Income Tax Severed Letters - 1999-09-17

Ruling

1999 Ruling 9906633 - DEFERRED SHARE UNIT PLAN

Unedited CRA Tags
6801(d)

Principal Issues:
Confirmation that the plan is a prescribed plan under paragraph (d) of Regulation 6801.

Position:
Yes.

Reasons:
The plan meets all the conditions in paragraph (d) of Regulation 6801,

1999 Ruling 9909123 - SUPPLEMENTAL PENSION ARRANGEMENT

Unedited CRA Tags
248

Principal Issues: Whether an unfunded supplemental pension arrangement results in current taxation.

Position: No.

Reasons: The plan provides notional accounts will be maintained in respect of participants. In-house "funding" will be made but the amounts will not be held in trust for the benefit of the participants, the participants have no right to these assets and the assets are available to the general creditors of the employer. This type of plan satisfies the purpose test of not being a salary deferral arrangement and is not a retirement compensation arrangement. The pension benefits are taxable upon receipt.

1999 Ruling 9817473 F - PRESOMPTION DE GAIN EN CAPITAL

Unedited CRA Tags
251(3) 55(5) (e) 248(10)

Principal Issues: Vois enoncé des principales questions

Position: Voir énoncé des principales questions

Reasons:

1999 Ruling 9825943 F - PUC REFUND & SHARES TRANSFER TO RELATED CO.

Unedited CRA Tags
84.1 84(4) 89(1) PUC 84.1(2.01) SECTION

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					3-982594
XXXXXXXXXX

Le XXXXXXXXXX 1999

Monsieur

Objet : Demande de décisions anticipées
XXXXXXXXXX

1999 Ruling 9900203 - SUBSIDIARIES OF A TAX EXEMPT CORPORATION

Unedited CRA Tags
149(1)(d.4)

Principal Issues:
1. Whether the subsidiaries of XXXXXXXXXX would qualify for the exemption under paragraph 149(1)(d.4),

2. Whether the ownership test in paragraph 149(1)(d.4) is on the basis of a single holding of shares or capital or on the basis of two or more separate holdings.

Position:
1. Yes, provided that the XXXXXXXXXX is a corporation as described in paragraph 149(1)(d.3).

2. It may be a combination of holdings.

Reasons:
1. This ruling is given on the basis that the XXXXXXXXXX is a corporation as described in paragraph 149(l)(d,3). It is a factual determination whether a corporation qualifies for the paragraph 149(1)(d.3) exemption.

1999 Ruling 9901833 - STRUCTURED SETTLEMENT

Unedited CRA Tags
3

Please note that the fo.llowing 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 Issues.

1998 Ruling 9813933 - SURPLUS, CONSTRUCTIVE RECEIPT

Unedited CRA Tags
147.1

Principal Issues: Would contructive receipt exist where court has ruled that members of an RPP have right to the surplus?

Position: No

1998 Ruling 9820743 - EMPLOYEE BENEFIT PLAN STATUS

Unedited CRA Tags
248(1)

Principal Issues: Classification of arrangement as stock option plan or employee benefit plan

Position: It is an employee benefit plan

Reasons: There is no agreement to issue shares to employees

1997 Ruling 9702363 - DIRECTOR FEE, DEFERRED SHARE PLAN

Unedited CRA Tags
6801(d)

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

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

Dear Sirs:

970236
Re: Advance Income Tax' Ruling
XXXXXXXXXX

1997 Ruling 9722993 - UNIT-TRUST - NON-RESIDENT UNITHOLDERS

Unedited CRA Tags
212(11) 212(1)(c) ART xxii

Principales Questions:

Does the exemption of withholding provided by Article XXII, paragraph 2, of the Canada-U.S. Income Tax Convention (1980) apply to the Fund where it pays income to U.S. residents?

Position Adoptée:

1997 Ruling 9725683 - DEFERRED SHARE UNITS, STOCK OPTIONS

Unedited CRA Tags
6801(d) 7(1) (a)

Principal Issues:

1) Will the payment of deferred share units be an SDA?
2) Will the right to issue treasury shares for share units create
a section 7 problem?

Position:

1) No 2) No

Reasons:

Technical Interpretation - External

20 September 1999 External T.I. 9919025 - INDIAN ACT EXEMPTION EMPLOYEES

Unedited CRA Tags
81(1)(a)

Principal Issues: Whether the tax status of an employer's business income affects the tax status of an Indian employees employment income.

Position: No.

Reasons: An employee of an Indian sole proprietor should determine the tax status of their employment income using the Indian Act Exemption for employment income Guidelines. The tax status of the employment income is independent of the tax status of the proprietorship's business income..

17 September 1999 External T.I. 9922535 - EXPENDITURE (TRAILER) EMPLOYEE

Unedited CRA Tags
8(2)

Principal Issues: (1) Can an employee, who is a tree planter and works "in different places" for the purposes of paragraph 8(1)(h) of the Act and is entitled to deduct travel expenses under that provision, deduct the cost of a trailer in which the employee would live while working for the reforestation company. (2) In the alternative, can the employee claim capital cost allowance in respect of the trailer?

Position: (1) No (2) Capital cost allowance in respect of the trailer cannot be claimed

Reasons: (1) The cost of a capital asset is not considered to be deductible under paragraph 8(1)(h) of the Act (subparagraph 8(1)(h)(ii) of the Act refers to travel expenses). (2) There is no provision in section which would allow the employee to claim capital cost allowance and subsection 8(2) of the Act restricts an employee to those expenses described in section 8 of the Act.

17 September 1999 External T.I. 9923005 - BENEFITS RENTAL OF CORP'S HOUSE

Unedited CRA Tags
6(1)(a) 15(1)

Principal Issues: If a corporation rents a property to one of its directors and the director pays the fair rental value of the property to the corporation, will the director be required to include a benefit in his or her income under paragraph 6(1)(a) of subsection 15(1) of the Income Tax Act?

Position: No

Reasons: There is no basis for including a benefit in the director's income,

16 September 1999 External T.I. 9922725 - DEMUTUALIZATION - CASH PAYMENT

Unedited CRA Tags
82

Principal Issues: How a cash payment received upon a demutualization of an insurer is to be taxed.

Position: As a taxable dividend.

Reasons: Draft legislation provides for such a treatment.

16 September 1999 External T.I. 9923905 - EXEMPT POLICIES

Unedited CRA Tags
section 306 income tax regulations

Principal Issues: Whether or not a life insurance policy issued by a non-resident insurer can qualify as an exempt policy.

Position: While it could it is our understanding that the required information would generally not be available to the policyholder or even exist.

Reasons: The determination is incumbent on the policyholder and when the policy is issued by a non-resident insurer the required information is usually not available.

16 September 1999 External T.I. 9922235 - SPOUSAL SUPPORT THIRD PARTY MORTGAGE

Unedited CRA Tags
56.1(4) 60(b)

Principal Issues: What is the tax treatment of child support amounts payable and spousal amounts payable pursuant to an order made after April 1997?

Position: Child support payments made pursuant to a written agreement or court order that has a "commencement day", as defined in subsection 56.1(4) of the Act, are subject to the new rules and, as such, are not deductible by the payer and are not required to be included in the income of the recipient. Spousal support amounts made pursuant to a post-April 1997 written agreement or court order would be deductible under paragraph 60(b) and taxable under paragraph 56(1)(b) provided all the other conditions of those provisions are met.

Reasons: See 980582, E8M18459, 9825917, 9902707, 9900035, 9823157, 990941

15 September 1999 External T.I. 9919475 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6(1)

Principal Issues: Whether a child beneficiary of a Trust, who never farmed, could have qualified farm property if a parent, grandparent or great-grandparent met the gross revenue test in clause (a)(vi)(A) and did the farming while they owned the property.

Position: Yes, if the parents or grandparents, including the great-grandparents met the gross revenue test while they owned the property.

Reasons: We have considered these issues before. Refer to E9628495 and E9807845

xxxxxxxxxx John Oulton
1999-000303
September 15, 1999

14 September 1999 External T.I. 9919505 - MEDICAL EXPENSES

Unedited CRA Tags
118.2(2) Reg. 5700

Principal Issues: Whether the amount paid for a defibrillator is a qualifying medical expense

Position: yes

Reasons: It is considered to described in Regulation 5700(d).

10 September 1999 External T.I. 9921735 - EMPLOYEE BENEFITS

Unedited CRA Tags
6(1) (a)

Principal Issues: Whether hotel employees receive taxable benefits when they are provided with free beverages.

Position: yes

Reasons: Consistent with comments in paragraph 28 of IT-470R, it is our view that an employee is considered to have received a taxable benefit on he basis of the employer's cost.

9 September 1999 External T.I. 9922565 - LEVELLING AND SLOPING LAND

Unedited CRA Tags
30

Principal Issues: Whether, for the purpose of constructing a feedlot for cattle, the amount paid in the year for levelling and sloping land for proper drainage is deductible by the taxpayer in computing his income from the farming business (i.e., the feedlot business)

Position: Yes.

Reasons: Section 30 requires the amount to be paid for "clearing land, levelling land or installing a land drainage system for the purpose of the business". In this situation it is the levelling of the land for the purpose of the business.

9 September 1999 External T.I. 9912235 - PARAGRAPH 149(1)(D.6) - COMB. OWNERSHIP TEST

Unedited CRA Tags
149(1) (d.6)

Principal Issues:

Whether the ownership test in paragraph 149(1)(d.6) is on the basis of a single holding of shares or capital or on the basis of two or more separate holdings.

Position:

It is our view that it may be a combination of holdings.

Reasons:

9 September 1999 External T.I. 9914395 - HEDGE TRANSACTION

Unedited CRA Tags
3 9

Principal Issues: The characterization for income tax purposes of a hedge transaction which includes a short sale of shares.

Position: The short sale of shares is on account of income unless the taxpayer has elected pursuant to subsection 39(4) of the Act. Where an election under 39(4) has not been made, the characterization of a disposition of a security other than by short sale is a question fact.

Reasons: See IT-479R.

7 September 1999 External T.I. 9909965 - ASSUMPTION OF LEASE OBLIGATIONS

Unedited CRA Tags
9(1) 12(1) (x)

Principal Issues:

(1) Whether the proceeds of disposition for a rental building are affected by a payment by the vendor to the purchaser for the latter's assumption of the obligations with respect to a long-term lease, in the situation where a subsection 20(24) election is filed.
(2) Where an election is not filed, how should the purchaser treat the payment and the expenses with respect to the long-term lease.

Position:

(1) In the situation outlined, the so called "pre-paid rent," which covers a period of 20 years, may, in some circumstances, be considered proceeds of disposition, rather than a prepayment of rent. Assuming that the prepaid rent is for a shorter period, and also, assuming that the amount paid by the taxpayer to the purchaser for the assumption of the lease obligations is reasonable, so that the election under subsection 20(24) is applicable, the amount of proceeds would not be affected by a payment for the assumption of the obligations.

(2) The purchaser would include the payment in income pursuant to ss 9(1) or para. 12(1)(x). The costs incurred with respect to these obligations may be deductible if the taxpayer can demonstrate that they are made for the purpose of earning income from a business or property.

Reasons:

31 August 1999 External T.I. 9921895 F - TRANSFERT D'ALLOCATION DE RETRAITE

Unedited CRA Tags
60(j.1)

Principales Questions: Explication de l'application de la disposition 60j.1)(ii)(B).

27 August 1999 External T.I. 9828785 F - PAPILLON

Unedited CRA Tags
55(3.1)c)

Principal Issues: Pour les fins de la règle du 10% prévue à l'alinéa 55(3.1)c), est-ce que la détermination de la JVM totale des biens doit être effectuée sur la base de la JVM brute des biens ou sur la base de la JVM nette, lorsque l'attribution est effectuée en utilisant la méthode de la JVM nette acceptée par le Ministère?

Position: JVM nette

Reasons: Pour être consistant avec la méthode utilisée pour faire l'attribution.

26 August 1999 External T.I. 9900495 - NPO - CANADIAN BRANCH

Unedited CRA Tags
149(1)(1)

Principal Issues:

A U.S. corporation that is exempt from federal taxation under section
501(c)(3) of the Internal Revenue Code has established a Canadian
branch office to extend its activities in Canada. The issue is whether
the U.S. corporation is a non-profit organization for purposes of
paragraph 149(1)(l).

Position:

23 August 1999 External T.I. 9913505 - ROYALTY AGREEMENT, QUALIFIED INVESTMENT

Unedited CRA Tags
146(1)

Principal Issues: Will a royalty investment agreement constitute a qualified investment for an RRSP?

Position: No.

Reasons: A royalty agreement is not included in the definition of "qualified investments" in subsection 146(1) of the Act.

Technical Interpretation - Internal

2 September 1999 Internal T.I. 9919677 F - DEDUCTION EN VERTU DE L'ALINEA 60J.04)

Unedited CRA Tags
6Oj.04)

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.

PRINCIPALE QUESTION:

Est-ce que les contribuables peuvent se prévaloir de la déduction à l'alinéa 60j.04) de la Loi?

Position ADOPTEE:

Oui, si toutes les conditions sont rencontrées.

RAISON POUR POSITION ADOPTEE:

Analyse législative.