Income Tax Severed Letters - 2000-08-18

Principal Issues:
Can a common-law spouse claim the equivalent-to-spouse credit for a child (from a previous relationship), where the spouse lived separate and apart for less than 90 days in 1995 from her common-law partner and reconciled before the end of the year.

Principal Issues: Does taxpayer meet the function and status test such that he can avail himself of the 8(1)(c) deduction?

Position: It appears that he does.

Reasons: Provided the individual meets the status test, and provided he meets the function test as a result of 1) The individual is a minister and is engaged exclusively in full-time administrative service (paragraph 18 requires the function to be full-time) appointed by a religious organization (paragraph 20 of IT-141R) or
2) it is arguable that the individual could be considered to be ministering to a congregation.(see Koop, Klassen & Rushton (Youth for Christ Employee)

Principales Questions:
Est-ce que les indemnités couvrant le logement, le déplacement et la nourriture d'un stagiaire participant à un programme international pour une période de 6 mois sont exclues du revenu en vertu du paragraphe 6(6) de la Loi ?

Position Adoptée:
Oui, si les conditions prévues au paragraphe 6(6) de la Loi.

Principal Issues: Canadian students will be working overseas in France for the Canadian Government for about 11 or 12 weeks. The rate of pay is $10.11 per hour plus a daily allowance of $24.00. The daily allowance is being paid to compensate the guides for the high cost of living in France. The issues are whether (i) the allowance is taxable; and (ii) whether a student can deduct their travel costs to and from France.

Position: (i) The allowance is taxable as employment income. (ii) Generally, the student may be entitled to deduct the costs of moving to France - In the case of coming back to Canada, some students may be entitled to deduct moving costs from award income (scholarships, fellowships, bursaries, prizes and research grants) or employment or business income.

Reasons: (i) For the purposes of paragraph 6(1)(b) of the Income Tax Act (the "Act") the allowance is considered to be for "personal or living expenses or as an allowance for any other purpose." (ii) The comments are consistent with those in the General Income Tax and Benefit Guide" and Form T1-M.

Principal Issues: Whether conversion of capital to inventory when leasing company sells 3-year old trucks?

Position: yes

Reasons: Trucks are not worn out or obsolete and sale of formerly leased trucks is essential to operation of business.

Principal Issues: Traitement fiscal des arbres fruitiers

Position: Attente de la décision rendue dans la cause Archambault

Reasons: Le contribuable a porté la cause en appel

Principal Issues: Can the Yukon First Nations issue receipts for gifts under section 110.1 and 118.1 of the Income Tax Act.

Position: Yes.

Reasons: The Department's administrative position is to consider a band to be a municipality for purposes of sections 110.1 and 118.1 and therefore be able to issue official receipts for gifts if it qualifies for exemption under paragraph 149(1)(c) of the Income Tax Act. Bands that do not meet this requirement can be considered on a case-by-case basis to determine whether the band performs a function of government. Since each of the 14 Yukon First Nations have been involved in the negotiations and implementation of a land settlement claim, they would be considered public bodies performing a function of government in Canada.

Principal Issues:
Determining whether the relationship of certain investors in respect of the acquisition and rental of apartment buildings was a partnership, and if so, whether a limited or general partnership.

Position:
Relationship was a general partnership.

Reasons:
There was no executed written agreement confirming that a limited partnership was created under the Limited Partnership Act. Also, no evidence was presented to suggest that the requirements of subsection 96(2.4) of the Income Tax Act would apply to cause a particular investor to be a limited partner.

Position Adoptée:

Principal Issues:
Are costs incurred to build a temporary access road or in respect of the preparation of a site CEE, CDE, a capital expenditure or an operating cost in those situations where no oil or gas well is ever drilled.

Position: Question of Fact

Reasons: A review of all of the facts surrounding a specific situation will determine the tax treatment of these expenses. They may qualify as CDE or as CEE.