Income Tax Severed Letters - 2000-03-31

Miscellaneous

13 March 2000 Miscellaneous 2000-001193B - EMPLOYER-EMPLOYEE VS. INDEP. CONTRACTORS

Unedited CRA Tags
2

Principal Issues: A request for an advance income tax ruling to confirm that the relationship to be established by a proposed agreement was that of an independent contractor rather than an employee-employer.

Position: Refused to rule.

Reasons: Rulings in this respect are given by Revenue Collections in the local tax services office.

10 March 2000 Miscellaneous 2000-0012136 - INDIAN TAXATION

Unedited CRA Tags
81(1)(a)

Principal Issues: General comment on the taxation of employment income, business income and whether the Indian Act exemption applies to corporations.

Position:

Reasons:

Ruling

2000 Ruling 2000-0001473 - PARTNERSHIP REORGANIZATION

Unedited CRA Tags
Reg 1103

Principal Issues: In order to make election under regulation 1103(2d) does the taxpayer need to acquire property in class 43 in the year of disposition?

Position: No. If T\P has acquired class 43 property at any time before the end of the year in which the class 29 property is sold.

Reasons: Previous opinion letter. See also history of subsection.

2000 Ruling 2000-0003223 - DIRECTOR PHANTOM STOCK PLAN

Unedited CRA Tags
REG 6801(d)

Principal Issues: Will the payment of Director fees in the form of deferred share units result in an SDA?

Position: No.

Reasons: 6801(d) satisfied

2000 Ruling 9929203 - FOREIGN TAX CREDIT - FOREIGN ELECTION

Unedited CRA Tags
126

Principal Issues: Whether U.S. tax paid as a consequence of a section 338(g) election under the U.S. Internal Revenue Code is eligible for a foreign tax credit under section 126.

Position: In the circumstances of this ruling the U.S. tax qualifies for foreign tax credit within the limits of section 126.

Reasons: The U.S. section 338(g) election gives rise to a legal liability for U.S. tax and allows the taxpayer to match the timing of U.S. and Canadian tax liability in connection with the same income and gains. Therefore the U.S. section 338(g) election effectively prevents double taxation that would otherwise have arisen. The U.S. tax is only paid in respect of income and gains that the U.S. is entitled to tax under the Canada - U.S. Income Tax Convention.

2000 Ruling 2000-0004153 - REOGRANIZATION DSU ADJUSTMENT

Unedited CRA Tags
REG 6801(D)

Principal Issues: Will a 6801(d) phantom stock plan still qualify where the number of deferred share units credited to notional accounts are adjusted to reflect a corporate reorganization?

Position: Where the value of the units after the reorganization equals the value of the units before the reorganization, yes.

Reasons: The conditions in 6801(d) would continue to be satisfied.

2000 Ruling 9923863 - INDIAN ACT EXEMP. - EMPLOYMENT INCOME

Unedited CRA Tags
81(1)(a)

Principal Issues:

1. Are settlement amounts received by the XXXXXXXXXX considered employment income?
2. Would these amounts be exempt from tax when received by status Indians?
3. Is the Trust exempt from tax?

Position:

1. Yes
2. Yes if they arise based on tax exempt employment income.
3. No.

Reasons:

2000 Ruling 2000-0004163 - REOGANIZAITON DSU

Unedited CRA Tags
reg 6801(D)

Principal Issues: Will a 6801(d) phantom stock plan still qualify where the number of deferred share units credited to notional accounts are adjusted to reflect a corporate reorganization?

Position: Where the value of the units after the reorganization equals the value of the units before the reorganization, yes.

Reasons: The conditions in 6801(d) would continue to be satisfied.

2000 Ruling 2000-0006813 - reorganization

Unedited CRA Tags
55(3)(b)

Principal Issues: changes in facts which did not affect rulings (ie incorporating act and amounts of certain shares)

Position:

Reasons:

2000 Ruling 9932063 - SAR SDA CHANGE OF CONTROL

Unedited CRA Tags
REG 6801(d)

Principal Issues: Can benefits under a stock appreciation right plan be used to acquire deferred share units under a plan that qualifies under 6801(d)?

Position: Yes.

Reasons: If the provisions of 6801(d) are satisfied, there is no reason to exclude the employment income under the stock appreciation right plan. The plan will only be accepted because the employee will elect to participate in the 6801(d) plan prior to receiving any rights to cash under the stock appreciation plan.

1999 Ruling 9915213 F - DETTE REMISEES

Unedited CRA Tags
80 80.01(8)

Principales Questions:
1. Est-ce que le paragraphe 80.01(8) s'applique lorsqu'une dette est assumée par une société liée?
2. Est-ce que l'assumation a pour effet de produire un règlement ou une extinction de la dette (application du paragraphe 80(2)a))?

Position Adoptée:
1. Non.
2. Non, pas de novation en droit.

1999 Ruling 9928853 - DEFERRED SHARE UNIT PLAN

Unedited CRA Tags
REG 6801(d) 6(1) 115(1) 5(1) 70(2)

Principal Issues: Will the payment of Directors' fees in the form of deferred
share units constitute an SDA for purposes of the Act.

Position: No

Reasons: Exempted under the provisions of paragraph 6801(d) of the Regulations

1999 Ruling 9917483 - EXEMPTION OF FIRST NATIONS FROM TAX

Unedited CRA Tags
149(1)(c) 75(2) 104(6)(b)

Principal Issues:
1. Whether the B and C First Nations are each considered to be a public body performing a function of government and thus qualify for exemption under paragraph 149(1)(c) of the Income Tax Act.
2. Whether each of the B Trust and the C Trust is a separate trust?
3. Whether subsection 75(2) will apply to deem undistributed income of the trust to be income of the B First Nation or the C First Nation?
4. Will each trust be able to deduct, under paragraph 104(6)(b), in computing its income for a year, amounts that become payable to the relevant First Nation?

Position:
1. Yes, based on a factual determination, the First Nations are each considered to be a public body performing a function of government in Canada, as per paragraph 149(1)(c).
2. Not a matter to be ruled on;
3.Yes.
4. Yes, provided that the trustees exercise their discretion before the end of the year to make such amounts payable.

Reasons:
1. Primarily since each of the First Nations has negotiated with Canada a land settlement agreement which is the subject of this ruling and will be involved in the administration and implementation of the settlement. In addition, each of the First Nations provides an extensive list of community services and programs. Based on the facts provided, the First Nations are providing essential community services even though they haven't formalized the services in by-laws.
2. This is a question of fact and law, and it is not appropriate for us to make a binding ruling in this matter. Whether there are two trusts or only one does not affect the essence of the rulings.
3. The B First Nation and the C First Nation, will contribute the funds to the trusts. The two First Nations are entitled to the compensation in respect of certain reserve lands, and they will direct Canada to place their monies into the trusts which the First Nations will create. Thus there is constructive receipt by the First Nations. It is noted in the Settlement Agreement (XXXXXXXXXX) that if the Trust Agreement is not approved, Canada will place the compensation payment in two equal shares into the Revenue Accounts (i.e. in the CRF) - these Accounts are maintained for the benefit of specific Bands.
4. The trust provides that the payment of income to the beneficiaries is at the absolute discretion of the trustees, so a deduction can be made only if that discretion is exercised. It is noted that any amount of income that becomes payable will be paid shortly afterwards by the issuance of an unrestricted demand promissory note, and that the trust has the authority to borrow in order to meet its obligation to pay cash for such note. Note that such income will not include amounts subject to subsection 75(2).

1999 Ruling 9928143 F - RÉGIME DE PENSION AGRÉÉ-PERTE APPARENTE

Unedited CRA Tags
40(3.4) 54 40(2)g 104(2)

Principales Questions:
(1) La perte découlant de la disposition d'actions d'une fiducie à une autre fiducie est-elle visée par le paragraphe 40(3.3) lorsque le fiduciaire est le même pour les deux fiducie ?

(2) La perte découlant de la disposition des actions est-elle une perte apparente au sens de l'article 54 de la Loi ?

Position Adoptée:
(1) Oui. La propriété des actions repose sur le fiduciaire (par.104(1) et 104(2) de la Loi) Comme le fiduciaire a disposé des actions dans la première fiducie mais les a acquises immédiatement dans la deuxième fiducie, la position de l'Agence est à l'effet que les actions disposées ont été acquises par la même personne dans un délai de 30 jours. Les autres conditions du paragraphe 40(3.3) étant satisfaites, le paragraphe 40(3.4) de la Loi trouve application.

1999 Ruling 9923853 - TAKEOVER AND BUMP - 88(1)(C)(VI)

Unedited CRA Tags
88(1)(c)(vi)

Principal Issues: Application of 88(1)(c)(vi) to takeover and bump transaction

Position: Not applicable

Reasons: see Principal Issues.

1999 Ruling 9931623 - mortgage backed securities

Unedited CRA Tags
12(1)(c) 212(1)(b)

Principal Issues: XXXXXXXXXX Rulings

Position: OK

Reasons: Standard Ruling issued. Unchanged from prior year.

1999 Ruling 9931713 - PARTNERSHIP REORGANIZATION

Unedited CRA Tags
103(1) Reg 1100 Reg 1102 Reg 1103

Principal Issues:
1. Is interest payable on debts used to acquire fixed assets still deductible by the partnership after the transfer to Newco and reacquisition from Newco on wind-up of Newco.
2. In order to cause recapture in the partnership that can be allocated to the partners, the partnership will need a year end prior to the reacquisition of the assets. Is this possible.
3. If this was an asset sale purchaser would put assets in class 43. Proposed transactions have certain assets remain in class 43. Is there a benefit.

Position:
1. Yes
2. Request must be made to the Director of the relevant TSO.
3. Potential benefit. However to avoid the problem, Partnership will acquire class 43 assets before sale of old assets and make an election to have class 29 and 39 become class 43.

Reasons:
1. On the sale to Newco the partnership receives common shares which are considered property used to earn income. On the wind-up of Newco the partnership reacquires the assets which will be used to earn income in the partnership.
2. See It- 179R par. 4
3. Regulation 1103(2d)

1999 Ruling 9924993 - XXXXXXXXXX BUTTERFLY - DIVISIVE REORGANIZATION

Unedited CRA Tags
55(3)(b)

Principal Issues: Butterfly Ruling - Standard Issues

Position: Rulings given - in accordance with the law.

Reasons: See above.

1999 Ruling 9925763 - NRO - MAKING OF A LOAN

Unedited CRA Tags
133(8)

Principal Issues: Will we rule favorably that the purchase by an NRO of previously existing non-arm's length debt (i.e. debt that was not incurred in contemplation of the proposed transactions) would not be considered the "making of a loan" for purposes of the definition of non-resident-owned investment corporation in subsection 133(8)?

Position: Yes, rule favorably

Reasons: similar to previous rulings given

1999 Ruling 9906963 - DPS - LIMITED PARTNERSHIP

Unedited CRA Tags
248(1)

Principal Issues:

1. Whether financial difficulty criteria met.

2. Where a limited partnership is eliminated for the purposes of refinancing a debt of the limited partnership with DPS, will GAAR apply to deny the lenders a subsection 112(1) or 136(1) deduction in respect of the dividends on the DPS?

3. The revised proposal is to retain the limited partnership with the taxpayer as the general partner having a XXXXXXXXXX % interest and its newly created wholly-owned subsidiary as the sole limited partner having a XXXXXXXXXX % interest. Is this proposed structure acceptable?

4. Whether the proposed splitting of the term loan into two tranches before the issuance of the DPS is acceptable.

5. Can dividends be paid on the DPS from XXXXXXXXXX even though the shares will not be issued until after that date?

Position:

1. Favourable ruling given.

2. No, based on the circumstances of this particular situation.

3. It is acceptable in this case.

4. Yes.

5. Yes.

Reasons:

1999 Ruling 9904573 F - SURPLUS D'APPORT

Unedited CRA Tags
84(1)(c.3) 84(10)

Principal Issues: Voir énoncé des principales questions

Position:

Reasons:

1999 Ruling 9927473 - TERM PREFERRED SHARES

Unedited CRA Tags
248(1)

Position:. No

1999 Ruling 9908523 - INTERNAL REORGANIZATION -SPIN-OFF

Unedited CRA Tags
55(3)(a) 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.

XXXXXXXXXX 990852

Attention: XXXXXXXXXX

XXXXXXXXXX, 1999

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX

This is in reply to your letters of XXXXXXXXXX, wherein you requested an advance income tax ruling on behalf of the above-noted taxpayers.

Technical Interpretation - External

27 March 2000 External T.I. 2000-0000165 - TAXATION LUMP SUM SUPLUS PAYMENT

Unedited CRA Tags
56(1)(a)(i) 110.2 70(2) ITAR 40(5)

Principal Issues: Is a lump sum payment of surplus from a pension plan paid to the beneficiary of an estate taxable in full in the year of receipt.

Position: Yes, the payment is taxable pursuant to paragraph 56(1)(a)(i) of the Act.

Reasons: (a) The amount is considered to be a superannuation or pension benefit. In this case (b) the provisions of ITAR would not apply, (c) the payment would not be considered a right or thing and (d) the new proposed legislation of section 110.2 does not apply to lump sum pension surplus payments.

27 March 2000 External T.I. 1999-0013135 - ROLLOVER PROVISIONS

Unedited CRA Tags
148(8.2) 70(6)

Principal Issues: Which rollover provisions apply when an annuity contract with funds invested in both non-segregated and segregated accounts is jointly owned by two spouses and one of the spouses dies?

Position: Subsections 148(8.2) and 70(6) may apply.

Reasons: Legislation provides for the application of these provisions.

24 March 2000 External T.I. 2000-0002775 F - Revenu gagné dans une province

Unedited CRA Tags
Reg 402(5) Reg 402(3)

Principales Questions:
1. Est-ce que l'exclusion des intérêts sur obligations et hypothèques que l'on retrouve au paragraphe 402(5) du Règlement s'applique à des intérêts sur d'autres genres de placements ?
2. Est-ce que les gains en capital sur disposition d'actions sont exclus des recettes brutes aux fins du paragraphe 402(3) du Règlement ?

Position Adoptée:
1. Non
2. Oui

22 March 2000 External T.I. 2000-0005155 - PRIVATE HEALTH SERVICES PLAN

Unedited CRA Tags
118.2(2) 248(1) 118.2(2)(q)

Principal Issues: Whether proposed plan qualifies as a PHSP.

Position: General comments only based on limited information provided.

Reasons: IT-339R2 and IT-519R2.

22 March 2000 External T.I. 1999-0013995 F - ECHANGE D'ACTIONS

Unedited CRA Tags
7(1.5) 7(1.3)

Principales Questions:
1. Au moment d'un échange d'actions auquel le paragraphe 7(1.5) s'applique et dont les articles 85 et 85.1 de la Loi sont inapplicables, le contribuable doit-il s'imposer sur le gain en capital compte tenu qu'un avantage sera inclus en vertu de l'article 7 au moment de la disposition?
2. Le paragraphe 7(1.3) s'applique-t-il à la totalité des actions reçues suite à un échange lorsque le paragraphe 7(1.5) s'applique seulement à une partie des actions? Si non quel est l'ordre de disposition?

22 March 2000 External T.I. 2000-0011775 - DONATION OF ARTIST INVENTORY

Unedited CRA Tags
118.1(7) 10(6)

Principal Issues:
How does the election in ss. 118.1(7) work?

Position:
Election can be made where there is a donation by an artist of a piece of art from the artists own inventory, where the fair market value of the property exceeds its cost. The donation must be made to a qualified donee.

Reasons:
The wording of the provision Act

22 March 2000 External T.I. 2000-0002705 - INTEREST DEDUCTIBILITY - INTEREST FREE LOAN

Unedited CRA Tags
20(1)(C)

Principal Issues: Deductibility of interest on borrowed money that is used to make an interest free loan to a foreign subsidiary.

Position: The interest would not be deductible.

Reasons: Not directly used to earn income from a business or property.

21 March 2000 External T.I. 2000-0014435 - DOWNSIZING PROGRAM, QUALIFYING EMPLOYEE

Unedited CRA Tags
REG 8505(2.1)

Principal Issues: A company is implementing a downsizing program described in subsection 8505(1) of the Regulations and, to determine whether an employee will qualify for the downsizing program, the company will have the interested employees complete a questionnaire . Can we confirm that a questionnaire is a reasonable method to ensure that the company will have sufficient information to determine whether the specific employee will qualify for the additional pension benefits offered under the downsizing program?

Position: Yes.

Reasons: Since we are not able to rule on the issue because it is a question of fact, we agree that a questionnaire is a reasonable approach to determine whether an employee will be a qualifying individual under subsection 8505(2.1) of the Regulations.

21 March 2000 External T.I. 1999-0015845 - CRIME COMP. & JUDGMENT INTEREST

Unedited CRA Tags
81(1)(g.1) 12(1)(c) 212(1)(b)

Principal Issues:

21 March 2000 External T.I. 2000-0004965 - STANDBY CHARGE-RESTRICTED USE OF VECH.

Unedited CRA Tags
6(1)(k) 6(2) 6(7)

Principal Issues: Whether standby charge should be applied to use of employer-provided vehicle between home and workplace if use forbidden after work hours or on week-ends.

Position: We have maintained the position that travel between home and workplace is of a personal nature and whether or not vehicle is used, once made available to the employee, subject to standby charge.

Reasons: The main purpose of the trips is considered to be personal.

20 March 2000 External T.I. 1999-0004815 - INDIANS-TAX EXEMPT INCOME

Unedited CRA Tags
81(1)(a)

Principal Issues:
Are the benefits under the Employment Insurance Act received by a status Indian, whose previous employment income was as an accounting officer from the XXXXXXXXXX , exempt from income taxation?

Position:
Question of fact - based on whether employment income was exempt under the Indian Act Exemption for Employment Income Guidelines.

Reasons:
EI benefits received by a status Indian are tax exempt if the insured employment income from which the EI benefits arise was tax exempt to the Indian. Guideline 2 or 4 may apply to exempt employment income from the College.

20 March 2000 External T.I. 2000-0002565 - CANADA COUNCIL AWARDS

Unedited CRA Tags
56(1)(n)

Principal Issues:

20 March 2000 External T.I. 1999-0005815 F - BIEN DE REMPLACEMENT-DATE DE DISPOSITION

Unedited CRA Tags
44(2)d)

Principales Questions:

I. Est-ce qu'il y a une date de disposition selon l'alinéa 44(2)a)de la L.I.R., dans les situations suivantes :

a) une société reçoit des avances d'une société d'assurances sans avoir convenu d'un montant définitif pour un bien perdu ou volé
b) plusieurs biens dont un immeuble ont été détruits par un incendie. L'indemnité à recevoir pour cet immeuble a été convenu alors qu'aucune entente n'est intervenue à l'égard des autres biens.
c) la société d'assurance désire convenir d'une indemnité globale pour l'ensemble des biens. A l'heure actuelle, aucun règlement ne fut conclu à l'égard de chaque bien individuel.

II. Est-ce que des améliorations locatives peuvent être considérées comme des biens de remplacement à un immeuble ?

Position Adoptée:

17 March 2000 External T.I. 2000-0010655 - CLERGYMANS RESIDENCE DEDUCTION

Unedited CRA Tags
8(1)(c)

Principal Issues: A taxpayer is an XXXXXXXXXX ; however, he does not accept employment income from his church. Can such a taxpayer claim the clergyman's residence deduction?

Position: No

Reasons: Pursuant to the requirements of paragraph 8(1)(c) of the Act, a taxpayer cannot claim the clergyman's residence deduction if the value of the residence occupied by him or the rent paid by him for a residence he rented and occupied, or the fair rental value of a residence owned or occupied by him, for the year, is not included in his income from employment as a member or minister in charge of or ministering to a diocese, parish or congregation or engaged in such administrative service, as described in subparagraphs 8(1)(c)(i) and (ii) of the Act.

16 March 2000 External T.I. 2000-0004975 - STANDBY CHARGE-RESTRICTED USE OF VEH.

Unedited CRA Tags
6(1)(k) 6(2) 6(7)

Principal Issues: Whether standby charge should be applied to use of employer-provided vehicle between home and workplace if use forbidden after work hours or on week-ends. Vehicle brought home for reasons of security of government vehicles.

Position: We have maintained the position that travel between home and workplace is of a personal nature and whether or not vehicle is used, once made available to the employee, subject to standby charge.

Reasons: The main purpose of the trips is considered to be personal.

16 March 2000 External T.I. 2000-0014105 - EXCHANGEABLE SHARE AS FOREIGN PROPERTY

Unedited CRA Tags
206(1)(f) 206(1)(d.1)

Principal Issues: Could an exchangeable share (excluded under 206(1)(f)(i)) be a foreign property under 206(1)(d.1) of the definition of foreign property - clarification of position in file 2000-000388?

Position: Question of fact.

Reasons: The determination of whether the shares of a Canadian corporation derive their value from foreign property can only be determined after a review of all of the facts.

16 March 2000 External T.I. 2000-0004945 - STANDBY CHARGE-LIMITED USE OF VEH.

Unedited CRA Tags
6(1)(k) 6(1)(e) 6(7)

Principal Issues: Whether standby charge should be applied to use of employer-provided vehicle between home and workplace if use forbidden after work hours or on week-ends. Vehicles brought home for reasons of security of government vehicles.

Position: We have maintained the position that travel between home and workplace is of a personal nature and whether or not vehicle is used, once made available to the employee, subject to standby charge.

Reasons: The main purpose of the trips is considered to be personal.

16 March 2000 External T.I. 2000-0013975 - RRSP MORTGAGE INSURED BY CMHC

Unedited CRA Tags
REG 4900(1)(J) 146(2)(c.4)

Principal Issues: Why is insurance required on a mortgage within an RRSP?

Position: Explained requirement where mortgagor is the annuitant or related person.

Reasons: Required by 4900(4) and 4900(1)(j) of Regulations.

16 March 2000 External T.I. 2000-0002765 - US NON-QUALIFIED DEFERRED COMPENSATION PLAN

Unedited CRA Tags
248(1)

Principal Issues: Whether U.S. non-qualified deferred compensation plan will be a salary deferral arrangement

Position: Probably, but will always be a question of fact,

Reasons: The plan must have as one of its main purposes the deferral of tax under the Act.

15 March 2000 External T.I. 2000-0011415 - EQUIV. TO MARRIED AMOUNT

Unedited CRA Tags
118(1)(b)

Principal Issues: In a situation in which an individual turns 18 years of age on March 3, 1999, and starts to live with a taxpayer-relative on August 1, 1999, is the taxpayer prevented from claiming the equivalent-to-married tax credit pursuant to paragraph 118(1)(b) of the Income Tax Act in respect of the individual by virtue of the fact that the individual turned 18 years of age before the date of becoming a dependent (but not by reason of mental or physical infirmity) of the taxpayer, assuming all other conditions of paragraph 118(1)(b) are otherwise met?

Position: Yes

Reasons: At no time in 1999 did the relative support the individual while the individual was under 18 years of age. The wording at any time in the year in the preamble of paragraph 118(1)(b) is modified by the wording at that time in subparagraph (i) thereof and accordingly, the individual being supported must be under 18 of age at some time while being dependent on the taxpayer.

14 March 2000 External T.I. 2000-0008955 - RESP CHIL CONTRIBUTIONS

Unedited CRA Tags
146(.1(2)(g.2)

Principal Issues: Can a child make a contribution to an RESP where the child's parent is the subscriber under the plan?

Position: If made on behalf of the subscriber, yes.

Reasons: A contribution may be made to an RESP by a subscriber or on behalf of a subscriber. However, it is our understanding that, in accordance with the legislation administered by HRDC, payments on behalf of a subscriber are not eligible for the new Canada Education Savings Grant.

14 March 2000 External T.I. 2000-0005375 - hepatitis c compensation

Unedited CRA Tags
146(1)

Principal Issues: Is compensation received by an individual from the province of Quebec as a result of having acquired Hepatitis C taxable?

Position: Question of fact but generally, no.

Reasons: As indicated in paragraph 2 of IT-365R2, Damages, Settlements and Similar Receipts, amounts received by a taxpayer as special or general damages for personal injury are excluded from income. If the compensation is in respect of special or general damages for personal injury as a result of you having acquired Hepatitis C through a blood transfusion, then, generally, it is our view that it would not be required to be included in income.

14 March 2000 External T.I. 2000-0004625 - RETIRING ALLOWANCE RELATED EMPLOYERS

Unedited CRA Tags
60(j.1)

Principal Issues: Are certain employers including a joint venture and participants in the joint venture considered related for the purposes of paragraph 60(j.1) of the Act?

Position: Question of fact.

Reasons: Where employers are not related under subparagraphs 60(j.1)(iv) and (v) of the Act, we would have to look at the relationship between the employers to make the determination, including the joint venture agreement.

14 March 2000 External T.I. 2000-0008095 - BC YOUTH AGREEMENT PROGRAM

Unedited CRA Tags
56(1)(u) 56(1)(n)

Principal Issues: Whether benefits paid by the Province of British Columbia under the Youth Agreement Program (the "Program") are taxable. This program is aimed at helping BC's most desperate youths, who often make up the "street kids" that live in our cities, and provides these youths with assistance for shelter costs (rent, hydro, telephone, etc.), support costs (food and incidental costs), education costs, and miscellaneous costs including security deposit, start-up costs (utility hook-ups, furnishings, etc.) and other one-time expenditures.

Position: In our view, the determination of whether or not payments made to youths under the Program are taxable will depend on the particular circumstances of each youth's case. However, based on our review of the Program, it is our view that most of the payments would be included as income as social assistance payments under paragraph 56(1)(u) of the Income Tax Act (the "Act") with an offsetting deduction pursuant to paragraph 110(1)(f) of the Act. However, where financial assistance is paid to a youth primarily to enable the youth to pursue an education, it may be that the amount will be taxable as a bursary under paragraph 56(1)(n) of the Act.

Reasons: The determination of the purpose of the payments is a question of fact.

14 March 2000 External T.I. 1999-0007475 F - REMISE DE DETTE

Unedited CRA Tags
20.1(1)

Principales Questions: Dans une situation précise quel montant est réputé être utilisé pour gagner du revenu au sens du paragraphe 20.1(1) de la Loi?

Position Adoptée: Dans l'exemple théorique le montant serait de 1000 $

13 March 2000 External T.I. 2000-0000145 - NORMAL REASSESSMENT PERIOD

Unedited CRA Tags
152(3.1) 152(4)

Principal Issues: Is the normal reassessment period 3 years from the first assessment issued for that year or from the most recent assessment for that year

Position: Original Assessment is the first assessment issued for the year

Reasons: The normal reassessment period begins to run from the time that is the earlier of the day of mailing of an original assessment and the day of mailing of a notification that no tax is payable.

13 March 2000 External T.I. 2000-0005985 - AMOUNTS REC'D BY VOLUNTEERS

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

Principal Issues: Whether benefits received by volunteer workers working for the taxpayer, a church-based agency which provides relief, social benefits and social services to people in need, are taxable. These benefits include reimbursement for housing and food, travel costs, and allowances for vacation and personal expenses.

Position: It is our view that the volunteers are likely receiving employment benefits. As such, it is our view generally that, unless the exemption for a special work site in subparagraph 6(6)(a)(i) of the Act applies, the amounts received by the volunteers are either taxable benefits under paragraph 6(1)(a) of the Act or taxable allowances under paragraph 6(1)(b) of the Act.

Reasons: Although a ruling received by the taxpayer from CPP/UI Rulings in 1989 indicated that the volunteers were not under a contract of service, it appears to us from the description of the volunteers' work conditions that many of the relevant factors point to an employee-employer relationship.

13 March 2000 External T.I. 2000-0012715 - RRSP PAYMENT TO DEPOSIT INSURANCE CORP.

Unedited CRA Tags
146(10) 146(2)(c.3)

Principal Issues: Whether ITA prevents deposit insurance corporation from requiring a credit union to use the capital it raised by issuing shares to RRSPs to offset the credit union's operating losses..

Position: No.

Reasons: Nothing in the Act on point.

13 March 2000 External T.I. 2000-0008445 - RETIREMENT HOME-WHETHER NURSING HOME

Unedited CRA Tags
118.2(2)(b) 118.2(2)(d)

Principal Issues: Whether a retirement home will qualify as a nursing home for purposes of the medical expense tax credit.

Position: Depends on the facts.

Reasons: Although a particular place does not necessarily need to be licensed as a nursing home in order to be considered as such, it must have sufficient staff to operate as a nursing home. In other words, the facility must have the equivalent features and characteristics of a nursing home in order to qualify as a nursing home. Hence, it must provide sufficient calibre and number of qualified medical personnel to provide nursing care to its residents on a 24-hour basis.

10 March 2000 External T.I. 2000-0004525 - STOCK OPTIONS AND INSTALMENTS

Unedited CRA Tags
7(1) 156

Principal Issues: Rationale for instalments based on inflated value of income in year employee stock options are exercised.

Position: Explained three methods to calculate instalments due in a year, only one of which involves an estimate of income based on future value of stock option benefit.

Reasons: Interest and penalties only due if estimate method used and results in short-fall; 2000 Budget provides tax deferral for certain amount of employee options for listed public securities.

9 March 2000 External T.I. 2000-0001115 - CORPORATION SHARES

Unedited CRA Tags
73(4) 110.6(2) 110.6(2.1) 82(4)

Principal Issues: Does each share in a particular corporation qualify as a "share of the capital stock of a family farm corporation" for purposes of subsection 73(4) of the Act or as a "share of the capital stock of a family farm corporation" for purposes of subsection 110.6(2) of the Act or as a "qualified small business corporation share" for purposes of subsection 110.6(2.1) of the Act.

Position: General comments.

Reasons: Depends on the facts of a particular situation.

9 March 2000 External T.I. 2000-0012095 - PERSONAL EXP. NON-RESIDENT DEPENDENT

Unedited CRA Tags
118

Principal Issues: Whether any special relief to allow payments for the support of an elderly parent residing in India.

Position: No.

Reasons: There is no income tax provision that would permit the deduction for such amounts in arriving at a taxpayer's income or tax payable.

8 March 2000 External T.I. 1999-0011475 - travel allowances

Unedited CRA Tags
6(1)(o)(vii) 67.1

Principal Issues: The issue is whether an allowance paid to truckers for expenses such as meals and lodging is "reasonable" for the purposes of subparagraph 6(1)(b)(viii) of the Act. The quantum of the allowance is based on distance travelled. Subparagraph 6(1)(b)(vii) of the Act refers to reasonable allowances for travelling expenses received from the employer for travelling away from the Metropolitan area (assuming there is one), where the employer's establishment is located.)

Position: This issue is determined on a case-by-case basis. We have also provided general comments to the effect that it could be questionable whether an allowance for such expenses falls within subparagraph 6(1)(b)(vii) of the Act when the allowance is determined by distance travelled.

Reasons: See position.

8 March 2000 External T.I. 2000-0001075 - GROUP TERM LIFE INS. POLICY

Unedited CRA Tags
6(1)(a)(i) 6(4) Reg. 2700

Principal Issues: Tax treatment of premiums paid by an employer on group life insurance and group dependent life insurance.

Position: Premiums paid by an employer on "group term life insurance policy" are excluded from an employee's income .

A policy that covers both employees and dependents or dependents only would not be considered a "group term life insurance policy" Therefore, employer's premium payments on such a policy would be included in an employee's income.

Reasons: Subparagraph 6(1)(a)(i); Subsection 248(1); Subsection 6(4) and Part XXVII of the Regulation.

8 March 2000 External T.I. 1999-0015075 - QFP-PROPERTY USED BY CHILD AFTER DISP.

Unedited CRA Tags
110.6(1)

Principal Issues: Whether land may qualify as qualified farm property if it is gifted by a parent to his adult child in January or February, 2000, and the child only begins to work the land in April or May, 2000, after there is no more frost in the ground.

Position: Yes, it may qualify depending on the facts.

Reasons: In our view, subparagraph (vii)(A) of the definition of qualified farm property does not require use of the farm property by specified individuals before it is disposed of, but rather it requires only that the property be used by the specified individuals in the year the property is disposed of.

7 March 2000 External T.I. 2000-0002845 - INDIAN TAXATION - DIAND

Unedited CRA Tags
81(1)(a)

Principal Issues: Various questions regarding the Indian Act Exemption for Employment Income Guidelines presented to employees of DIAND.

Position:

Reasons:

7 March 2000 External T.I. 1999-0004195 - FOREIGN SERVICE DIR-MATERNITY ALLOW.

Unedited CRA Tags
6(1)(b)(iii)

Principal Issues: Taxation of Foreign Service Directive - Maternity Leave

Position: Non-taxable.

Reasons: The fact that the allowances are included in the definition of weekly rate of pay for the purposes of defining the entitlement of an employee to maternity leave allowances and supplemental employment benefits should not in substance change the nature of the payments. Accordingly, the portion of maternity benefits which is attributable to FSD 55, 56 and 58 would be exempt from taxation pursuant to subparagraph 6(1)(b)(iii) of the Act.

15 February 2000 External T.I. 1999-0014525 - Woodlots

Unedited CRA Tags
9

Principal Issues: administrative position in IT-373R for farmers to defer gain on certain minor capital amounts

Position: section 43 applies; administrative position does not apply to taxation years commencing after July 16, 1999

Reasons: interpretation of Act

30 October 1998 External T.I. 9805985 - CANADIAN MUNICIPAL OWNED CORPORATION INDIAN

Unedited CRA Tags
149(1)(d) 149(1)(d.5) 149(1)(c) 149(1)(1.2)

Principal Issues: interpretation of geographic boundaries and computation of income for purposes of exemption from tax under 149(1)(d) for Indian band

Position: geographic boundaries means reserve boundaries, income is net income

Reasons: geographic boundaries of Indian exemption as previously interpreted, income as computed under the Income Tax Act.

Technical Interpretation - Internal

23 March 2000 Internal T.I. 2000-0003277 F - INTERNE ET REP

Unedited CRA Tags
146.02(1) 118.6(1) 118.6(2)

Principales Questions: Un interne travaillant dans un hôpital est-il admissible au REP ?

Position Adoptée: C'est une question de fait et cela dépend si l'université le considère inscrit à temps plein.

8 March 2000 Internal T.I. 1999-0015767 - LONG TERM DISABILITY BENEFITS

Unedited CRA Tags
6(1)(f)

Principal Issues:

Does a LTD benefit received from a CPC former employee taxable or non-taxable? POSITION TAKEN:

Taxable under 6(1)(f).

8 March 2000 Internal T.I. 2000-0009537 - Reserve 34.2(4) - Allocation of Income

Unedited CRA Tags
34.2 96(1.1) 96(1.6)

Principal Issues:
Whether XXXXXXXXXX can deduct a reserve, pursuant to subsection 34.2(4) of the Act, in respect of December 31, 1995 income from the partnership.

Position:
XXXXXXXXXX is able to claim a reserve pursuant to subsection 34.2(4) of the Act in respect of her "December 31, 1995 income" for that business. The amount of the reserve cannot exceed the least of the amounts specified in paragraph 34.2(4)(a), (b) and (c).

Reasons:
Subsection 96(1.1) provides, inter alia, that XXXXXXXXXX is deemed to be a member of the partnership for the purposes of sections 34.1 and 34.2. There is a deeming provision in subsection 96(1.6) of the Act that deems XXXXXXXXXX to be carrying on the business of the partnership in Canada for the purposes of the rules of subsections 34.1 and 34.2 of the Act. Subsection 34.2(6) does not apply to the present situation.

7 March 2000 Internal T.I. 1999-0007497 F - AIDE A DOMICILE-PRESTATION DE L'ART SAAQ

Unedited CRA Tags
9(1) 81(1)q)

Principales Questions:
Est-ce que les sommes qu'un parent reçoit pour l'aide accordée à un enfant bénéficiaire de l'indemnité prévue à l'article 79 de la SAAQ doit s'imposer sur ce revenu ?

Position Adoptée:
Oui, pour la portion attribuable à des services rendus.

24 February 2000 Internal T.I. 1999-0007447 - CGA COURSES AND LIFELONG LEARNING PLAN

Unedited CRA Tags
146.02

Principal Issues: Whether CGA courses will qualify for purposes of the Lifelong Leaning Program

Position: Yes given the facts of this particular case if the CGA association is HRDC certified.

Reasons: Requirements of section 146.02 met

21 February 2000 Internal T.I. 1999-0007637 - PENSION TAX CREDIT

Unedited CRA Tags
118(3) 118(7)

Principal Issues: Can the pension tax credit be claimed in respect of income from an un-matured RRSP?

Position: No.

Reasons: It is not (and is not theoretically equivalent to) "pension income" as defined in 118(7).

18 February 2000 Internal T.I. 1999-0008457 F - Life Insurance Corporation

Unedited CRA Tags
39(1)(c) 141 256(9)

Principal Issues:

1. Does the presumption created by s 141 whereby a life insurance corporation is deemed to be a public corporation affect its subsidiary's tax status as a SBC, CCPC and private corporation for the purpose of a business investment loss under paragraph 39(1)(c)?

2. Does the presumption created by paragraph 256(9) whereby control of a corporation is deemed to have been acquired by a person at the commencement of the day and not at the actual time of the change of control affect the corporation's tax status at the time the shares are actually disposed for the purpose of determining the departing shareholder's eligibility for a business investment loss under paragraph 39(1)(c)?

Position: (1) Yes (2) No

Reasons:

15 February 2000 Internal T.I. 2000-0004537 F - UNDP ORGANISATION INT'LE VISEE x REGL

Unedited CRA Tags
110(1)(f)(iii) 8900 a)

Principal Issues:
Whether the United Nations Development Programme is a prescribed international organization for the purposes of paragraph 8900(a) of the Regulations and subparagraph 110(1)(f)(iii) of the Act?

Position:
Yes. The UNDP is a related subsidiary administrative body of the United Nations and it is in fact part of the United Nations.

Reasons:
Question of facts and in accordance with the position taken in file 971555.

21 January 2000 Internal T.I. 1999-0011317 - SAFE INCOME - ALBERTA ROYALTY TAX CREDIT

Unedited CRA Tags
55(2) 18(1)(m) 12(1)(o)

Principal Issues:
Whether the Alberta Royalty Tax Credit should be netted with Alberta Crown Royalty to determine one amount that should be deducted in the computation of safe income on hand.

Position: Yes

Reasons: See response for detailed analysis of the issues

Ministerial Letter

10 March 2000 Ministerial Letter 1999-0014918 - Woodlots

Unedited CRA Tags
9

Principal Issues: administrative position in IT-373R for farmers to defer gain on certain minor capital amounts

Position: section 43 applies; administrative position does not apply to taxation years commencing after July 16, 1999

Reasons: interpretation of Act

2 March 2000 Ministerial Letter 1999-0004638 - PENSIONS PAID TO INDIANS

Unedited CRA Tags
81(1)(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.

March 2, 2000

XXXXXXXXXX

Dear XXXXXXXXXX :

24 February 2000 Ministerial Letter 2000-0008748 - YUKON INDIANS MORATORIUM

Unedited CRA Tags
81(1)(a)

Principal Issues: 1. Did the moratorium apply to all income sources for all Yukon Indians. 2. Did the moratorium apply to all Yukon lands or only "lands set aside."3. Does the Income Tax Remission Order (Yukon Lands) retroactively restrict the application of the moratorium.

Position: 1. The moratorium only applied to employment income. 2. The moratorium only applied to the "lands set aside." 3. The remission order was effective from 1984 and applied to all sources of income. It treats the lands set aside as if they were reserves.

Reasons: Based on a review of the previous correspondence related to the moratorium.