Income Tax Severed Letters - 1999-01-22

Miscellaneous

1 December 1998 Miscellaneous E9829490.txt - MEANING OF SERIES,SIGNIFICANT INCREASE

Unedited CRA Tags
55(3) 248(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.

TEI Conference
December 1, 1998

Question XXIII

SECTION 55

1 December 1998 Miscellaneous E9829500.txt - SAFE INCOME - ALLOCATION TO SHARES

Unedited CRA Tags
55(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.

TEI Conference
December 1, 1998

Question XXIV

SAFE INCOME DETERMINATION

1 December 1998 Miscellaneous E9829690.txt - 1998 BUDGET: HOUSING ASSISTANCE

Unedited CRA Tags
6 80.4

Principal Issues: Will new relocation provisions get deferred for non residents moving to Canada.

Position: no.

Reasons: Must be eligible relocation, which requires moves to be inside Canada.

27 October 1998 Miscellaneous E9823830.txt - INTEREST DEDUCTION

Unedited CRA Tags
20(1)(c)

Principal Issues: What is the Department’s position?

Position: Decision limited to identical situations

Reasons: Decision based on the special circumstances of the facts.

27 October 1998 Miscellaneous E9827430.txt - BUMP AVAILABLE ON VERTICAL AMALGAMATION

Unedited CRA Tags
87(2.11)

Principal Issues:

Does subsection 87(11) allow the same bump on a vertical amalgamation as paragraph 88(1)c) does for wind-ups?

Position:

Yes, provided that it is an amalgamation of a parent and one or more of its wholly-owned subsidiaries.

Reasons:

Ruling

27 March 1998 Ruling 970133A - THIN CAPITALIZATION - BACK-TO-BACK LOANS

Unedited CRA Tags
18(6)

Principal Issues: Administrative position on subsection 18(6).

Position: Please review document

Reasons: Intepretation of position set out in IT Bulletin.

8 March 1998 Ruling 970133B - THIN CAPITALIZATION - BACK-TO-BACK LOANS

Unedited CRA Tags
18(6)

Principal Issues: Administrative position subsection 18(6)

Position: Please review document

Reasons: Interpretation of IT Bulletin position

30 November 1997 Ruling E9820283 - RETIRING ALLOWANCE PAYMENT IN SHARES

Unedited CRA Tags
56(1)(a)(ii) 248(1)

Principal Issues:
Is the proposed arrangement a plan for the payment of retiring allowances?

Position:
Yes. The arrangement is a retiring allowance plan.

Reasons:
Review of terms.

30 November 1997 Ruling 9800973 - BUTTERFLY RULING (SPIN-OFF)

Unedited CRA Tags
55(2)

Principal Issues: Butterfly Ruling which contains several issues

Position: (See Statement of Principal Issues attached with Ruling)

Reasons: (See Statement of Principal Issues attached with Ruling)

30 November 1997 Ruling 9811733 - PAYMENT FOR CAPACITY IN XXXXXXXXXX

Unedited CRA Tags
212(1)(d)

Principal Issues: What is characterization of payment for XXXXXXXXXX ?

Position: In this case, services.

Reasons: Jurisprudence and analogy to other XXXXXXXXXX.

30 November 1997 Ruling 9820283 - RETIRING ALLOWANCE PAYMENT IN SHARES

Unedited CRA Tags
56(1)(a)(ii) 248(1)

Principal Issues:
Is the proposed arrangement a plan for the payment of retiring allowances?

Position:
Yes. The arrangement is a retiring allowance plan.

Reasons:
Review of terms.

Technical Interpretation - External

20 January 1999 External T.I. E9832255 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6

Principal Issues: qualified farm property: raising horses and farm in year of disposition.

Position: both qualify if considered "carrying on business of farming"

Reasons: def; in 110.6(1)

20 January 1999 External T.I. 9832255 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6

Principal Issues: qualified farm property: raising horses and farm in year of disposition.

Position: both qualify if considered "carrying on business of farming"

Reasons: def; in 110.6(1)

19 January 1999 External T.I. E9832245 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6

Principal Issues: Does property qualify as qualified farm property?

Position: probably

Reasons: acquired pre-87 and farmed by father

19 January 1999 External T.I. 9826715 - 148(8) - TRANSFER TO A MINOR CHILD

Unedited CRA Tags
148(8) 148(7)

Principal Issues:

Rollover of an interest in a life insurance policy to a minor child under subsection 148(8). If the child is a minor the child under most provincial statutes may not have the legal capacity to own or deal with an insurance policy (except as a beneficiary). In these cases will a transfer of the policy to a bare trust satisfy the conditions of subsection 148(8)?

Position: No.

Reasons:

19 January 1999 External T.I. 9832245 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6

Principal Issues: Does property qualify as qualified farm property?

Position: probably

Reasons: acquired pre-87 and farmed by father

19 January 1999 External T.I. E9826715 - 148(8) - TRANSFER TO A MINOR CHILD

Unedited CRA Tags
148(8) 148(7)

Principal Issues:

Rollover of an interest in a life insurance policy to a minor child under subsection 148(8). If the child is a minor the child under most provincial statutes may not have the legal capacity to own or deal with an insurance policy (except as a beneficiary). In these cases will a transfer of the policy to a bare trust satisfy the conditions of subsection 148(8)?

Position: No.

Reasons:

18 January 1999 External T.I. 9823125 - RRIF, designated BENEFIT

Unedited CRA Tags
146.3(6.1)

Principal Issues: Do the comments in ¶10 of IT-500R regarding RRSPs also apply to RRIFs?

Position: The relevant comments in the IT discuss subsection 146(8.1). Similar legislation for RRIFs is subsection 146.3(6.1). The issue of deemed receipt is basically identical.

18 January 1999 External T.I. E9823125 - RRIF, designated BENEFIT

Unedited CRA Tags
146.3(6.1)

Principal Issues: Do the comments in ¶10 of IT-500R regarding RRSPs also apply to RRIFs?

Position: The relevant comments in the IT discuss subsection 146(8.1). Similar legislation for RRIFs is subsection 146.3(6.1). The issue of deemed receipt is basically identical.

14 January 1999 External T.I. 9812985 - TESTAMENTARY TRUSTS

Principal Issues: Whether the three trusts can be viewed as three separate testamentary trusts?

Position: Generally yes where the testator creates a separate trust for each of his children.

Reasons: Consistent with previous opinions. Final determination to be made by the Tax Services Office.

14 January 1999 External T.I. 9900245 - APPROVED STATUS FOR SR&ED

Unedited CRA Tags
37(1)(a)(ii)(A) 37(7)

Principal Issues: requirements for approved status under 37(1)(a)(ii)(A)

Position: must be non-profit and be able to carry out SR&ED in Canada on on-going basis.

Reasons: legislation and policy

13 January 1999 External T.I. 9822955 - SPOUSAL TESTAMENTARY TRUST - CHARITABLE GIFTS

Unedited CRA Tags
118.1(5) 118.1(3)

Principal Issues:

The terms of a testamentary spousal trust provide that, on the death of the spouse, the entire trust fund is to be paid to one or more registered charities. The trustees have discretion as to the choice of charities and the allocation of funds to any particular charity. Is the spousal trust entitled to claim a charitable donations tax credit when the amounts are actually paid to registered charities?

Position:

This is a factual determination to be made based on the terms of the particular will. If it is determined that the trust has in fact made a gift to a registered charity, it is our view that a charitable donations tax credit may be claimed by the trust to the extent provided by subsection 118.1(3).

Reasons:

13 January 1999 External T.I. E9821715 - STOP LOSS RULES - GRANDFATHERING

Unedited CRA Tags
112(3)

Principal Issues: Application of grandfathering of shares for the purpose of the stop loss rules of subsection 112(3) to (3.2) of the Act. Will the rollover of previously grandfathered shares to a new corporation qualify?

Position: Question of fact as to whether grandfathering rules apply and some general discussion of grandfathering rules was provided. However, exchange of share rule only applies for purpose of paragraph 131(1)(b) of c.19.

Reasons: See paragraph 131(1)(b) and subsection 131(12) of c. 19 - grandfathering rules - for purpose of subsection 112(3) to (3.2) of the Act.

13 January 1999 External T.I. 9813665 - CHARITABLE GIFTS TO A MUNICIPALITY

Unedited CRA Tags
118.1(2)

Principal Issues:

1. Whether a municipality can issue charitable receipts for donations that may be subject to a general direction.

2. Can the municipality issue a charitable donation receipt on behalf of a community association.

3. Can the Municipality issue receipts for the donation of equipment to be used at a community building.

Position:

1. Yes provided they meet the Department's criteria as noted in IT-110R3 and ATR 63

2. Yes provided the community association is an organization which operates under the authority of the municipality (e.g. a committee established by a municipal bylaw)

3. Gifts in kind are acceptable provided they are gifts and meet criteria.

Reasons:

13 January 1999 External T.I. E9822955 - SPOUSAL TESTAMENTARY TRUST - CHARITABLE GIFTS

Unedited CRA Tags
118.1(5) 118.1(3)

Principal Issues:

The terms of a testamentary spousal trust provide that, on the death of the spouse, the entire trust fund is to be paid to one or more registered charities. The trustees have discretion as to the choice of charities and the allocation of funds to any particular charity. Is the spousal trust entitled to claim a charitable donations tax credit when the amounts are actually paid to registered charities?

Position:

This is a factual determination to be made based on the terms of the particular will. If it is determined that the trust has in fact made a gift to a registered charity, it is our view that a charitable donations tax credit may be claimed by the trust to the extent provided by subsection 118.1(3).

Reasons:

13 January 1999 External T.I. 9821715 - STOP LOSS RULES - GRANDFATHERING

Unedited CRA Tags
112(3)

Principal Issues: Application of grandfathering of shares for the purpose of the stop loss rules of subsection 112(3) to (3.2) of the Act. Will the rollover of previously grandfathered shares to a new corporation qualify?

Position: Question of fact as to whether grandfathering rules apply and some general discussion of grandfathering rules was provided. However, exchange of share rule only applies for purpose of paragraph 131(1)(b) of c.19.

Reasons: See paragraph 131(1)(b) and subsection 131(12) of c. 19 - grandfathering rules - for purpose of subsection 112(3) to (3.2) of the Act.

13 January 1999 External T.I. 9900515 - EMPLOYEE INCENTIVE AWARDS

Unedited CRA Tags
6(1)(a)

Principal Issues: Taxability of employee awards

Position: General comments provided

Reasons: General comments provided

12 January 1999 External T.I. 9832625 - ASSOCIATED CORPORATIONS

Unedited CRA Tags
256

Principal Issues: Are two corporations associated pursuant to section 256 in a specific fact situation described in the letter.

Position: The two corporations would be associated under paragraphs 256(1)(b)(c)(d)(e), and potentially also under the anti-avoidance provisions of subsection 256(2.1).

Reasons: See description of fact situation in the technical interpretation.

12 January 1999 External T.I. E9827675 - UK PENSION PLAN TO RRSP

Unedited CRA Tags
56(1)(a) 60(j)

Principal Issues: Is a rollover available for an amount received from a UK pension plan to an RRSP of a Canadian resident.

Position: Question of fact.

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

12 January 1999 External T.I. E9822435 - EXISTING STOCK OPTION, 7(1)

Unedited CRA Tags
7(1)

Principal Issues: Will this specific stock bonus plan be covered under section 7 of the Act?

Position: Question of fact.

Reasons: Completed transaction so no comments can be provided other than through the relevant TSO.

12 January 1999 External T.I. E9832625 - ASSOCIATED CORPORATIONS

Unedited CRA Tags
256

Principal Issues: Are two corporations associated pursuant to section 256 in a specific fact situation described in the letter.

Position: The two corporations would be associated under paragraphs 256(1)(b)(c)(d)(e), and potentially also under the anti-avoidance provisions of subsection 256(2.1).

Reasons: See description of fact situation in the technical interpretation.

12 January 1999 External T.I. 9827675 - UK PENSION PLAN TO RRSP

Unedited CRA Tags
56(1)(a) 60(j)

Principal Issues: Is a rollover available for an amount received from a UK pension plan to an RRSP of a Canadian resident.

Position: Question of fact.

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

12 January 1999 External T.I. 9822435 - EXISTING STOCK OPTION, 7(1)

Unedited CRA Tags
7(1)

Principal Issues: Will this specific stock bonus plan be covered under section 7 of the Act?

Position: Question of fact.

Reasons: Completed transaction so no comments can be provided other than through the relevant TSO.

11 January 1999 External T.I. 9814125 - LUMP-SUM ANNUITY PAYMENT, RRIF

Unedited CRA Tags
146(1)

Principal Issues:
Can a lump-sum annuity payment be transferred to a RRIF?

Position:
If it is the commuted value of a matured RRSP then yes, otherwise no.

Reasons:
Paragraph 146.3(2)(f) lists the amounts that may be transferred to a RRIF.

8 January 1999 External T.I. 9823655 - LSVCC, RETIRES FROM THE WORKFORCE

Unedited CRA Tags
211.7

Principal Issues: Will a retired person continue to be considered “retired from the workforce” where he or she does odd handy man projects during the summer?

Position: Question of Fact.

Reasons: The Department has certain established positions in respect of retirement for the purposes of retiring allowances and these positions should be applied equally when determining whether a person has retired from the workforce.

8 January 1999 External T.I. E9823655 - LSVCC, RETIRES FROM THE WORKFORCE

Unedited CRA Tags
211.7

Principal Issues: Will a retired person continue to be considered “retired from the workforce” where he or she does odd handy man projects during the summer?

Position: Question of Fact.

Reasons: The Department has certain established positions in respect of retirement for the purposes of retiring allowances and these positions should be applied equally when determining whether a person has retired from the workforce.

7 January 1999 External T.I. E9831965 - DAMAGES

Unedited CRA Tags
5 248 retiring allowance

Principal Issues: We have been asked to be of assistance with respect to a settlement (out-of-court or in court) that an individual may receive. Taxable and non-taxable may be involved.

Position: General comments were provided.

Reasons: Specific information not available.

7 January 1999 External T.I. E9826745 - STATUS OF TRUSTEE - EPSP

Unedited CRA Tags
144(1) 147(2)(g)

Principal Issues: Can the trustee of an EPSP be a corporation or individual?

Position: Either appears possible.

Reasons: No restrictions under the Act.

7 January 1999 External T.I. E9823845 - QUALIFIED INVESTMENTS, OPTIONS

Unedited CRA Tags
146(1)

Principal Issues: What options are qualified investments within the meaning assigned by subsection 146(1) of the Act?

Position: Only if 4900(1)(e) is satisfied.

Reasons: An option to acquire a property will be a qualified investment if the property itself is a qualified investment.

7 January 1999 External T.I. 9830935 - LIMITED "SERVICES PARTNERSHIP"

Unedited CRA Tags
67 103 245(1)

Principal Issues: Whether a "limited services partnership," which provides administrative services, as well as professional staff, to a professional partnership at a 15% mark-up, would be acceptable.

Position: General comments only. Our general view with respect to services partnerships is explained in opinion letters 9603995 and 9634905. Further, the Department views fees based on a 15% mark-up of the reasonable costs incurred by the services partnership as being deductible.

Reasons: The acceptance of claims involving the use of service partnerships involves a question of fact, which can only be determined following a thorough review of the circumstances of a particular situation. Further, it is the Department’s practice to examine all of the facts before making a determination as to whether subsection 245(1) would be applied. We would also note that there is a possibility that section 103 may apply in some situations

7 January 1999 External T.I. 9819635 - ITAR 40(7), ELIGIBLE AMOUNT

Unedited CRA Tags
40(7)

Principal Issues:
Is the amount eligible under ITAR 40(7) prorated to reflect plan surplus that subsequently exists?

Position: No

Reasons:
The provision clearly provides that the amount calculated is the amount eligible.

7 January 1999 External T.I. 9831965 - DAMAGES

Unedited CRA Tags
5 248 retiring allowance

Principal Issues: We have been asked to be of assistance with respect to a settlement (out-of-court or in court) that an individual may receive. Taxable and non-taxable may be involved.

Position: General comments were provided.

Reasons: Specific information not available.

7 January 1999 External T.I. 9826745 - STATUS OF TRUSTEE - EPSP

Unedited CRA Tags
144(1) 147(2)(g)

Principal Issues: Can the trustee of an EPSP be a corporation or individual?

Position: Either appears possible.

Reasons: No restrictions under the Act.

7 January 1999 External T.I. 9823845 - QUALIFIED INVESTMENTS, OPTIONS

Unedited CRA Tags
146(1)

Principal Issues: What options are qualified investments within the meaning assigned by subsection 146(1) of the Act?

Position: Only if 4900(1)(e) is satisfied.

Reasons: An option to acquire a property will be a qualified investment if the property itself is a qualified investment.

7 January 1999 External T.I. E9830935 - LIMITED "SERVICES PARTNERSHIP"

Unedited CRA Tags
67 103 245(1)

Principal Issues: Whether a "limited services partnership," which provides administrative services, as well as professional staff, to a professional partnership at a 15% mark-up, would be acceptable.

Position: General comments only. Our general view with respect to services partnerships is explained in opinion letters 9603995 and 9634905. Further, the Department views fees based on a 15% mark-up of the reasonable costs incurred by the services partnership as being deductible.

Reasons: The acceptance of claims involving the use of service partnerships involves a question of fact, which can only be determined following a thorough review of the circumstances of a particular situation. Further, it is the Department’s practice to examine all of the facts before making a determination as to whether subsection 245(1) would be applied. We would also note that there is a possibility that section 103 may apply in some situations

6 January 1999 External T.I. 9832505 F - ACT. PRIV. IMPOSABLE TAXABLE PREFERRED SHARE

Unedited CRA Tags
191(4)(d)(i)

Principales Questions:

Est-ce que 191(4) s’applique?

Position Adoptée:

6 January 1999 External T.I. 9833955 - ONTARIO HEPATITIS C ASSISTANCE PLAN

Unedited CRA Tags
3

Principal Issues:
Tax treatment of the $10,000 assistance payments to be made by the Ontario Government, under the Ontario Hepatitis C Assistance Plan (the “Plan”), to individuals who contracted hepatitis C virus (“HCV”) through the blood system in Ontario, or were infected with HCV by a spouse, partner or parent who received blood or blood products in Ontario. This assistance will be provided to individuals infected before January 1, 1986, or from July 1, 1990 to September 28, 1998.

6 January 1999 External T.I. E9833955 - ONTARIO HEPATITIS C ASSISTANCE PLAN

Unedited CRA Tags
3

Principal Issues:
Tax treatment of the $10,000 assistance payments to be made by the Ontario Government, under the Ontario Hepatitis C Assistance Plan (the “Plan”), to individuals who contracted hepatitis C virus (“HCV”) through the blood system in Ontario, or were infected with HCV by a spouse, partner or parent who received blood or blood products in Ontario. This assistance will be provided to individuals infected before January 1, 1986, or from July 1, 1990 to September 28, 1998.

5 January 1999 External T.I. 9833535 F - PENSION GRC

Unedited CRA Tags
81(1)(i)

Principales Questions:

Application 81(1)(i)

Position Adoptée:

4 January 1999 External T.I. 9831355 - TRANSFERT POLICE ASSURANCE VIE

Unedited CRA Tags
148(7) 15(1)

Principales Questions:

Avantage accordé lorqu’une société transfert une police d’assurance-vie à un actionnaire sujet à 15(1)?

Position Adoptée:

31 December 1998 External T.I. E9833965 - RETIRING ALLOWANCE

Unedited CRA Tags
248

Principal Issues: Unpaid leave of absence until pension commences - has the individual retired?

Position: Question of fact, but if no pension benefits accruing and other tests described in IT-337R3 are met, generally the individual would be considered retired.

Reasons: Consistent with positions in IT-337R3.

31 December 1998 External T.I. 9833965 - RETIRING ALLOWANCE

Unedited CRA Tags
248

Principal Issues: Unpaid leave of absence until pension commences - has the individual retired?

Position: Question of fact, but if no pension benefits accruing and other tests described in IT-337R3 are met, generally the individual would be considered retired.

Reasons: Consistent with positions in IT-337R3.

30 December 1998 External T.I. E9825165 - AWARDS AND RESEARCH GRANTS - NON-RESIDENTS

Unedited CRA Tags
212

Principal Issues: non-residents in receipt of IDRC awards

Position: See letter - not enough information to give more than general comments

Reasons:

30 December 1998 External T.I. 9825165 - AWARDS AND RESEARCH GRANTS - NON-RESIDENTS

Unedited CRA Tags
212

Principal Issues: non-residents in receipt of IDRC awards

Position: See letter - not enough information to give more than general comments

Reasons:

21 December 1998 External T.I. 9830345 - AUTOMOBILE BENEFITS - DIFFERENT SCENARIOS

Unedited CRA Tags
6(1)(e) 6(1)(k) 6(1)(a)

Principal Issues: Whether use of employer's car is a taxable benefit in three different scenarios: (1) The employee uses the car to travel home the day before an all-day conference. The employee then uses the car to travel to the conference. The following day the employee returns the employer's car to his or her work location. (ii) The employee uses his or her own car to travel from home to an employer's facility, switches to an employer's vehicle, and continues on to a second facility. At the end of the day, the employee reverses the trip. There is no purpose for driving to the first facility other than to switch vehicles. (iii) The employee uses an employer's vehicle to travel from his home to a temporary work site, for example, to participate in surveillance activities. Instead of picking up the employer's vehicle in the morning, the employee takes the employer' vehicle home the night before.

Position: (i) Likely no benefit. (ii) Likely a benefit. (iii) Likely a benefit.

Reasons: (i) Although travel to and from an employee's work location is personal, in the case where such an occurrence is infrequent and irregular, there is likely no benefit. (ii) Since the first facility cannot be regarded as a work location (because no work is performed there by the employee) the trip between the first facility and the employee' work location would be regarded as personal since it is merely part of the trip between the employee's home and his or her work location. (iii) Travel between home and work is considered personal. However, per para. 5 of IT-63R5, travel from home to a point of call will be considered employment-related.

21 December 1998 External T.I. E9830345 - AUTOMOBILE BENEFITS - DIFFERENT SCENARIOS

Unedited CRA Tags
6(1)(e) 6(1)(k) 6(1)(a)

Principal Issues: Whether use of employer's car is a taxable benefit in three different scenarios: (1) The employee uses the car to travel home the day before an all-day conference. The employee then uses the car to travel to the conference. The following day the employee returns the employer's car to his or her work location. (ii) The employee uses his or her own car to travel from home to an employer's facility, switches to an employer's vehicle, and continues on to a second facility. At the end of the day, the employee reverses the trip. There is no purpose for driving to the first facility other than to switch vehicles. (iii) The employee uses an employer's vehicle to travel from his home to a temporary work site, for example, to participate in surveillance activities. Instead of picking up the employer's vehicle in the morning, the employee takes the employer' vehicle home the night before.

Position: (i) Likely no benefit. (ii) Likely a benefit. (iii) Likely a benefit.

Reasons: (i) Although travel to and from an employee's work location is personal, in the case where such an occurrence is infrequent and irregular, there is likely no benefit. (ii) Since the first facility cannot be regarded as a work location (because no work is performed there by the employee) the trip between the first facility and the employee' work location would be regarded as personal since it is merely part of the trip between the employee's home and his or her work location. (iii) Travel between home and work is considered personal. However, per para. 5 of IT-63R5, travel from home to a point of call will be considered employment-related.

15 December 1998 External T.I. E9832095 - FOREIGN REPORTING RULES

Unedited CRA Tags
233.2 233.3 233.6

Principal Issues: As to whether form T1141, T1142 or T1135 is required to be filed?

Position: Form T1135 required to be filed if cost amount of the property in the trust exceeds $100,000. Form T1141 and T1142 not required to be filed.

Reasons: The trust is the person resident in Canada owning foreign property

15 December 1998 External T.I. E9821495 - FOREIGN AFFILIATES - FOREIGN TAX / LLCS

Unedited CRA Tags
113(1)(c) 113(1)(b) 91(4)

Principal Issues: Various foreign affiliate issues concerning foreign taxes paid by members of U.S. LLCs.

Position: Various

Reasons:

15 December 1998 External T.I. 9832095 - FOREIGN REPORTING RULES

Unedited CRA Tags
233.2 233.3 233.6

Principal Issues: As to whether form T1141, T1142 or T1135 is required to be filed?

Position: Form T1135 required to be filed if cost amount of the property in the trust exceeds $100,000. Form T1141 and T1142 not required to be filed.

Reasons: The trust is the person resident in Canada owning foreign property

15 December 1998 External T.I. 9821495 - FOREIGN AFFILIATES - FOREIGN TAX / LLCS

Unedited CRA Tags
113(1)(c) 113(1)(b) 91(4)

Principal Issues: Various foreign affiliate issues concerning foreign taxes paid by members of U.S. LLCs.

Position: Various

Reasons:

14 December 1998 External T.I. E9824705 - CHILD SUPPORT

Unedited CRA Tags
56.1(4) 56(1)(b)

Principal Issues:
A taxpayer is in arrears in respect of child support payments set out in a court order. The child support is deductible by the payer under paragraph 60(b) of the Act and is required to be included in the income of the recipient under paragraph 56(1)(b) of the Act. A new order is issued after April 1997 which varies the child support amount payable in the initial order and sets out the amount of the arrears (the “Arrears”) that is not subject to the new regime. In the alternative, the new order may set out an amount (the “Reduced Arrears”) that is less than the amount of the arrears.

If the Arrears are paid to the Recipient in a year when all child support subject to the new regime has been paid, is the recipient required to include the Arrears in income? In the alternative, if the Reduced Sum is paid in similar circumstances, is the Reduced Sum required to be included in income?

Position:
The Arrears would be required to be included in the recipient’s income. On the other hand, the Reduced Arrears would not be taxable in the hands of the recipient if it was paid to obtain a release from a liability imposed by the first order (i.e., the “Reduced Arrears” cannot be identified as amounts payable periodically under the initial order).

Reasons:
The comments are consistent with paragraph 22 of the new draft IT on “Support Payments”.

14 December 1998 External T.I. 9824705 - CHILD SUPPORT

Unedited CRA Tags
56.1(4) 56(1)(b)

Principal Issues:
A taxpayer is in arrears in respect of child support payments set out in a court order. The child support is deductible by the payer under paragraph 60(b) of the Act and is required to be included in the income of the recipient under paragraph 56(1)(b) of the Act. A new order is issued after April 1997 which varies the child support amount payable in the initial order and sets out the amount of the arrears (the “Arrears”) that is not subject to the new regime. In the alternative, the new order may set out an amount (the “Reduced Arrears”) that is less than the amount of the arrears.

If the Arrears are paid to the Recipient in a year when all child support subject to the new regime has been paid, is the recipient required to include the Arrears in income? In the alternative, if the Reduced Sum is paid in similar circumstances, is the Reduced Sum required to be included in income?

Position:
The Arrears would be required to be included in the recipient’s income. On the other hand, the Reduced Arrears would not be taxable in the hands of the recipient if it was paid to obtain a release from a liability imposed by the first order (i.e., the “Reduced Arrears” cannot be identified as amounts payable periodically under the initial order).

Reasons:
The comments are consistent with paragraph 22 of the new draft IT on “Support Payments”.

9 December 1998 External T.I. 9802615 - 21-YEAR DEEMED DISPOSITION RULE

Unedited CRA Tags
104(4) 108(1) - trust paragraph (g)

Principal Issues:

1. Whether a trust with more than one beneficiary including charities as contingent beneficiaries can qualify under paragraph (g) of the definition of "trust" in subsection 108(1) of the Act?

2. Whether a perpetual fund trust can qualify under paragraph (g) of the definition of "trust" in that subsection?

Position: 1. No 2. No.

Reasons: Interests not vested indefeasibly and there are interests which may become effective in the future.

1 December 1998 External T.I. E9829525 - UTILIZATION OF SUBSIDIARY'S LOSSES

Unedited CRA Tags
88(1.1)(b)

Principal Issues: Utilization of a subsidiary's losses

Position: loss realized by subsidiary deemed to be loss of the parent for the taxation year of the parent in which subsidiary's loss year ended. Revised previous opinion #964228.

Reasons: Short fiscal period did not restrict the loss available to parent to the year 2002.

1 December 1998 External T.I. 9829525 - UTILIZATION OF SUBSIDIARY'S LOSSES

Unedited CRA Tags
88(1.1)(b)

Principal Issues: Utilization of a subsidiary's losses

Position: loss realized by subsidiary deemed to be loss of the parent for the taxation year of the parent in which subsidiary's loss year ended. Revised previous opinion #964228.

Reasons: Short fiscal period did not restrict the loss available to parent to the year 2002.

27 November 1998 External T.I. 9825665 - PAYOUT OF SICK LEAVE CREDITS ON TRANSFER

Unedited CRA Tags
248(1)

Principal Issues:

Whether payout of sick leave credits on transfer from one position to another with the same employer constitutes retiring allowance.

Position: No.

Reasons:

27 November 1998 External T.I. E9825665 - PAYOUT OF SICK LEAVE CREDITS ON TRANSFER

Unedited CRA Tags
248(1)

Principal Issues:

Whether payout of sick leave credits on transfer from one position to another with the same employer constitutes retiring allowance.

Position: No.

Reasons:

26 November 1998 External T.I. 9809035 - INVESTMENTS HELD IN TRUST FOR CHILD

Unedited CRA Tags
74.1

Principal Issues: attribution re: child tax benefit and capital gains

Position: no attribution

Reasons: wording of 74.1(2)

26 November 1998 External T.I. 9818605 - FOREIGN EXCHANGE LOSS

Unedited CRA Tags
39(2) 40(2)(g) 40(3.3)

Principal Issues: Application of loss denial rules to a foreign exchange loss realized on the payment of a loan owing to an affiliated person

Position: Loss denial rules do not apply

Reasons: Loss arises by virtue of the payment of the loan and not by virtue of the disposition of property to the creditor to which the loss denial rules apply

16 November 1998 External T.I. E9820135 - ELECTION FOR ECP OWNED ON FEB 22, 1994

Unedited CRA Tags
110.6(19)(b) 14(1)(a)(v)

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.

	5-982013
XXXXXXXXXX 								J. Teixeira
(613) 957-2095
November 16, 1998

Dear Sir:

Re: Transfer of eligible capital property and redemption of shares received as consideration

16 November 1998 External T.I. 9820135 - ELECTION FOR ECP OWNED ON FEB 22, 1994

Unedited CRA Tags
110.6(19)(b) 14(1)(a)(v)

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.

	5-982013
XXXXXXXXXX 								J. Teixeira
(613) 957-2095
November 16, 1998

Dear Sir:

Re: Transfer of eligible capital property and redemption of shares received as consideration

12 November 1998 External T.I. E9827375 - GENERAL DAMAGES FOR PAIN AND SUFFERING

Unedited CRA Tags
248(1) 6

Principal Issues: Individual was dismissed from her employment and as a result of treatment she received from former employer, individual suffered mental distress which required medical intervention. Individual has negotiated settlement with former employer and as part of settlement, individual receives amount for general damages for pain and suffering. Employer has withheld tax from damages for pain or suffering.
Is amount paid as damages for pain and suffering taxable?

Position: Question of fact.

Reasons: Paragraph 9 of IT-337R3 sets out our position on the treatment of the award of damages for wrongful dismissal and the treatment of damages in respect of pain and suffering. This position is also applicable to negotiated settlements of wrongful dismissal cases. General damages are not taxable where there is sufficient evidence to conclude that the damages are for personal injury and are in respect of the loss of employment, such as human rights violations.

12 November 1998 External T.I. 9827375 - GENERAL DAMAGES FOR PAIN AND SUFFERING

Unedited CRA Tags
248(1) 6

Principal Issues: Individual was dismissed from her employment and as a result of treatment she received from former employer, individual suffered mental distress which required medical intervention. Individual has negotiated settlement with former employer and as part of settlement, individual receives amount for general damages for pain and suffering. Employer has withheld tax from damages for pain or suffering.
Is amount paid as damages for pain and suffering taxable?

Position: Question of fact.

Reasons: Paragraph 9 of IT-337R3 sets out our position on the treatment of the award of damages for wrongful dismissal and the treatment of damages in respect of pain and suffering. This position is also applicable to negotiated settlements of wrongful dismissal cases. General damages are not taxable where there is sufficient evidence to conclude that the damages are for personal injury and are in respect of the loss of employment, such as human rights violations.

28 October 1998 External T.I. 9825705 - LOSSES OF AMALGAMATED CORPORATION

Unedited CRA Tags
87(2.1)(e)

Principal Issues:

Whether an amalgamated corporation formed by the amalgamation of a parent and a wholly-owned subsidiary can carry back its losses to offset taxable income of the subsidiary corporation.

Position:

No.

Reasons:

28 October 1998 External T.I. E9825705 - LOSSES OF AMALGAMATED CORPORATION

Unedited CRA Tags
87(2.1)(e)

Principal Issues:

Whether an amalgamated corporation formed by the amalgamation of a parent and a wholly-owned subsidiary can carry back its losses to offset taxable income of the subsidiary corporation.

Position:

No.

Reasons:

16 September 1998 External T.I. 9814825 - REMOTE WORK LOCATION

Unedited CRA Tags
6(6) 110.7

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.

30 June 1998 External T.I. 9816195 - CHARITABLE CORP - DISPOSITION OF SHARES

Unedited CRA Tags
149(1)(l)

Principal Issues: Charitable corp - disposition of shares

Position: referred to IT-83R3 and IT-496

Reasons: see letter

24 April 1998 External T.I. 9730155 - OVERSEAS EMPLOYMENT TAX CREDIT

Unedited CRA Tags
122.3

Principal Issues: Dans la situation donnée, est-ce que l'employeur "exploitait une entreprise à l'étranger se rapportant à ... un projet d'installation" aux fins du crédit d'impôt 122.3 ?

Position: Notre réponse fait le tour de la question - IT, jurisprudence ... et conclut que l'employeur satisfait aux critères de l'article 122.3

Reasons: L'objet de l'article 122.3 est de permettre aux employeurs Canadiens d'être compétitifs à l'étranger; de plus l'expression "exploitait une entreprise à l'étranger se rapportant à ... un projet d'installation" peut être interprétée de façon très large.

2 March 1998 External T.I. 9709005 - FOREIGN AFFILIATES - EARNINGS AMOUNT

Unedited CRA Tags
subsection 5907(1) of the Regualtions

Principal Issues:
Whether inflationary adjustments made to income under Mexican tax law are included in the determination of a foreign affiliate’s earnings amount under subsection 5907(1) of the Regulations.

Position: No

Reasons:
Such adjustments are purely notional and do not involve a payment or a receipt by a foreign affiliate. Moreover they have arguably little to do with the foreign affiliate's active business.

20 February 1998 External T.I. 9714685 - NON-RESIDENT TRUST STRUCTURES

Unedited CRA Tags
95 94 94.1

Principal Issues: Various issues regarding non-resident trust structures.

Position: Please review document

Reasons:

6 January 1998 External T.I. 9818015 - CHANGE IN ACCOUNTING METHOD - PENSION FUNDS

Unedited CRA Tags
47(1) 10(2.1)

Principal Issues: Can a pension plan change the accounting method for properties from average cost to LIFO or FIFO.

Position: Generally no.

Reasons:
1) For capital properties: specific item method. (average cost method for identical properties only).
2) For inventory: FMV or the lesser of cost and FMV (cost: specific item method. If not practical: average or FIFO method for identical properties only - LIFO is not acceptable).
3) Changing the use of a method: question to tax services office.

8 October 1997 External T.I. 9700575 - FOREIGN AFFILIATES - DEEMED ACTIVE INCOME

Unedited CRA Tags
95(2)(a)(ii)(D)

Principal Issues: Whether the amalgamation of foreign affiliates in a foreign group would put arrangement off-side under clause 95(2)(a)(ii)(D).

Position: No in the case at hand. Please review document.

Reasons: The requirements of clause 95(2)(a)(ii)(D) still met after amalgamation.

Conference

22 December 1998 Roundtable, E9828936 - YUKON FIRST NATIONS: VARIOUS QUESTIONS

Unedited CRA Tags
81

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.

		December 22, 1998
	Policy Development Division	HEADQUARTERS
	Ms Aileen Conway	D. Duff
	Director
	Attention: Neil Mitchell
		982893

Yukon First Nations

11 December 1998 Roundtable, E9829456 - WHETHER FORMER PARTNER IS A MEMBER

Unedited CRA Tags
98.1 Reg 229(5)(a) 96(1.1)

Principal Issues: Whether an individual who is a former partner and who has a residual interest as defined in 98.1(1), is a member of the partnership for purposes of determining whether must file under Regulation 229(5)(a), which applies where all members are corporations.

Position: No.

Reasons: 98.1(1)(d) deems the former partner not to be a member, except for certain specified purposes. Neither Regulation 229(5) (nor 221(1)(d) of the Act, which authorizes that regulation) are specified.

13 October 1998 APFF Roundtable Q. 3, 9819170 F - INTÉRACTION 55(5)E)(I) ET 251(3)

Unedited CRA Tags
251(3) 55(5)e)(i)

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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 3

Application du paragraphe 55(2)

13 October 1998 APFF Roundtable Q. 6, 9819190 F - FRACTIONNEMENT DU REVENU NEUMAN

Unedited CRA Tags
56(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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 6

Fractionnement du revenu

13 October 1998 APFF Roundtable Q. 7, 9819200 F - SAFE INCOME - WINDFALL

Unedited CRA Tags
55(5)

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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 7

Revenu gagné ou réalisé par une société

13 October 1998 APFF Roundtable Q. 11, 9819240 F - CONVENTION FISCALE ET LES LLC

Unedited CRA Tags
212(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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 11

(Limited Liability Company( et convention fiscale

13 October 1998 APFF Roundtable Q. 12, 9819250 F - SOCIÉTÉ À BUT UNIQUE - SINGLE PURPOSE CO.

Unedited CRA Tags
15(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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 12

Détention d’immeuble résidentiel aux États-Unis - Société à but unique

13 October 1998 APFF Roundtable Q. 13, 9819260 F - DÉCLARATION DE PLACEMENTS ÉTRANGERS

Unedited CRA Tags
233.3

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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 13

Déclaration de placements étrangers

24 November 1998 APFF Roundtable Q. 14, 9811270 F - ÉMIGRATION

Unedited CRA Tags
128.1

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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 14

Émigration du Canada

13 October 1998 APFF Roundtable Q. 21, 9820920 F - TRANSFERT DE BIEN

Unedited CRA Tags
55(3)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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 21

Présomption de gain en capital - l’alinéa 55(3)a) de la Loi

13 October 1998 APFF Roundtable Q. 22, 9820930 F - IT-169

Unedited CRA Tags
86(2) 51(2) 85(1)(e.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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 22

Clause de rajustement de prix

13 October 1998 APFF Roundtable Q. 23, 9820940 F - CLAUSE DE RAJUSTEMENT DE PRIX

Unedited CRA Tags
84(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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 23

Clause de rajustement de prix et le paragraphe 84(3) de la Loi

13 October 1998 APFF Roundtable Q. 25, 9820960 F - ORDRE DE DISPOSITION DES ACTIONS IDENTIQUES

Unedited CRA Tags
112(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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 25

Paragraphe 112(3) - Ordre de disposition des actions identiques

13 October 1998 APFF Roundtable Q. 28, 9820990 F - ACTIONS DE RÉGIME TRANSITOIRE

Unedited CRA Tags
112(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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 28

Actions de régime transitoire aux fins du paragraphe 112(3) de la Loi

13 October 1998 APFF Roundtable Q. 29, 9821000 F - RÉGIMES DE DROITS ACQUIS

Unedited CRA Tags
112(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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 29

Régime des droits acquis - application du paragraphe 112(3)

13 October 1998 APFF Roundtable Q. 36, 9823030 F - DUHA PRINTER

Unedited CRA Tags
249(4)

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.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 1998

Question 36

Contrôle de jure - l’affaire Duha Printers (Western) Ltd.

21 November 1997 CTF Roundtable, 9730600 - IN-HOUSE LOSS UTILIZATION

Unedited CRA Tags
20(1)(C) 245

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.

TAX EXECUTIVES INSTITUTE, INC.

LIAISON MEETING - DECEMBER 9, 1997

Question VI - In-house loss utilization

1 December 1998 TEI Roundtable, 9829490 - MEANING OF SERIES,SIGNIFICANT INCREASE

Unedited CRA Tags
55(3) 248(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.

TEI Conference
December 1, 1998

Question XXIII

SECTION 55

9 December 1997 TEI Roundtable, 9729800 - FOREIGN TAX CREDITS - PRODUCTION SHARING

Unedited CRA Tags
126

Principal Issues: Whether payments under production sharing agreements are an income or profits tax.

Position: Under review

Reasons:

1 December 1998 TEI Roundtable Q. 12, 9829500 - SAFE INCOME - ALLOCATION TO SHARES

Unedited CRA Tags
55(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.

TEI Conference
December 1, 1998

Question XXIV

SAFE INCOME DETERMINATION

Technical Interpretation - Internal

18 January 1999 Internal T.I. 9828227 F - RACHAT D'OPTIONS D'ACHAT D'ACTIONS

Unedited CRA Tags
20(1)e) 20(1)f)

Position Adoptée:

6 January 1999 Internal T.I. 9833837 - DEFINITION OF SPOUSE

Unedited CRA Tags
252(4)

Principal Issues: Where the 12 month period referred to in subparagraph 252(4)(a)(i) of Income Tax Act (the “Act”) straddles the end of 1992, will the individuals involved in the common-law relationship be treated as spouses immediately after the end of the 12 month period, assuming the other requirements of subsection 252(4) of the Act are met?

Position: Yes

Reasons: Position approved by Policy Review Committee (see 0-971306)

6 January 1999 Internal T.I. E9833837 - DEFINITION OF SPOUSE

Unedited CRA Tags
252(4)

Principal Issues: Where the 12 month period referred to in subparagraph 252(4)(a)(i) of Income Tax Act (the “Act”) straddles the end of 1992, will the individuals involved in the common-law relationship be treated as spouses immediately after the end of the 12 month period, assuming the other requirements of subsection 252(4) of the Act are met?

Position: Yes

Reasons: Position approved by Policy Review Committee (see 0-971306)

22 December 1998 Internal T.I. 9832947 - ROTH IRA, CANADIAN TAX ISSUES

Principal Issues:

How will Roth IRAs be treated for tax purposes in Canada?

Position: Questions and Answers provided.

Reasons:

22 December 1998 Internal T.I. 9830297 F - CONJOINT

Unedited CRA Tags
252(4)

Principales Questions:

Transfert de REER au conjoint de droit et de fait au décès?

Position Adoptée: Oui.

22 December 1998 Internal T.I. 9817137 - PRE-PRODUCTION REVENUE; BULK SAMPLE

Unedited CRA Tags
66(12.1)

Principal Issues: treatment of bulk sample revenue

Position: reduces CCEE

Reasons: 66(12.1)

22 December 1998 Internal T.I. E9832947 - ROTH IRA, CANADIAN TAX ISSUES

Principal Issues:

How will Roth IRAs be treated for tax purposes in Canada?

Position: Questions and Answers provided.

Reasons:

22 December 1998 Internal T.I. 9828936 - YUKON FIRST NATIONS: VARIOUS QUESTIONS

Unedited CRA Tags
81

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.

		December 22, 1998
	Policy Development Division	HEADQUARTERS
	Ms Aileen Conway	D. Duff
	Director
	Attention: Neil Mitchell
		982893

Yukon First Nations

17 December 1998 Internal T.I. 9822637 F - PRESTATIONS D'INVALIDITÉ

Unedited CRA Tags
6(1)f)

Principales Questions:
Pourquoi les prestations d'invalidité reçues du «XXXXXXXXXX » deviennent non imposable à partir du 1er janvier 1997?

Position Adoptée:
On ne peut pas confirmer que les montants sont non imposables car il manque de l'information.

17 December 1998 Internal T.I. 9827967 F - AVANTAGES - FONDS SOCIAL POUR EMPLOYÉS

Unedited CRA Tags
6(1)a)

Principales Questions:

Est-ce que les cinq douzièmes de la réduction des cotisations d’un employeur à l’assurance-emploi transférés par l’employeur à un fonds social pour le bénéfice des employés constituent un avantage imposable pour les employés en vertu de l’alinéa 6(1)a) de la Loi.

Position Adoptée:

11 December 1998 Internal T.I. E9828647 - PARAGRAPH 18(1)(A)

Unedited CRA Tags
18(1)(a)

Principal Issues:

Whether certain swap transactions were entered into for the purpose of producing income.

Position:

Question of fact as to whether paragraph 18(1)(a) applies - Case referred to Industry Specialist for a review of the facts, industry practice and comparison to terms of commercial swap transactions.

Reasons: See above.

11 December 1998 Internal T.I. 9828647 - PARAGRAPH 18(1)(A)

Unedited CRA Tags
18(1)(a)

Principal Issues:

Whether certain swap transactions were entered into for the purpose of producing income.

Position:

Question of fact as to whether paragraph 18(1)(a) applies - Case referred to Industry Specialist for a review of the facts, industry practice and comparison to terms of commercial swap transactions.

Reasons: See above.

11 December 1998 Internal T.I. 9829456 - WHETHER FORMER PARTNER IS A MEMBER

Unedited CRA Tags
98.1 Reg 229(5)(a) 96(1.1)

Principal Issues: Whether an individual who is a former partner and who has a residual interest as defined in 98.1(1), is a member of the partnership for purposes of determining whether must file under Regulation 229(5)(a), which applies where all members are corporations.

Position: No.

Reasons: 98.1(1)(d) deems the former partner not to be a member, except for certain specified purposes. Neither Regulation 229(5) (nor 221(1)(d) of the Act, which authorizes that regulation) are specified.

1 December 1998 Internal T.I. 9829690 - 1998 BUDGET: HOUSING ASSISTANCE

Unedited CRA Tags
6 80.4

Principal Issues: Will new relocation provisions get deferred for non residents moving to Canada.

Position: no.

Reasons: Must be eligible relocation, which requires moves to be inside Canada.

27 October 1998 Internal T.I. 9827430 - BUMP AVAILABLE ON VERTICAL AMALGAMATION

Unedited CRA Tags
87(2.11)

Principal Issues:

Does subsection 87(11) allow the same bump on a vertical amalgamation as paragraph 88(1)c) does for wind-ups?

Position:

Yes, provided that it is an amalgamation of a parent and one or more of its wholly-owned subsidiaries.

Reasons:

27 October 1998 Internal T.I. 9817606 F - CIPCMC - BIEN AMORTISSABLE ET BFT

Unedited CRA Tags
125.4 125.1

Principales Questions:
1- Le choix prévu au paragraphe 8 du Bulletin d’interprétation IT-283R2 permet-il à un producteur d’ajouter le coût de sa production à son inventaire au lieu de le capitaliser? 2- Quelle est la nature des sommes versées par XXXXXXXXXX au Producteur?
3- Un producteur qui est admissible au crédit pour PCMC prévu à l’article 125.4 de la Loi peut-il également bénéficier du crédit au titre de BFT ?

Position Adoptée:
1- Le choix visé au paragraphe 8 du Bulletin d’interprétation IT- 283R2 permet d’inclure le coût d’un film cinématographique dans une catégorie de l’annexe II du Règlement de l’impôt sur le revenu lorsque le producteur estime que la valeur du film demeurera la même après la première projection. Ce paragraphe ne permet donc pas à un producteur d’ajouter le coût d’un film cinématographique à son inventaire au lieu de le capitaliser
2- Avance de distribution sous réserve d’une disposition partielle du droit d’auteur selon les critères à établir par CAVCO
3- La Loi ne prévoit pas de dispositions spécifiques empêchant un contribuable de bénéficier simultanément de ces deux crédits.

27 October 1998 Internal T.I. 9823830 - INTEREST DEDUCTION

Unedited CRA Tags
20(1)(c)

Principal Issues: What is the Department’s position?

Position: Decision limited to identical situations

Reasons: Decision based on the special circumstances of the facts.

25 October 1998 Internal T.I. 9826647 - NATURE OF DAMAGES

Unedited CRA Tags
9(1)

Principal Issues: A corporation, which acts as a buyer for its members, received compensation as a result of court settlement that related to U.S. antitrust legislation. The compensation was received in respect of XXXXXXXXXX purchases (XXXXXXXXXX ) and will be distributed to the members on a pro rata basis. Will the compensation be taxable?

Position: Our general position is that it will be taxable.

Reasons: The position is consistent with comments in paragraph 4 of IT-182.

25 October 1998 Internal T.I. E9826647 - NATURE OF DAMAGES

Unedited CRA Tags
9(1)

Principal Issues: A corporation, which acts as a buyer for its members, received compensation as a result of court settlement that related to U.S. antitrust legislation. The compensation was received in respect of XXXXXXXXXX purchases (XXXXXXXXXX ) and will be distributed to the members on a pro rata basis. Will the compensation be taxable?

Position: Our general position is that it will be taxable.

Reasons: The position is consistent with comments in paragraph 4 of IT-182.

21 October 1998 Internal T.I. E9823767 - CHILD SUPPORT PAYMENTS

Unedited CRA Tags
56.1(4) 56(1)(b) 60(b)

Principal Issues: A written agreement dated XXXXXXXXXX , between the taxpayer and his spouse indicates that they agree that the recipient spouse will report the payments made for child and spousal support on her income tax return and that the payer will claim the payments on his income tax return. The agreement also stipulates that the payer will pay any income tax liability incurred by the recipient spouse as a result of the recipient reporting the spousal and child support payments on her tax return. Furthermore, the agreement indicates that any tax benefit resulting from this arrangement will be split evenly between the parties. However, the written agreement does not indicate how much spousal or child support amounts payable is required to be made.

A court order dated XXXXXXXXXX , requires the payer to pay $XXXXXXXXXX per month in spousal and child support effective XXXXXXXXXX . The court order also provides that, for income tax purposes, the recipient spouse will report the support payments as income on her income tax return and the payer will claim the support payments as deductions on his income tax return.

Is the court order considered to be a court order made after April 1997? Are the child support and spousal support payments made pursuant to the court order taxable and deductible under the provisions of the Act because the wording of the court order orders that they are deductible and taxable for income tax purposes.

Position: Yes, the court order dated XXXXXXXXXX , is considered to be a court order made after April 1997 and paragraph (a) of the definition of “commencement day” in subsection 56.1(4) applies. The global child support and spousal support payments of $XXXXXXXXXX per month, commencing XXXXXXXXXX , are not deductible to the payer or taxable to the recipient.

Reasons: Paragraph (a) of the definition of “commencement day” in subsection 56.1(4) states that where an agreement or order is made after April 1997, the commencement day of the agreement or order is the day it is made. The written agreement dated XXXXXXXXXX , does not require that support payments are to be made by the payer nor does it indicate the amount of the support payments that are to be made. Accordingly, any support payments made before the date of the court order are not taxable or deductible. In this particular case, subsections 56.1(3) and 60.1(3) do not apply. There is no indication from the wording of the court order that the payments made prior to the court order are deemed to be made pursuant to the court order.

21 October 1998 Internal T.I. 9823767 - CHILD SUPPORT PAYMENTS

Unedited CRA Tags
56.1(4) 56(1)(b) 60(b)

Principal Issues: A written agreement dated XXXXXXXXXX , between the taxpayer and his spouse indicates that they agree that the recipient spouse will report the payments made for child and spousal support on her income tax return and that the payer will claim the payments on his income tax return. The agreement also stipulates that the payer will pay any income tax liability incurred by the recipient spouse as a result of the recipient reporting the spousal and child support payments on her tax return. Furthermore, the agreement indicates that any tax benefit resulting from this arrangement will be split evenly between the parties. However, the written agreement does not indicate how much spousal or child support amounts payable is required to be made.

A court order dated XXXXXXXXXX , requires the payer to pay $XXXXXXXXXX per month in spousal and child support effective XXXXXXXXXX . The court order also provides that, for income tax purposes, the recipient spouse will report the support payments as income on her income tax return and the payer will claim the support payments as deductions on his income tax return.

Is the court order considered to be a court order made after April 1997? Are the child support and spousal support payments made pursuant to the court order taxable and deductible under the provisions of the Act because the wording of the court order orders that they are deductible and taxable for income tax purposes.

Position: Yes, the court order dated XXXXXXXXXX , is considered to be a court order made after April 1997 and paragraph (a) of the definition of “commencement day” in subsection 56.1(4) applies. The global child support and spousal support payments of $XXXXXXXXXX per month, commencing XXXXXXXXXX , are not deductible to the payer or taxable to the recipient.

Reasons: Paragraph (a) of the definition of “commencement day” in subsection 56.1(4) states that where an agreement or order is made after April 1997, the commencement day of the agreement or order is the day it is made. The written agreement dated XXXXXXXXXX , does not require that support payments are to be made by the payer nor does it indicate the amount of the support payments that are to be made. Accordingly, any support payments made before the date of the court order are not taxable or deductible. In this particular case, subsections 56.1(3) and 60.1(3) do not apply. There is no indication from the wording of the court order that the payments made prior to the court order are deemed to be made pursuant to the court order.

14 October 1998 Internal T.I. 9726727 - DEBT PARKING - SS 50(1) AND 80.01(8)

Unedited CRA Tags
50(1) 80.01(8)

Principal Issues: Losses incurred on loans to controlled subsidiary - can the parent make a claim under 20(1)(l) rather than ss 50(1) in order to avoid the application of para 40(2)(g)(ii) and section 80

Position: Must be in the business of lending money - question of fact

Reasons: Paragraph 20(1)(l) only applicable to money lenders

13 October 1998 Internal T.I. 9819280 F - EXEMPTION DE PRODUIRE LA 1ÈME ANNÉE

Unedited CRA Tags
233.7

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.

Question 16

Exemption de produire une déclaration de placements étrangers pour les résidents de 1re année

3 September 1998 Internal T.I. 9819907 - YUKON FIRST NATIONS

Unedited CRA Tags
81

Principal Issues: Yukon First Nations treaty; various issues on effect on 1998 income.

Position: various

Reasons:

11 May 1998 Internal T.I. 9809947 - ALLOWABLE BUSINESS LOSSES

Unedited CRA Tags
39(1)(c) 50(1)

Principal Issues:

For purposes of the business investment loss rules, does the Canadian-controlled private corporation" ("CCPC") (defined in subsection 125(7) of the Act) have to qualify as an SBC within 12 months of the deemed disposition under 50(1) of the Act or within 12 months of the time specified in clause 39(1)(c)(iv)(B) or (C) of the Act, as the case may be?

Position:

Within 12 months of the time specified in clause 39(1)(c)(iv)(B) or (C), as the case may be.

Reasons:

8 April 1998 Internal T.I. 9731977 - REMAINDER INTEREST IN REAL PROPERTY

Unedited CRA Tags
43.1 73(3)

Principal Issues:

1. For purposes of a transfer of farm property, IT-268R4 accepts a transfer of a remainder interest as a transfer of land. Does this equally apply to a depreciable property component of the real property?

2. Does a transfer of real property under section 43.1, result in a recapture of depreciation in respect of any depreciable property component of the real property?

Position:
1. Yes

2. No

Reasons:

24 February 1998 Internal T.I. 9800277 - STOCK OPTIONS EXERCISED BY NON-RESIDENT

Unedited CRA Tags
115(1)(a)(i)

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.

Ministerial Letter

20 April 1998 Ministerial Letter 9808908 - ROLLOVER OF PERIODIC PENSION PAYMENTS

Unedited CRA Tags
60(j.02); 147.2(4)(b)

Principal Issues: Rollover of periodic pension payments

Position: No rollover provided for under the Act

Reasons: Subsection 60(j.02) & paragraph 147.2(4)(b)

12 February 1998 Ministerial Letter 9M18638 - CONSTITUTIONALITY OF ITA

Unedited CRA Tags
n/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.

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to respond to your letter of October 29, 1997, concerning the statutory authority relating to the taxing powers of the Government of Canada. I apologize for the delay in replying.