its public service employees in respect of a four day cultural diversity course which it intends putting on for its employees. They feel that they fall within the wording of subparagraph 118.5(1)(a)(i) of the Act which reads “where the individual was during the year a student enrolled at an educational institution that is a university, college or other educational institution providing courses at a post-secondary school level.

Position: Appears not to qualify as a “university, college or other educational institution. Also, the provincial minister of education determines what qualifies as post secondary level courses. Subparagraph 118.5(1)(a)(ii) refers to an entity “certified by the Minister of Human Resources Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for, or improve a person’s skills in, an occupation.

Reasons: It is only the educational institution that can issue tuition certificates. The City itself is not an educational institution. Not within the Department’s jurisdiction to determine whether course is a post secondary level nor whether an institution can be certified under subparagraph 118.5(1)(a)(ii).
XXXXXXXXXX 981385
A. M. Brake
Attention: XXXXXXXXXX

Principal Issues:

Does an amount designated as being travel expenses qualify for the 110.7(1)(a) deduction?

Position:

NO

Reasons:

Principal Issues: Tax treatment of purchase of original works of art.

Position:
1. May qualify for inclusion in Class 8 if conditions met.
2. Consider Certified Cultural Property.
3. Could be personal use property.

Reasons: Interpretation Bulletins: IT-128R, IT-332R & IT-407R4.

Principales Questions:
1. Est-ce que les frais de transport payés par l'employeur pour le transport de ses employés de leur résidence au lieu de travail après les heures où le transport en commun est disponible, est un avantage imposable pour les employés ?

2. Si oui, quel devrait être la méthode d'évaluation de l'avantage advenant le cas où les transports sont effectués soit par taxi, soit par des véhicules de l'employeur ?

Position Adoptée:
1. Oui, la distance entre la résidence et le lieu de travail est une dépense personnelle de l'employé et le transport payé par l'employeur doit être inclus au revenu de l'employé.

Principal Issues:

The taxpayer has requested a technical interpretation regarding various scenarios in which a non-profit organization (NPO) organized as a trust wishes to invest in various types of investments in the future. The taxpayer is asking if the status of the NPO would be affected if it invests in various investments.

Position:

We are unable to give a technical interpretation as to whether the NPO would lose its status if it made different types of investments as we do not have all the material facts. The determination of whether an organization qualifies as an NPO pursuant to paragraph 149(1)(l) is retrospective. Accordingly, we can only provide general comments.

Reasons: See 961356, 9202765, 9704605

Principal Issues:

Can Stock losses be business losses ?

Position:

Question of fact

Reasons:

Principal Issues: SIN to be reported on "In-Trust Accounts"?

Position: Payee's SIN.

Reasons: Withholding tax deducted on account of payee.

Principal Issues:
Are the support payments subject to the new child support rules given that the written agreement came into force after May 1, 1997?

Position:
This is a factual determination. We can only provide general comments. We do not have a copy of the written agreement and we do not know when the agreement was made. We only know that it came into force on July 31, 1997.

Reasons: See 9719345. When an agreement or order, made after April 1997, varies a child support amount payable pursuant to a pre-May 1997 order, the day on which the first payment is required to be made is considered to be the “commencement day” and the new order falls under the new child support rules.

Principales Questions:
Est-ce que les employés de la XXXXXXXXXX peuvent être considérées résider dans une région visée par règlement aux fins de l'application de l'article 110.7 de la Loi?

Position Adoptée:
Non.

Principal Issues:

1) Whether equipment used 2 months while waiting for a closing for its transfer, is used equipment for the purpose of Class 43.1;
2) what is the starting point for the 5 year period referred to in Class 43.1

Position:

1) Used equipment is used equipment, even if used only 2 months.
2) The 5 year period starts at the point in time when the equipment was available for use, which cannot be later than the date the equipment was used to earn income.

Reasons: