Income Tax Severed Letters - 2000-09-15

Administrative Letter

31 August 2000 Administrative Letter 2000-0037072 - CHILD TAX BENEFIT - SUMMER

Unedited CRA Tags
122.6

Principal Issues:
Can a parent who has the children for a summer month (visitation rights) claim the child tax benefit?

Ruling

2000 Ruling 2000-0014633 - Transfer from 401(k) to IRA to RRSP

Unedited CRA Tags
60(j)(ii)

Principal Issues: Will we accept the transfer of an amount from a 401(k) plan that does not qualify for 60(j)(i) to an IRA that qualifies for 60(j)(ii) followed by the subsequent transfer to an RRSP?

Position: Yes.

Reasons: Nothing preventing the transfer in the Act and not offensive from a policy perspective.

2000 Ruling 2000-0029803 - Amendment to formula in DSU plan

Unedited CRA Tags
6801(d)

Principal Issues:

1. Will the amendment to the Plan cause the Plan not to meet the requirements of paragraph 6801(d) of the Regulations?
2. Since the Plan affects existing Participants, can we rule?

Position:

1. No
2. Yes

Reasons:

1999 Ruling 9910813 - PROTECTIVE TRUST

Unedited CRA Tags
248(1) 107.4(1) 107.4(3)

Principal Issues:
1. Whether the definition of "disposition" in proposed subsection 248(1) applies on a transfer of property to a trust.

2. Whether the transfer of property to a trust is a qualifying disposition for the purposes of proposed subsection 107.4(1) and, consequently whether the provisions of proposed subsection 107.4(3) applies.

Position:
1. Yes.

2. Yes.

Reasons:
Analysis of the legislative proposals on trusts issued on December 23, 1998.

1999 Ruling 9926143 - LIMITED PARTNERSHIP

Unedited CRA Tags
9(1) 18.1 118.1(7)

Principal Issues: On wind-up of partnership can each piece of art be considered identical properties and qualify for 98(3) application?

Position: No.

Reasons: Even if identical property 98(3) states that each partner must receive undivided interest in each property.

Ministerial Correspondence

12 September 2000 Ministerial Correspondence 2000-0044584 - GIFT

Unedited CRA Tags
110.1 118.1

Principal Issues: Meaning of the word "gift" for tax purposes.

Position: Refer to letter below

Reasons: Refer to letter below

11 September 2000 Ministerial Correspondence 2000-0042224 F - DON CONTREPARTIE PARTIELLE

Unedited CRA Tags
118.1

Position Adoptée:
Aucune. La question est présentement sous étude.

Technical Interpretation - External

15 September 2000 External T.I. 2000-0037205 - LEGAL & OTHER FEES - CURATORSHIP

Unedited CRA Tags
18(1)(h) 18(1)(a) 18(1)(b)

Principal Issues:
(1) Whether certain legal fees are deductible for tax purposes.
(2) Whether certification costs and other fees related to the appointing of a curator are deductible for tax purposes.

Position:
(1) Question of fact.
(2) No.

Reasons:
(1) The expenses must satisfy the criteria in the Act for deductibility of legal fees.
(2) These costs would be considered to be personal living expenses.

14 September 2000 External T.I. 2000-0033275 - CONVERT PRINCIPAL RESIDENCE TO BUS. USE

Unedited CRA Tags
45(1)(c) 20(1)(a) 20(1)(ee) 40(2)(a)

Principal Issues:

1) Can a taxpayer maintain his principal residence exemption if he builds a large detached garage behind his home to be used for a manufacturing business ?
2) Specific additions to building or equipment, or expense

13 September 2000 External T.I. 2000-0011445 - UNUSED TUITION & EDUCATION CREDITS

Unedited CRA Tags
118.5 118.6 118.61 126(1)

Principal Issues:
Clarification of the integration between section 118.61 (unused tuition and education credits) and section 126 (foreign tax credits). When there are both tuition and education credits available and non-business foreign tax paid, which tax credit is calculated first.

13 September 2000 External T.I. 2000-0012435 - MANDATORY INVENTORY ALLOWANCE

Unedited CRA Tags
28(1) 28(2)

Principal Issues: For the purposes of the MIA rules which apply to a farming business (Cash basis), is the personal farming operation of an individual and a business farming operation carried on by a partnership (the individual is one of the two partners) comprise "one" business?

Position: No

Reasons: By virtue of the structure of subsections 96(1) 28(1) and 28(2), the MIA rules apply to each business operation.

13 September 2000 External T.I. 2000-0032775 - STANDBY CHARGE

Unedited CRA Tags
6(1)(e) 6(1)(k) 248(1)

Principal Issues: Whether an extra cab pick-up truck is an "automobile" within the meaning thereof in subsection 248(1) of the Act.

Position: Question of fact.

Reasons: The definition of "automobile" includes certain exceptions. Whether or not these exceptions apply will be relevant to the determination.

13 September 2000 External T.I. 2000-0017365 - CONVENTION EXPENSES & EMPLOYEES

Unedited CRA Tags
8(1)

Principal Issues: Whether a school teacher is entitled to deduct the costs (transportation, meals, and accommodation) of attending a convention in another location.

Position: No

Reasons: Subsection 8(2) of the Income Tax Act (the "Act") provides that "Except as provided by this section, no deductions shall be made in computing a taxpayer's income for a taxation year from an office or employment." Consistent with comments in paragraph 7 of IT-131R2, there is no provision in section 8 of the Act which allows an employee to claim convention expenses.

13 September 2000 External T.I. 2000-0030055 - CONTINUOUS OWNERSHIP - QFP

Unedited CRA Tags
110.6

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
Can farm property owned by the taxpayer's aunt previously acquired by the taxpayer's grandfather qualify as an interest in qualified farm property

Position TAKEN
No

13 September 2000 External T.I. 2000-0042885 - SWAP - QUALIFIED INVESTMENTS

Unedited CRA Tags
204.4

Principal Issues:

If a trust which owns mortgages described in subparagraph 204.4(2)(a)(ii) enters into a swap agreement to hedge the income from those assets, can it be said that the income from the swap could be considered to be derived from those mortgages for the purpose of determining whether the trust "derives" 95% of its income from qualified investments for the purpose of 204.4(2)(a)(v)?

Position: No.

Reasons:

The swap is an asset separate from the mortgages the income stream from which it may be designed to hedge. Accordingly, any income or expense from the swap would not be considered to be derived from the associated hedged assets or the stream of income therefrom.

13 September 2000 External T.I. 2000-0019235 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6(1)

Principal Issues:
Is land that you pay another farmer to seed, cultivate, fertilise and harvest Qualifying Farm Property?

Position TAKEN:
Question of fact. Insufficient information to determine if land falls under pre or post-June 1987 rules and if requirements are met. General comments only provided to taxpayer.

Reasons:
Question of fact. Insufficient information.

11 September 2000 External T.I. 2000-0045115 F - FERR TRANSFERT

Unedited CRA Tags
146,3

Position Adoptée:
Oui mais le FERR sera un FERR au profit du conjoint.

11 September 2000 External T.I. 2000-0033885 - LAST-TO-DIE INSURANCE POLICY

Unedited CRA Tags
148(9)

Principal Issues: Treatment of benefit payment made as a consequence of the first to die under a joint-last-to-die policy.

Position: Whether or not intended the better view is that such payment would be described in paragraph (j) of the definition of disposition in 148(9).

Reasons: Broad wording of provision and lack of expressed intent to exclude such payment. The position expressed in 1999-000697 cannot be sustained under the existing law.

8 September 2000 External T.I. 2000-0032575 - PRINCIPAL RESIDENCE (EXCESS LAND)

Unedited CRA Tags
54 40(2)(b)

Principal Issues: Can a taxpayer claim a personal residence exemption on 2 parcels of land that are adjacent.

Position: The excess probably would not qualify.

Reasons: It 120R-5 paragraph 15 and 16.

8 September 2000 External T.I. 2000-0022005 - STUDENT EXCHANGE PROGRAM

Unedited CRA Tags
118.5 118.6 18(1)h) 62

Principal Issues:

Taxpayer's son went to school in Spain to learn Spanish and a student from Spain lived with the taxpayer to learn English. What are the tax consequences of the associated income and expenses?

Position TAKEN:

Insufficient information provided. In general, the expenses are non-deductible (paragraph 18(1)(h)).

Reasons:

8 September 2000 External T.I. 2000-0035405 - STOCK OPTION OFFER OF EMPLOYMENT

Unedited CRA Tags
7(1)

Principal Issues: Would subsection 7(1) apply to a stock option included in an offer of employment to a prospective employee?

Position: Yes.

Reasons: The agreement provides that the prospective employee can only exercise the stock options after certain conditions are satisfied including the actual employment of the person so the agreement would satisfy the conditions in subsection 7(1) of the Act.

8 September 2000 External T.I. 2000-0023475 F - INDIEN EMPLOYE MIN AFFAIRS INDIENNES

Unedited CRA Tags
81(1)a)

Principales Questions:
Est-ce qu'on maintient la position énoncée dans le document 9905485 à l'effet que le revenu d'emploi d'une Indienne inscrite qui est au service du ministère des Affaires indiennes et du Nord n'est pas exonéré d'impôt?

Position Adoptée:
Oui.

8 September 2000 External T.I. 2000-0036195 - STOCK OPTION SPECIFIC IDENTIFICATION

Unedited CRA Tags
7(1)

Principal Issues: What is the effective date of the new position regarding specific identification and stock options as outlined in Technical News #19?

Position: Effective the date Technical News #19 was published.

Reasons: The new position will apply to taxation years that are open as of the date Technical News #19 was published.

8 September 2000 External T.I. 2000-0029535 - FOREIGN PENSION PLAN ANNUITY

Unedited CRA Tags
56(1)(a)(i)

Principal Issues: Will amounts received from an Australian annuity contract qualify as a pension for purposes of the Act?

Position: Yes.

Reasons: Since one of the payment options under the individual's pension plan included the acquisition of an annuity with the commuted value of the individual's pension benefits under the pension plan, we would consider the annuity payments to be pension payments for purposes of the Act.

7 September 2000 External T.I. 2000-0015905 F - allocation pour repas

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

Principales Questions:
Est-ce qu'une allocation pour frais de déplacement basée sur un critère autre que le temps passé à l'extérieur de la région où l'établissement de l'employeur est situé peut être considérée raisonnable aux fins du sous alinéa 6(1)b)(vii) LIR.

Position Adoptée:
Question de fait.

7 September 2000 External T.I. 2000-0017015 F - CALCUL DE LA SURTAXE

Unedited CRA Tags
180.1(2)b) 126(1) 122.3

Principales Questions:
Pour les fins de l'alinéa 180.1(2)b), comment déterminerait-on le montant qui serait l'impôt payable en vertu de la partie I dans une situation où un contribuable qui a droit au crédit d'impôt pour emploi à l'étranger(article 122.3) et au crédit pour impôt étranger (paragraphe 126(1)), est assujetti à l'impôt minimum.

Position Adoptée:
Le calcul de la Partie I doit s'effectuer selon la section E et la section E.1 sans tenir compte entre autres, de l'article 122.3 et du paragraphe 126(1) de la Loi.

7 September 2000 External T.I. 2000-0033705 - TRANSFER DPSP TO RRSP EX-SPOUSE

Unedited CRA Tags
147(19) 147(20) 146(16)

Principal Issues: Can a transfer be made from an individual's DPSP to his or her
ex-spouse's RRSP upon marriage breakdown?

Position: No. However, such a transfer may be made if the transferor first transfers the assets of the DPSP to his or her own RRSP and then transfers the assets to his or her ex-spouse's RRSP.

Reasons: Law does not provide for a direct transfer. However, subsections 147(20), 147(19) and 146(16) allow an indirect transfer.

7 September 2000 External T.I. 2000-0018585 F - FRAIS DE STAGE COOPERATIF

Unedited CRA Tags
118.5

Principales Questions:
Est-ce que les frais de stage coopératif sont des frais de scolarité admissibles au crédit d'impôt pour frais de scolarité en vertu de l'article 118.5 de la Loi?

Position Adoptée:
Non.

7 September 2000 External T.I. 2000-0044205 - RRIF CHANGE PRESCRIBED FACTOR

Unedited CRA Tags
146.3(1)

Principal Issues: A RRIF annuitant gets married and the spouse is fourteen years younger than the RRIF annuitant, can the prescribed factor for the minimum amount be changed to the spouse's age?

Position: No.

Reasons: Existing RRIF cannot be amended to reflect spouse's age for purposes of prescribed factor; however, property can be transferred to a new RRIF which uses the spouse's age.

6 September 2000 External T.I. 2000-0039015 - MEDICAL EXPENSES

Unedited CRA Tags
118.2(2)

Principal Issues: Whether the cost of a blood pressure monitor qualifies for the medical tax credit

Position: No

Reasons: It is not described within paragraph 118.2(2)(m) and section 5700 of the Income Tax Regulations.

5 September 2000 External T.I. 2000-0033115 - RETIRING ALLOWANCE

Unedited CRA Tags
60(j.1)

Principal Issues:
1. Can a retiring allowance be transferred to a RRIF under paragraph 60(j.1) (taxpayer is 78 years of age)? 2. Can a retiring allowance be paid to a retiring employee in respect of services to a corporation which is wound-up under subsection 88(1) immediately after the payment?

Position:
1.No. 2.Yes.

Reasons:
Paragraph 60(j.1) only allows rollovers to RPPs and unmatured RRSPs. Taxpayer is over 69 years of age and therefore cannot be the annuitant of an unmatured RRSP. 2. The wind-up of the subsidiary corporation, in and by itself, will not affect the characterization of the payment as a retiring allowance.

31 August 2000 External T.I. 2000-0033985 - PRIVATE HEALTH SERVICES PLAN

Unedited CRA Tags
6(1)(a) 248(1)

Principal Issues: Whether a health services plan under which an employer will reimburse the employees for specified percentages of certain expenses qualifies as a PHSP.

Position: General comments were provided.

Reasons: Comments regarding a PHSP are set out in IT-339R2.

31 August 2000 External T.I. 2000-0032525 - Exchanged CCPC option, 110(1)(d.1)

Unedited CRA Tags
110(1)(d.1)

Principal Issues: Will the disposition of shares that are subjected to paragraph 7(1)(a) by virtue of subsection 7(1.1) which were acquired under an exchanged option that satisfied subsection 7(1.4) qualify for the deduction under paragraph 110(1)(d.1)?

Position: If the conditions in subparagraph 110(1)(d.1)(ii) and (iii) are satisfied, yes.

Reasons: The provisions of paragraph 110(1)(d.1) are satisfied.

Technical Interpretation - Internal

13 September 2000 Internal T.I. 2000-0027557 F - REER AU PROFIT DU CONJOINT

Unedited CRA Tags
146(1) 146(8.3) 146.3(5.1)

Principales Questions: Lorsqu'un REER transfert un montant à un RPA ce dernier doit-il garder une trace que le montant provient d'un REÉR qui est au profit du conjoint ?.

Position Adoptée: Non

8 September 2000 Internal T.I. 2000-0036107 - EPSP-WITHHOLDING REQUIREMENTS

Unedited CRA Tags
153

Principal Issues: Whether withholding is required on EPSP amounts.

Position: Withholding under subsection 153(1) is not required when an employer contributes to an EPSP nor when the trustee makes an allocation to the beneficiary. Further, unless payments from an EPSP are taxable, which is generally not the case, withholding from these payments is not required.

Reasons: Paragraph 15 of IT-428.

5 September 2000 Internal T.I. 2000-0035427 - WAGE LOSS REPLACEMENT VS. SALARY CONTINUANCE

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

Principal Issues: Whether a plan is a sickness plan or a salary continuance plan.

Position: It is a salary continuance plan.

Reasons: Paragraph 7 of IT-428 indicates that a sickness plan must be an "insurance" plan, and therefore paragraph 6(1)(f) does not apply to uninsured employee benefits such as continuing wage or salary payments based on sick leave debits. These latter type of payments are included in income under paragraph 6(1)(a).

31 August 2000 Internal T.I. 2000-0036177 - CAL. OF INTEREST-TRANSFER OF REFUND

Unedited CRA Tags
161 164

Principal Issues: Calculation of refund interest and instalment interest when overpayment transferred to another taxpayer's instalment account

Position: Overpayment and accumulated refund interest transferred effective on date of notice of assessment or reassessment.

Reasons: Subsection 164(1) only requires refund of overpayment to be made on or after date of notice of assessment.

31 August 2000 Internal T.I. 2000-0038757 F - ALLOCATIONS POUR FRAIS DE DEMENAGEMENT

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

Principales Questions : déterminer le traitement fiscal approprié concernant des allocations payables à certains fonctionnaires du gouvernement du Québec en vertu de la politique entrant en vigueur le 30 mars 2000?

Position Adoptée : ces allocations sont imposables pour la portion qui excède $650.

16 September 1999 Internal T.I. 9913460 F - CONF. CONS. TECHNIQUES - DOMMAGES

Unedited CRA Tags
18(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.

QUESTIONS 8 & 47

Application de l'alinéa 18(1)a) de la Loi

Faits