Income Tax Severed Letters - 1998-09-18

Principales Questions:
S/O

Position Adoptée:
S/O

Principales Questions:
Quel est l'impact de la partie I.3 lorsqu'une société utilise une fiducie de protection d'actifs?

Position Adoptée: Société n'a pas à considérer les dettes de la fiducie.

Principal Issues:
1. Can a child claim a designated benefit where the RRIF annuitant has a common law spouse that is not the parent of the child?

2. Are non-taxable social payments included in determining financial dependence?

Position:
1. No

2. Not if excluded from net income.

Reasons:
1. Cannot have a designated benefit if annuitant has a spouse at the time of death.

Principales Questions:
Quelles sont les conséquences fiscales, dans une situation particulière, d’une police d'assurance-vie utilisée dans le cadre d'une convention de retraite.

Position Adoptée:
Question de fait. Explication générale des dispositions du paragraphe 207.6(2).

Principales Questions:
1. Que signifie l'expression "revenu tiré de la disposition de tels placements" à la définition de "fiducie de fonds en commun" au paragraphe 5000(7) du Règlement?

2. Doit-on tenir compte de l'attribution des gains en capital aux bénéficiaires de la fiducie selon le paragraphe 104(21) pour déterminer le revenu de la fiducie à l'alinéa (d) de la définition de "fiducie de fonds mis en commun au paragraphe 5000(7)?

Position Adoptée:
1. Le revenu net calculé selon la Partie I de la Loi et incluant les gains en capital imposables.

Principal Issues:
The taxation of certain Canadian source retirement income on emigration to the USA.

Position:
General explanations provided together with T4056 and T4058 and IT-193 SR.

Reasons:
General information was requested. Reply also explained new treaty provisions with respect to CPP receipts.

Principal Issues: Whether an Eutelsat Pension Scheme payments are tax exempts.

Position: Question of fact.

Reasons: Subject to Article XVII of UK treaty and paragraph 56(1)(a).

Principal Issues:
What does the term “retirement from, or loss of, an office or employment” mean in the context of paragraph 6801(d) of the Regulations?

Position:
We have taken the position that it generally has the same meaning as used for the definition of retiring allowance.

Reasons:
The wording and intent of the provisions were previously considered and the position for retiring allowance purposes was generally adopted for this purpose.

Principal Issues:
Are certain specific payments retiring allowances or tax free receipt?

Position:
Comments provided but, in general, payments of this nature are retiring allowance.

Reasons:
This is a specific proposed transaction and should be the subject of an advance income tax ruling.

Principal Issues:

Must an employee’s return to work follow immediately after a leave of absence in order for a plan to meet the requirements of 6801(a)?
Taxation of “retirement gratuity”

Position:

If the terms of the arrangement allow (or are modified to allow an employee to return at a date that is later than expected, we would accept that it effectively extends the leave of absence. Therefore the requirement would still be fulfilled provided the employee returns to work for a period that is at least as long as the extended leave.
A retirement gratuity will be taxable as employment income unless there is a retirement or loss of job in which case it will be taxable as a retiring allowance.

Reasons:

Principal Issues:
Are the following options qualified investment for purposes of RRSP or RRIF?
1. Equity Spread;
2. Put Options;
3. Call options acquired in the Market
4. Writing Covered Call Options;

Position:
1. Provisions of the Act do not apply directly to a trading strategy but apply to the underlying properties;
2. No: but cash received on writing a put option may be qualified;
3. Yes if the options are rights to acquire qualified investments;
4. The provisions of the Act do not apply but the cash received on writing a call option may be qualified.

Reasons:
1. A Spread is a strategy, not an investment;
2. A Put is not a right to acquire property. Cash qualifies;
3. Qualifies if listed and underlying property is qualified.
4. any Cash is a property so rules apply

Principal Issues:

Information on writing off or disposing of non-performing investments held in an RRSP.

Position:

Outlined possible tax consequences and noted we do not provide opinions or rule on the valuation or propriety of such transactions

Reasons:

Principal Issues: Whether proposed Long Term Care Insurance Plan qualifies as a Private Health Services Plan for purposes of paragraph 118.2(2)(q) of the Act.

Position: Determination can only be made when all facts & information is available (including a copy of the Insurance Policy).

Reasons: Question of Fact.

Principal Issues:
Enquiry seeking confirmation that, where, owing to a non-arm’s length relationship between the relevant parties, a transfer of securities from one person (the “securities lender”) to another person (the “securities borrower”) that would otherwise qualify for the special rules regarding securities lending arrangements set out in section 260 of the Act would not apply, any compensatory payments or lending fees paid by a Canadian resident to a non resident corporation would not be subject to any Part XIII withholding tax.

Principal Issues:

Position Adoptée:
Oui, en autant que l’annulation est effectuée après le 1er octobre 1998.