Income Tax Severed Letters - 1998-10-16

Ruling

30 November 1997 Ruling 9808763 - FINANCING

Unedited CRA Tags
212(1)(b) 20(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.

XXXXXXXXXX 980876
XXXXXXXXXX
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: XXXXXXXXXX
Advance Income Tax Ruling

30 November 1997 Ruling 9812883 - STRUCTURED SETTLEMENTS

Unedited CRA Tags
56(1)(d)

Principal Issues:

30 November 1997 Ruling 9815553 - SUPPLEMENTARY TO 3-980098

Unedited CRA Tags
20(1)(e)

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 
XXXXXXXXXX 			 		1-981555
XXXXXXXXXX 

Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Advance Income Tax Ruling

30 November 1997 Ruling 9816373 - DAMAGES RE POST-RETIREMENT HEALTH BENEFITS

Unedited CRA Tags
3 6(3) 56(1)(a) 12(1)(c)

Principal Issues:

30 November 1997 Ruling 9818673 - 21-YEAR DEEMED DISPOSITION RULE

Unedited CRA Tags
104(5.3)

Principal Issues:

1) Does a variation of a testamentary trust to permit the trustees to distribute the trust property prior the application of the 21-year rule constitute a disposition by the trust or of any beneficial interest in the trust?

2) Can 107(2) be utilized on the distribution of the trust property to the Grandchildren?

Position: 1) No. 2) Yes.

Reasons: The variation is not of such significant nature that the Department would consider any disposition. Distribution pursuant to 107(2) consistent with Finance’s technical notes in the context of the 21-year rule.

27 May 1997 Ruling 9730593 - INVESTMENT BY INDIAN BAND

Unedited CRA Tags
81

Principal Issues:

Whether income received by a First Nation from investments with a particular company will be exempt from Part I tax.

Position: No ruling.

Reasons:

Technical Interpretation - External

14 October 1998 External T.I. 9823535 - PARTNERSHIP REORGANIZATION

Unedited CRA Tags
97(2) 80(2)

Principal Issues: will section 80 apply to a partnership reorganization

Position: no comments

Reasons: require all documents and purposes

14 October 1998 External T.I. 9825075 - EMPLOYMENT EXPENSES

Unedited CRA Tags
8(1)(i)(ii) 8(1)(i)(iii)

Principal Issues: Are subparagraph 8(1)(i)(ii) and 8(1)(i)(iii) expenses deductible against income allocated under an employee profit sharing plan.

Position: Question of fact, provided that all requirements of the subparagraphs and the pre-amble of subsection 8(1) have been met.

Reasons: According to paragraph 6(1)(d) of the Act, a taxpayer must include in income, as income from an office or employment, all amounts allocated to him or her in a year under an EPSP, as provided by section 144 of the Act, except subsection 144(4) of the Act, and all amounts required by subsection 144(7) of the Act to be included in income.

5 October 1998 External T.I. 9824255 - PAYMENT OF DEATH BENEFIT BY EMPLOYEE TRUST

Unedited CRA Tags
6(1)(a) 248(1)

Principal Issues: A request for the correct category of an employee trust. The withholding and reporting requirement on a $10,000 death benefit.

Position: The plan is an employee benefit plan. No withholding on the death benefit but a T4A slip must be filed.

Reasons: The plan is not exclusively a private health services plan since it will also provide for a death benefit. Accordingly, it is an employee benefit plan. No withholding since death benefit does not exceed $10,000. T4A slip required per Regulations.

1 October 1998 External T.I. 9819885 - SPECIAL WORK SITE - TEMPORARY DUTIES?

Unedited CRA Tags
6(6)(a)(i)

Principal Issues: Whether an engagement beyond two years will be considered temporary for purposes of the tax-free allowance for a special work site.

Position: Generally, an engagement beyond two years will be regarded as long-term.

Reasons: Two years is considered to be a reasonable guideline for employment that purports to be a temporary assignment.

1 October 1998 External T.I. 9819015 - NON-PROFIT ORGANIZATIONS

Unedited CRA Tags
149(1)(L)

Principal Issues: REQUEST FOR INFORMATION ABOUT NPO. LETTER CLARIFIED BY TELEPHONE

Position: MAILED: It-496, It-83R3, It-409, Income tax guide to non-profit organizations (NPO) information return.

Reasons: NA

28 September 1998 External T.I. 9817885 - LIMITED PARTNERSHIP - ITC

Unedited CRA Tags
127(8.1) 127(8.3)

Principal Issues: is a general partner entitled to the
ITCs denied to a limited partner.

Position: no.

Reasons: G\P only entited to its share of any excess
based on its investment and debt of partnership which it is
responsible for.

28 September 1998 External T.I. 9819755 - CANADIAN FILM OR PRODUCTION TAX CREDIT

Unedited CRA Tags
125.4

Principal Issues:

1. Will distributors be viewed as having acquired copyright ownership in a film?
2. Will the acquisition of shares in a producer disqualify the producer from the credit?

PositionS:

1 &2. Not in a normal commercial arrangement. Question of fact, based on documents and agreements. We are still developing guidelines for less than obvious situations.

Reasons:

25 September 1998 External T.I. 9816075 - WITHHOLDING ON WRONGFUL DISMISSAL AWARDS

Unedited CRA Tags
153(1)(c) 56(1)(1.1) 60(o.1)

Principal Issues: A request for the withholding requirements on various aspects of wrongful dismissal awards.

Position: Withholding required on all aspects of a wrongful dismissal award except post and pre-judgement interest and legal expense reimbursements.

Reasons: A wrongful dismissal award falls within the definition of “retiring allowance”. Recent review of pre and post judgement interest is complete and the status quo is to be maintained. The reimbursement of mitigation expenses (e.g., expense of former employee to find another job) is related to the loss of employment and seems to be another factor in establishing the total award to be paid by the employer.

25 September 1998 External T.I. 9819415 - FEES FOR SOCIAL WORK SERVICES

Unedited CRA Tags
118.2(2)

Principal Issues:

1) Are fees paid to social workers who are members of OCCSW and/or OASW acceptable as "medical expenses"

2) are fees paid to social workers who are accredited by Family Services Ontario acceptable ?

Position:

1) YES,

2) NO

Reasons:

23 September 1998 External T.I. 9803035 F - AVANTAGE - POLICE ASSURANCE VIE ET DAS

Unedited CRA Tags
6(1)a) 153(1)

Principales Questions:
1. Quel avantage doit être inclus dans le revenu d’un employé d’une entreprise sous-traitante lorsqu’une société défraie le coût d’une police d’assurance vie dont les bénéficiaires sont 2/3 la société et 1/3 les ayants droits ou héritiers des employés?

2. Qui est responsable d’effectuer les retenues d’impôt et de remplir la déclaration de renseignements?

Position Adoptée:
1. La valeur de l’avantage à inclure dans le revenu d’un employé devrait correspondre à la prime que cet employé devrait débourser pour obtenir une couverture égale à la proportion de la police dont ses ayants droits ou ces héritiers sont bénéficiaires moins tout montant payé par l’employé à l’égard de cette police.

22 September 1998 External T.I. 9801035 - SUCCESSIVE TRUSTS & DEF'N OF TRUST

Unedited CRA Tags
108(1)

Principal Issues: Can successive trusts meet the words "on ans as a consequence of death" in the definiton of trust in subsection 108(1)?

Position: Yes.

Reasons: Creation under the terms of the will is sufficient.

17 September 1998 External T.I. 9812255 - SBD, ACQUISITION OF CONTROL AND 251(5)(B)

Unedited CRA Tags
125(1) 125(7) 249(4) 251(5)(b) 256(9)

Principal Issues:

16 September 1998 External T.I. 9814065 - REMOTE WORK LOCATION

Unedited CRA Tags
6(6)

Principal Issues:
For purposes of subsection 6(6) of the Income Tax Act, whether the community of XXXXXXXXXX , can be considered a remote work location for the teachers who work for the XXXXXXXXXX .

Position:
The teachers who work for the XXXXXXXXXX rent fully furnished apartments from their employer in XXXXXXXXXX and this accommodation meets the criteria of a “self-contained domestic establishment” as defined in subsection 248(1) of the Act. Therefore, there is a reasonable expectation that the teachers would establish and maintain a self-contained domestic establishment in XXXXXXXXXX . In order to qualify for the subsection 6(6) exclusion, there cannot be a reasonable expectation that the taxpayer would establish and maintain a self-contained domestic establishment.

Reasons: See 9432887 and IT-91R4.

14 September 1998 External T.I. 9804715 F - ASSISTANCE SOCIALE - MONTANTS EXCLUS

Unedited CRA Tags
81(1)h)

Principal Issues:
Will the amounts paid by a non-profit organisation to a foster family be excluded from income by virtue of paragraph 81(1)(h) of the Act?

Position:
Probably yes.

Reasons:
Paragraph 81(1)(h) of the Act provides that the amounts may be received directly or indirectly by the foster family. However, we have to ensure that the amounts received by the non-profit organisation from the provincial government are amounts paid on the basis of a means, needs or income test under a program provided for by an Act of Parliament or a law of a province.

14 September 1998 External T.I. 9733095 F - ASSISTANCE SOCIALE - MONTANTS EXCLUS

Unedited CRA Tags
81(1)h)

Principal Issues:
Will the amounts paid to a foster family be excluded from income by virtue of paragraph 81(1)(h) of the Act if the amounts are paid by :
1. A non-profit organisation that receives the funds from the provincial
government to provide care to handicap persons?
2. The handicap person for room and board if his or her income comes from
social assistance?

Position:
1. and 2. Probably yes.

Reasons:
1. and 2. Paragraph 81(1)(h) of the Act provides that the amounts may be received directly or indirectly by the foster family. However, we have to ensure that the amounts received by the non-profit organisation and by the handicap person from the provincial government are amounts paid on the basis of a means, needs or income test under a program provided for by an Act of Parliament or a law of a province.

8 September 1998 External T.I. 9820085 - ARGENTINA TAX ON RENTAL OF SOFTWARE

Unedited CRA Tags
126 Art. 12

Principal Issues: Argentina tax payable on rental of software from a Canadian company.

Position: Article 12 of Canada-Argentina Income Tax Convention dealing with royalties.

Reasons: Article 12 of Canada-Argentina Income Tax Convention

4 September 1998 External T.I. 9730395 F - SOCIETES ASSOCIEES

Unedited CRA Tags
256 251(2)

Principal Issues: (1) Est-ce que les deux sociétés sont liées?
(2) Est-ce que les deux sociétés sont associées?

Position: (1) Non
(2) Question de faits. Pas assez d'informations pour se prononcer.

Reasons: (1) Une des sociétés est contrôlée par un groupe de personnes non liée.

4 September 1998 External T.I. 9802455 - RENUNCIATION OF CEE

Unedited CRA Tags
66(12.66) 66(12.61)

Principal Issues: Can expenses renounced between related corporations be further renounced utilizing 66(12.66)?

Position: No.

Reasons: Requirements of 66(12.66)(b) not met under deeming provisions of 66(12.61)(a).

2 September 1998 External T.I. 9731015 F - TRANSFERT DE BIENS

Unedited CRA Tags
55(3)(a)

Principal Issues: (1) Est-ce que la souscription d'actions dans une société nouvellement constituée est visée par 55(3)a)?
(2) Est-ce que le remboursement d'un billet payable à demande est une disposition de biens pour une contrepartie égale à la JVM?

Position: (1) Non si la personne qui souscrit aux actions est en position de fondatrice de la nouvelle société. (2) Oui

Reasons: (1) Personne qui souscrit aux actions est liée à la société immédiatement avant la souscription. (2) Il est possible de considérer que la contrepartie pour la disposition d'argent est la réduction de la dette.

2 September 1998 External T.I. 9808445 - NEW BRUNSWICK SKILLS GRANTS & LOANS PROGRAM

Unedited CRA Tags
56(1)(r)

Principal Issues: Is financial assistance provided for under the New Brunswick Skills Loans and Grants program taxable?

Position: Yes.

Reasons: These payments are taxable under paragraph 56(1)(r) which was introduced in Bill C-28 and received royal assent on June 18, 1998. Paragraph 56(1)(r) of the Act subjects to tax various training-related amounts. Specifically, this paragraph includes in a taxpayer’s income financial assistance received under part II of the Employment Insurance Act, as well as similar financial assistance received from a government or government agency under the terms of an agreement with the Canada Employment Insurance Commission

16 July 1998 External T.I. 9812045 - APPROVED STATUS

Unedited CRA Tags
37(1) 37(7)

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 F.B. Fontaine, FCCA
981204
Attention: XXXXXXXXXX

July 16, 1998

Dear Sirs:

Re: Requirements for “Approved” Status

6 July 1998 External T.I. 9610695 F - RESPONSABILITÉ DES ADMINISTRATEURS

Unedited CRA Tags
40(2)g)(ii)

Principales Questions:

1. Est-ce le montant des salaires impayés d'une société, payés par l'administrateur de la société en raison de sa responsabilité à titre d'administrateur, peut être déductible du revenu d'emploi de l'administrateur?

2. Si non, est-ce que le montant peut être traité à titre de perte en capital ou à titre de perte au titre de placement d'entreprise si les conditions sont rencontrées?

3. Est-ce que la perte pourrait être reconnue si une partie du salaire de l'administrateur était, disons 1 000 $, versée en considération de sa responsabilité solidaire?

4. Est-ce que la perte pourrait être reconnue si la société lui émettait une action de son capital-actions représentant une infime participation?

Position Adoptée:

29 June 1998 External T.I. 9802105 - : Safe Income in Holding Company Shares

Unedited CRA Tags
: 55(5)(b) & 55(5)(c)

Principal Issues:
Whether there is safe income in shares of holding company attributable to safe income of shares of a corporation where there is no significant influence.

Position:
Yes.

Reasons:
Provided that it can be clearly demonstrated that the safe income in the shares of the subsidiary where there is no significant influence contributed to the gain in the shares of the holding company.

4 May 1998 External T.I. 9800045 - REPORTING OF FOREIGN PARTNERSHIP INCOME

Unedited CRA Tags
9(1)

Principal Issues:

Reporting of foreign partnership income

Position:

Filling out a T5 supplementary is not appropriate; sufficient information need to be provided to the beneficial owners of the partnership interest for them to include their share of the partnership income on their tax returns.

Reasons:

27 February 1998 External T.I. 9729735 F - PENSION ALIMENTAIRE FILS PÈRE

Unedited CRA Tags
60b) 60.1(4) 56.1(4)

Principales Questions: pension alimentaire versée par un fils à son père

Position Adoptée: non déductible

4 December 1997 External T.I. 9731635 F - FUSION

Unedited CRA Tags
87(8.1)

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.

	 						5-973163
XXXXXXXXXX 						M. Séguin
(613) 957-8953
A l’attention de XXXXXXXXXX 

Le 4 décembre 1997

Monsieur,

Technical Interpretation - Internal

14 October 1998 Internal T.I. 9809347 F - TPS & TVQ - RESPONSABILITÉ D'ADMINISTRATEUR

Unedited CRA Tags
40(2)g)(ii) 18(1)a)

Principales Questions:
Est-ce les montants payés par les administrateurs d’une société, relativement aux comptes de TVQ et TPS impayés par la société à la date de sa faillite, sont admissibles à titre de perte déductible au titre d’un placement d’entreprise et est-ce que les frais judiciaires encourus, pour tenter de faire réduire cette obligation, sont déductibles dans le calcul de leur revenu ?

Position Adoptée:
Non.

2 October 1998 Internal T.I. 9804187 F - CERTIFICAT MÉDICAL - 118.2(2)A)

Unedited CRA Tags
118.2(2)a)

Principales Questions:
Est-ce que les frais payés à un médecin pour obtenir un certificat médical attestant l’état de santé du contribuable ou encore pour remplir et signer le formulaire T2201 sont admissibles au crédit d’impôt pour frais médicaux ?

Position Adoptée:
Oui. La position du Ministère est de considérer de tels frais comme des frais médicaux admissibles aux fins de l’application de l’alinéa 118.2(2)a) de la Loi.

1 October 1998 Internal T.I. 9823456 - DEEMED TAXATION YEAR

Unedited CRA Tags
249(3) 249.1(1)

Principal Issues: When is a T2 return due when 249(3) has application? Does 249(3) apply to change the start of a fiscal period?

Position: Within 6 months form the end of the deemed taxation year established under 249(3). There is no deemed change to the beginning of the fiscal period that follows the deemed taxation year end.

Reasons: Subsection 249(3) applies for all purposes of the Act. The definition of fiscal period in 249.1(1) is not affected by the deeming provision of 249(3).

31 August 1998 Internal T.I. 9807817 - APPROPRIATION AND RECAPTURE

Unedited CRA Tags
15 13

Principal Issues: Whether amount of recapture on transfer of property to corporation is reduced by amount of appropriation.

Position: Yes.

Reasons: 248(28) prevents double income inclusion. The excess is more in the nature of an appropriation.

14 July 1998 Internal T.I. 9808476 - BROADCASTER ACQUIRING EQUITY INTEREST

Unedited CRA Tags
125.4(4)

Principal Issues: Has a broadcaster acquired an equity interest in a production?

Position: Yes, based on the available facts.

Reasons: Consistent with draft interpretive guidelines concerning the investor rules issued to CAVCO on June 17, 1998.

8 July 1998 Internal T.I. 9803347 F - FRAIS DE GARDE DE 5$ PAR JOUR

Unedited CRA Tags
63(3)

Principales Questions:
Est-ce que les frais de gardes au montant de 5$ par jour payés par un résident du Québec pour assurer la garde de ses enfants, selon le nouveau mode de financement des services de garde au Québec, sont déductibles du revenu en vertu de l’article 63 de la Loi ?

Position Adoptée:
Oui, si les frais rencontrent toutes les exigences de l’article 63, le montant de 5$ par jour sera déductible du revenu du contribuable. Le fait qu’une portion des frais de garde soit subventionnée par la province n’affecte en rien la déductibilité des sommes réellement payées.

5 May 1998 Internal T.I. 9812220 - FIRST NATIONS WORKSHOP - INDIAN TAXATION

Unedited CRA Tags
81(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.

FIRST NATIONS WORKSHOP
Pacific Region
May 4 - 5, 1998

Paper presented by Roberta Albert

Introduction

29 April 1998 Internal T.I. 9806857 - INCOME TAX EXEMPTIONS FOR YUKON FIRST NATIONS

Unedited CRA Tags
81

Principal Issues: Various questions related to the taxation of Yukon Indians after the comprehensive land claim settlement.

Position: Generally they lose the section 87 exemption and are taxable on income after 1998.

Reasons: There is no exemption without section 87 of the Indian Act. Property does not retain any exempt status if it is otherwise taxable.

Ministerial Letter

30 July 1998 Ministerial Letter 9811648 - INTEREST ON RETROACTIVE WCB BENEFIT

Unedited CRA Tags
56(1)(v) 110(1)(f)

Principal Issues: Interest on workers' compensation payment.

Position: Exempt from income.

Reasons: Consistent with previous position on similar issue.

19 May 1998 Ministerial Letter 9809328 - TAXABLE CANADIAN PROPERTY OF EMIGRANT

Unedited CRA Tags
115(1)(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.

XXXXXXXXXX

Dear XXXXXXXXXX :

The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to respond to a letter of March 23, 1998, from your Member of Parliament, XXXXXXXXXX, on your behalf, concerning the taxation of family trusts leaving Canada.