Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
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 Issues: Whether the mere rental of property constitutes the provision of "goods or services" within the meaning of proposed 120.4, the "split income" tax.
Position: No.
Reasons: The concept of rentals as distinct from the provision of goods and services is evident in 20(1)(m).
2000-001263
XXXXXXXXXX J.D. Brooks
(613) 957-2103
Attention: XXXXXXXXXX
June 20, 2000
Dear Sirs:
This is in reply to your letter of December 31, 1999 addressed to the Ottawa Tax Centre requesting our views on the proposed tax on split income as contained in proposed section 120.4 of the Income Tax Act. You presented a hypothetical scenario for our consideration and queried whether the term "goods and services" would include the rental of real property.
The facts of your hypothetical scenario appear to relate to an actual situation. Where a particular situation relates to transactions that have been completed, the enquiry should be directed to the local tax services office where the taxpayer's returns are filed. If, on the other hand, the situation involves proposed transactions, you should be aware that confirmation of the tax implications of proposed transactions is given only in reply to an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R3. While we are unable to comment on the particular situation described in your letter, the following general comments may be of assistance to you.
Proposed section 120.4 introduces a special tax applicable to certain passive income of individuals under the age of 18 years. The tax will apply to "split income," a term that is defined in proposed subsection 120.4(1). Where such an individual is a beneficiary of a trust other than a mutual fund trust and an amount is included in the individual's income pursuant to subsection 104(13), the individual's split income would include the portion of such amount that can reasonably be considered to be income derived from the provision of goods or services by a partnership or trust to or in support of a business carried on by, for instance, a related person. It is our view that income derived from the lease of real property by a partnership or trust would not be included in split income if no services were provided in conjunction with the lease. This view is based on the present wording of proposed subsection 120.4(1) and is thus contingent on the final wording being materially the same.
The comments above represent an expression of opinion which, as indicated in paragraph 22 of Information Circular 70-6R3, is not an advance income tax ruling and, accordingly, is not binding on the Canada Customs and Revenue Agency.
Yours truly,
T. Murphy
Manager
Trusts Section
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
??
- 2 -
.../cont'd
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2000
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2000
Email this Content