Income Tax Severed Letters - 1999-04-02

Principal Issues: Taxation of payments made to or on behalf of aboriginal students for tuition and books for post-secondary education under the XXXXXXXXXX .

Principal Issues:
The taxpayer owns 2 corporations. The ACB of the shares of one of them would be subject to a grind in virtue of 84.1(2). Is using section 84.1 on the shares of the other corporation an abusive transaction?

Position:
No

Reasons:
The taxpayer received consideration within the section 84.1 limits.

Principal Issues:
Whether the exception in paragraph 5 of IT-63R5 applies in the situation where an employee makes a business call on behalf of the employer during the course of travelling from his or her residence to the employer’s place of business, to which the employee regularly report, or vice versa.

Position:
Question of fact.

Reasons:
Generally, in cases where travel includes both a personal element and an employment element, we consider the primary purpose of a particular trip in determining whether it is personal in nature or employment-related. The primary purpose of any trip is always a question of fact. Since the circumstances are likely to differ from one case to the next, we have not established any specific criteria or guidelines in this regard.

Principal Issues: Paragraph 22 of IT-268R4 indicates that a property is used principally in a farming business if its primary use is in respect of the farming business operations as opposed to use in concurrent corporate or partnership operations that may even be ancillary or related to the farming operation such as, for example, storage or trucking of farm products for others or contract harvesting. What is intended by “concurrent corporate ...operations”? Is “concurrent operations” intended to include activities that involve further processing or marketing of the farm products that are carried on to achieve better return? Would it make a difference to the retail outlet question if the product is first enhanced through processing and packaging before being supplied to the retail outlet?

Principal Issues: Can an interest in a limited partnership that invests in Canada be foreign property?

Position: Yes

Reasons: Unless prescribed otherwise, an interest in a trust or a partnership is foreign property for purposes of the Act.

Principal Issues:
A lawyer has requested our opinion on the tax consequences when a portion of child support arrears are cancelled. She has attached an earlier opinion (972396) which contained a comment that the payment of the remaining arrears would not be deductible/taxable.

Position Adoptée:
Non. Le paragraphe 104(27) ne s’applique pas.

Principal Issues: Do cousins deal with each other at arm’s length?

Position: Probably but question of fact.

Reasons: Generally, they would not be connected by blood.

Principal Issues: Whether the donation of a right to use property can be considered a gift in kind.

Position: No

Reasons:A right to use property is a property. However, the granting of such a right is not a transfer of property per the Dunkelman case. Also, the legislation on attribution rules were revised to include not only transferred property but also "lent property". If all rights to use property resulted in a transfer there would be no need in section 74.1 for "lent property". XXXXXXXXXX .

Principales Questions:

Produit d’une police d’assurance-vie versé au créditeur en raison d’une hypothèque sur cette police peut-il être inclus dans le CDC du débiteur?

Position Adoptée:

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.

PRINCIPAL ISSUE:

Whether a land designated to be a wetland can be donated as an ecological gift and a certified cultural property.

Position TAKEN:

Maybe as an ecological gift but not as a certified cultural property.

Principales Questions :
Le traitement fiscal pour un assureur et un titulaire relativement à une garantie offerte par un assureur à l'égard d'un fonds réservé.

Position Adoptée :
1. Les dispositions de l'article 138.1 s'appliqueront au titulaire, peu importe le fait que le paiement de la "garantie" soit effectué par l'entremise du fonds réservé ou effectué directement au bénéficiaire.
2. L'assureur ne pourra pas demander de déduction lorsqu'il transfère des fonds à l'égard de la "garantie" dans le fonds réservé.
3. Lorsque l'assureur paie la "garantie" directement au titulaire ou au bénéficiaire du titulaire, nous sommes alors d'avis que l'assureur pourra demander une déduction aux fins de l'impôt à l'égard du paiement de la "garantie".

Principal Issues: Financial benefits for severely disabled individuals.

Position: None under the Income Tax Act.

Reasons: Non-refundable medical and disability tax credits available to reduce the tax payable. When no tax payable any unused tax credits are not payable by way of financial benefits.

Principal Issues: Confirmation requested, with respect to the participants in the XXXXXXXXXX , as to the application of certain of the rules contained in Part IV of the Regulations.

Position: Where identifiable taxpayers are seeking confirmation as to the income tax consequences of proposed transactions seriously contemplated, they should submit a written request for an advance income tax ruling. However, certain general comments were provided.

Reasons: Consistent with the Department’s position as reflected in Information Circular IC 70-6R3.

Principal Issues: general comments re transfer of shares of Canadian company to spouse

Position: N/A

Reasons: n/a

Principales Questions:

1. Est-ce qu’une action du Fonds de solidarité des travailleurs du Québec constitue un placement à titre de petite entreprise qui permet d’augmenter le contenu étranger d’un REER.
2. Est-ce que les biens d’un REER qui ont fait l’objet d’un transfert d’un REER à un autre REER (selon 146(16)) peuvent être considérés comme n’ayant pas fait l’objet d’une disposition/acquisition pour les fins de la définition de “bien de petite entreprise” au paragraphe 206(1) de la Loi?

Position Adoptée:

Principal Issues: Can a surviving spouse claim an exemption from Part X.5 taxes for amounts contributed to an RRSP and claimed as a deduction under 146(5) of the Act?

Position: Question of Fact.

Reasons: The surviving spouse only qualifies if the RESP does not have a subscriber at the time that the accumulated income payment is made.

Principal Issues:
An accountant has attached a copy of the Landry decision (98 DTC 1416) and requested clarification of the tax treatment of a lump-sum settlement of a long term disability claim, as opposed to periodic payments over time, under 6(1)(a) and 6(1)(f).

Principal Issues:

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 	5-982206
		Michel Lambert
À l'attention de XXXXXXXXXX 

Le 12 février 1999

Mesdames, Messieurs,

Objet: Avantage imposable
Primes d'assurance-vie