Income Tax Severed Letters - 2000-11-24

Miscellaneous

2000 Miscellaneous 2000-003204A - Supplementary ruling letter

Unedited CRA Tags
55(3)(b)

Principal Issues: Additional facts provided along with a request for additional rulings and a time extension.

Position: Requested amendments made.

Reasons: Amendments requested were clarifying in nature and proposed transactions had not commenced.

Ruling

2000 Ruling 2000-0014543 - Loss utilization

Unedited CRA Tags
85(1) 245

Principal Issues: 1. Whether an "in-house" transfer of depreciable property designed to utilize capital losses is subject to the GAAR?

2. Whether the properties qualify as depreciable property to Opco?

Position: 1. No. Similar to ruling given - 9419413.

2. Yes. Opco will hold property for a month and will earn income therefrom.

Reasons: 1. The previous ruling was presented to the GAAR Committee and it was concluded that GAAR will not apply.

2000 Ruling 2000-0034503 - CHILD SUPPORT VARIATION ORDER

Unedited CRA Tags
56.1(4) 60(b)

Principal Issues:

The taxpayer wishes to vary a XXXXXXXXXX court order to remove the requirement to pay spousal support. Will the variation in the court order result in a "commencement day" causing the new child support rules to apply?

2000 Ruling 2000-0034743 - Amendment to Phantom Stock Plan

Unedited CRA Tags
6801(d)

Principal Issues: Will certain amendments to a 6801(d) plan cause the plan to no longer qualify under 6801(d) of the Regulations?

Position: No.

Reasons: The amendments do not offend the provisions of paragraph 6801(d).

2000 Ruling 1999-0012953 - Butterfly; Classfication of Property

Unedited CRA Tags
55(3)(b)

Principal Issues: 1. classification of mortgage (other than current portion)
2. classification of rental properties

Position: 1. investment property, not business property, 5 year term
2. investment properties since ITAct made Opco a SIB on terminating
full-time employees

Reasons: 1. caselaw; property not "risked" in business; mortgage related to capital
property, not inventory (unlike Freeway Properties case)
2. since property was sold, Opco no longer needed more than 5 full-time
employees / function of Act

2000 Ruling 1999-0013323 - INDIAN BAND - MUNICIPALITY

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

Principal Issues:
1. Is the XXXXXXXXXX a municipality in Canada for purposes of paragraph 149(1)(c) of the Act?
2. Will the Company a corporation owned by the First Nation be exempt from tax by virtue of paragraph 149(1)(d.5)?
3. Will subsection 56(4) apply to dividends paid by the Company and assigned to XXXXXXXXXX ?

Position:
1. Yes.
2. Yes.
3. Yes.

Reasons:
1. The First Nation has met tests laid out in Otineka as being a public body exercising powers of self-government and providing services municipalities typically provide and in any period in which they act as described they will be exempt.
2. All of the requirements of paragraph 149(1)(d.5) have been met. Not less that 90% of its capital is owned by the First Nation. Only the First Nation has the right to acquire shares or capital of the corporation. The First Nation has beneficial ownership and because of the bare trust arrangement controls at least 90% of the votes associated with the shares. No more that 10 per cent of its income is earned from activities carried on outside the geographical boundaries of the First Nation.
3. Subsection 56(4) applies because the First Nation has assigned its rights to dividends from the Company to XXXXXXXXXX (an organization to which the First Nation does not deal at arms length). Had the right to the dividends not been assigned the dividends would have been included in the income of the First Nation.

1999 Ruling 9918323 - XXXXXXXXXX Business of a Commercial Trust

Unedited CRA Tags
206(1) "foreign property" 132(6) "mutual fund trust" 108(2) 245 Reg 5000(1)(e)

Principal Issues:
(a) Whether the MFT would be considered as an open-ended trust pursuant to paragraph 108(2)(a) of the Act, given that a 25-year promissory note instead of cash will be provided to the MFT unitholders upon their demand for redemption of the MFT units?
(b) Whether the MFT's only undertaking would be investing funds in the commercial trust units and the 25-year promissory notes and not in operating the XXXXXXXXXX business of the commercial trust for the purpose of subsection 132(6) of the Act?
(c) Whether the MFT units would be considered as foreign property within the meaning of the term under subsection 206(1) of the Act?
(d) Whether subsection 245(2) of the Act would apply in respect of the 25-year promissory notes?
(e) Whether the disposal of XXXXXXXXXX assets would be considered as a part of the series of transactions in the XXXXXXXXXX corporate reorganization?

Position:
(a) Yes
(b) Yes
(c) No
(d) No
(e) No

Reasons:
(a) XXXXXXXXXX, it is our view that the MFT would be an open-ended trust under paragraph 108(2)(a) of the Act because the requirements of the provision has been met notwithstanding illiquid assets would be received by the MFT unitholders upon the redemption of the MFT units.
(b) XXXXXXXXXX, it is our view that the only undertaking of the MFT is investing funds in the commercial trust units and the 25-year promissory notes. The MFT could not be considered as operating the XXXXXXXXXX business of the commercial trust.
(c) By virtue of paragraph 5000(1)(e) of the Regulations, the MFT units would not be considered as foreign property. The commercial trust units would be considered as foreign property, but, the 25-year promissory notes would not be considered as foreign property. The MFT would hold less than 20% of the cost of all of its property in the commercial trust units (and more than 80% of such cost in the 25-year promissory notes), notwithstanding the fact that the MFT still owns 100% of the commercial trust. However, that is enough to meet the requirements under paragraph 5000(1)(e) of the Regulations to have the MFT units to qualify as non foreign property.
(d) The GAAR Committee concluded that subsection 245(2) of the Act should not be applied. Even though it was concluded that there would be tax avoidance transactions in respect of the 25-year promissory notes, there would be no misuse of the "foreign property" definition nor abuse of the provisions of the Act read as a whole, given that the business of the commercial trust will be carried on in Canada. The GAAR Committee was advised by Finance that interests in trusts are treated as foreign property as it was not intended to encourage flow-through investments, such as trusts or partnerships, where there is no corporate level of tax. However, it was also noted that the foreign property definition does not include debt issued by a trust resident in Canada.
(e) The XXXXXXXXXX corporate reorganization was carried out with different corporate purpose and therefore the subsequent sale of the XXXXXXXXXX assets of XXXXXXXXXX would not be considered as a part of series of the reorganization transactions.

1999 Ruling 9922463 - 6801(D), DEFERRED SHARE UNITS

Unedited CRA Tags
6801(d)

Principal Issues: Will the payment of a portion of its executive compensation 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.

Technical Interpretation - External

17 November 2000 External T.I. 2000-0029115 - Refreeze transactions

Unedited CRA Tags
15(1) 56(2)

Principal Issues:

i) whether a benefit is conferred on the common shareholders of Holdco in a refreeze transaction?
ii) whether a benefit is conferred on the common shareholders of Holdco in a refreeze transaction after the payment of a capital dividend?
iii) whether a benefit will be conferred on a trust which subscribes for common shares of Holdco after the payment of a capital dividend?

Position:
i) No
ii) & iii) We cannot provide an opinion as we are unable to determine all the relevant facts and circumstances of the particular situation.

Reasons:

16 November 2000 External T.I. 2000-0050975 - WITHHOLDING TAX ON SWAP PAYMENTS

Unedited CRA Tags
212(1)(b)

Principal Issues:
1.Are "risk mitigation" payments pursuant to a swap agreement subject to Part XIII withholding tax because they have an interest component?

2.If they were found to contain an interest element, would they be considered to be obligations "similar" to bonds, debentures, mortgages or notes of a government of a province as per 212(1)(b)(ii)(C)(II)?

Position:
1.Generally, no.

2.Yes

Reasons:
1.A risk mitigation payment is not dissimilar to the circumstances in which the counterparties enter into a second separate swap agreement.

16 November 2000 External T.I. 2000-0035815 F - OPTION D'ACHAT D'ACTION

Unedited CRA Tags
7

Position Adoptée:
On doit appliquer la Loi aux transactions telles qu'elles ont été effectuées.

15 November 2000 External T.I. 2000-0041165 F - Action admissible de petite entreprise

Unedited CRA Tags
110.6 104(21.2)

Principales Questions: Le test de 24 mois prévu à l'alinéa b) de la définition d' « action admissible de petite entreprise » doit-il s'effectuer au niveau de la fiducie?

Position Adoptée: oui

15 November 2000 External T.I. 2000-0033735 - DOES ASSOCIATION INCLUDE A PARTNERSHIP

Unedited CRA Tags
REG 201(1)

Principal Issues:
Whether payment to a resident of Canada on account of interest on an amount received and held as a rental deposit by a partnership must be reported on a form T5 information slip.

15 November 2000 External T.I. 2000-0018125 - MUNICIPAL OFFICES TRAVEL

Unedited CRA Tags
6(1)(b) 81(3)

Principal Issues:
Whether travel between the trustee's ward and the regional office is not personal since the trustees are under statutory obligation to reside in their ward.

Position:
The travel is personal

Reasons:
Travel between the employee's home and his workplace is personal. While not crucial to the issue, there is no requirement for the trustees to live in their ward in order to perform their daily duties. Section 21 of the Local Authorities Elections Act of Alberta deals with the qualification of candidates to be eligible for (re)election.

15 November 2000 External T.I. 2000-0030225 - EMPLOYEE REIMBURSING EMPLOYER FOR CAR

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

Principal Issues: The income tax consequences if the employer charged the employee for the personal use by him or her of the company vehicle.

Position: If an employee reimburses the employer an amount for the standby charge, the standby charge otherwise calculated is reduced by the amount of this reimbursement. Similarly, if an employee reimburses the employer for the operating costs of the company vehicle in respect of the personal use of this vehicle by the employee, the operating cost benefit otherwise calculated is reduced by the amount of the reimbursement provided it is made in the year or within 45 days after the end of the year.

Reasons: Subparagraph 6(1)(e)(ii) of the Act and the definition of Amount B in paragraph 6(1)(k) of the Act respectively.

14 November 2000 External T.I. 2000-0048355 - STOCK OPTIONS EMPLOYER CASHOUT RIGHT

Unedited CRA Tags
7(1) 7(3) 5

Principal Issues: 1. Can we describe, further to our comments in our file 2000-003069, other factors which we would consider relevant in determining whether a cash payout on the termination of a particular securities option plan that includes an employer right to issue shares or cash would result in the application of section 7 or section 5 (or 6)?
2. When does the "agreement to sell or issue shares" arise where a stock option plan provides that the employer can elect to pay an option-holder cash instead of selling or issuing shares? 3. How do we reconcile our position on the deductibility of the cash payment where the employer chooses to pay cash rather than sell or issue shares given the judgment in the Kaiser case?

Position: 1. No. 2. The agreement arises at the time that the employer decides to issue shares or cash. 3. Our position is not inconsistent with Kaiser.

Reasons: 1. The relevance of any factor may vary depending upon all the facts of a particular situation. 2. Until the employer decides that it will sell or issue shares to an option-holder, there is only the possibility, not the certainty, that shares will in fact ever be sold or issued. 3. The result in Kaiser follows from the facts in that particular case and is not inconsistent with our position that the exercise of a cashout option in a stock option plan results in a deductible expense to the employer.

14 November 2000 External T.I. 2000-0053155 - RETIRING ALLOWANCE CORPORATE MERGER

Unedited CRA Tags
248(1)

Principal Issues: Whether the employees of a municipality can receive a retiring allowance (for purposes of paragraph 60(j.1)) prior to the merger of the municipality with several other municipalities to create a new city ("New City")?

Position: No.

Reasons: The employees will not lose their office or employment by virtue of the merger since New City will be an affiliate of the predecessor municipalities.

14 November 2000 External T.I. 2000-0014595 - INCOME ATTRIBUTION

Unedited CRA Tags
74.1(2)

Principal Issues: Is there any attribution of income and or capital gains when an "in-trust" account is established by a grandparent for a minor grandchild?

Position: If it can be proven that the grandchild is the beneficial owner of the property, the income will be attributed to the grandparents and the capital gains will be in the hands of the minor grandchild.

Reasons: Established Agency position IT-510. 9717475;9721325; 9830997

14 November 2000 External T.I. 2000-0054905 - DISPOSITION OF INTEREST IN PROPERTY

Unedited CRA Tags
69(1) 43 70(5)

Principal Issues:
The income tax consequences of reregistering title to property (principal residence) to include an (adult) child's name with joint tenancy.

Position TAKEN:
Question of fact. In adding another name to the property, there may or may not be a disposition, depending on whether or not there is a change in beneficial ownership. However, in a true joint tenancy arrangement, there has been a disposition of a 50% interest in the property to the recipient at fair market value.

Reasons:
Question of fact. In creating a true joint tenancy arrangement, the title to the property vests immediately to the recipient resulting in a partial disposition.

14 November 2000 External T.I. 2000-0051005 - RRSP WITHHOLDING TAX

Unedited CRA Tags
REG 103(6)(c)

Principal Issues: Can the Canada Customs and Revenue Agency waive the requirement to withhold income tax where funds held by an RRSP are ordered by the court to be forfeited to the Attorney General for Ontario as proceeds of crime?

Position: No.

Reasons: The Agency can only administer the law as it currently reads. The Department of Finance has the responsibility for drafting proposed changes to the law.

14 November 2000 External T.I. 2000-0050455 - QUAL. FARM PROPERTY

Unedited CRA Tags
110.6(2)

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.

PRICNCIPAL ISSUES

14 November 2000 External T.I. 2000-0051095 - DISPOSITION OF FARMLAND BY CORP.

Unedited CRA Tags
110.6(2) 73(3) 69(1)

Principal Issues:
Is there any capital gains relief for a corporation disposing of farmland to either a third party or its shareholder?

14 November 2000 External T.I. 2000-0051405 - DISPOSITION OF SHARES TO SPOUSE

Unedited CRA Tags
73(1) 74.1 74.2

Principal Issues:
Is there any capital gains relief (deferral) for a disposition of shares from one spouse to the other?

14 November 2000 External T.I. 2000-0052925 - DAMAGES-BREACH OF CONTRACT

Unedited CRA Tags
9(1)

Principal Issues:
The tax consequences of receipts for non-performance of business contracts as well as damages for slander.

10 November 2000 External T.I. 1999-0008335 F - inclusion revenu exonéré - convention fiscale

Unedited CRA Tags
56 110(1)f)

Principales Questions: Est-il nécessaire d'inclure dans le calcul du revenu, un montant exonéré en vertu d'une convention fiscale, pour ensuite prendre une déduction en vertu de l'alinéa 110(1)(f), ou peut-on simplement ne pas tenir compte de tels revenus?

Position Adoptée: Il faut tenir compte des revenus qui proviennent d'un autre pays et qui ne sont pas imposables entre les mains d' un résident du Canada en conséquence de l'application d'une disposition d'une convention fiscale, et prendre une déduction en vertu de 110(1)(f)

9 November 2000 External T.I. 2000-0050725 - US SHARES, FOREIGN PROPERTY

Unedited CRA Tags
206(1.1)

Principal Issues: Where shares of a U.S. company held by an RRSP are exchanged for shares of a Canadian company, can the Part XI taxes relating to the U.S. shares be refunded for the 15 months preceding the exchange?

Position: No.

Reasons: Part XI is computed based on the foreign property held at the end of each month. There is no provision exempting foreign property from being foreign property for a 15 month period.

9 November 2000 External T.I. 2000-0053195 - RCMP DISABILITY PENSION

Unedited CRA Tags
81(1)(i)

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 ISSUE:

Whether the taxpayer's pension is exempt under paragraph 81(1)(i) of the Act?

Position TAKEN:

The amount received under section 32 or 33 of the RCMPSA will be exempt.

REASON FOR POSITION TAKEN:

Legislative analysis.

9 November 2000 External T.I. 2000-0049435 - PAYMENT LONG SERVICE DEATH

Unedited CRA Tags
60(j.1)

Principal Issues: An employee dies and the Board of Directors decides to pay an amount in recognition of the employee's long service to the corporation after his or her death. 1) Will the amount paid qualify as a retiring allowance for purposes of the Act? Can the amount be transferred to the deceased employee's RRSP?

Position: 1) No. 2) No.

Reasons: 1) The retiring allowance definition specifically excludes an amount received as a consequence of an employee's death. 2) Subsequent to an annuitant's death, the annuitant or his or her estate is not eligible to make contributions to the RRSP.

9 November 2000 External T.I. 2000-0052205 - RRSP TRANSFERS

Unedited CRA Tags
146(16)(b)

Principal Issues: Can a tax-deferred transfer be made between the RRSPs of a divorced couple pursuant to paragraph 146(16)(b) where the old court order in respect of the divorce is varied or the separation agreement is amended in writing years after the divorce became final?

Position: Yes.

Reasons: The settlement of a couple's rights need not be limited to a single occurrence before or at the time of divorce. The amended agreement or varied court order is still in settlement of rights arising out of the couple's marriage.

9 November 2000 External T.I. 2000-0038955 F - CLAUSE DE CAPACITE DE GAIN

Unedited CRA Tags
1433

Principales Questions:

Le IT-426 permet la méthode de recouvrement de fonds dans le cas de vente d'actions dans le cadre d'un contrat comportant une clause relative à la capacité de gain à la condition de respecter certaines conditions dont celle qui stipule que la durée du contrat ne doit pas excéder cinq ans.

I. À partir de quel moment débute cette période de cinq ans?
II. Pour que cette condition soit respectée, quel(s) événement(s) ne doit(vent) pas survenir après la durée de la période de 5 ans ?
III. Ce bulletin stipule que lorsqu'un montant versé en règlement du prix de vente excède le prix de base rajusté des actions, l'excédent est considéré comme un gain en capital réalisé au moment où ce montant est devenu calculable. Ce bulletin mentionne (par. 5) qu'un montant devient calculable lorsqu'il est possible de le « calculer avec précision ». À quel moment, un montant devient-il «calculable avec précision » ?

Position Adoptée:

9 November 2000 External T.I. 2000-0050475 - ELIGIBILITY OVER THE COUNTER SHARE FOR RRSP

Unedited CRA Tags
146 REG 4900 REG 3201

Principal Issues: Are shares listed on NASDAQ over-the-counter exchange qualified investments for an RRSP

Position: Question of fact. The over-the-counter exchanges are not prescribed stock exchanges however there are other ways a share can be a qualified investment for an RRSP

Reasons: The over-the-counter exchanges are not prescribed stock exchanges, however shares of a public corporation as described in subparagraph 89(1)(g) are.

9 November 2000 External T.I. 2000-0048205 - STOCK OPTIONS CASHOUT OPTION

Unedited CRA Tags
7(1)(B) 7(3)

Principal Issues: 1. Will a deduction for the cash paid to an employee who elects to receive cash instead of shares under a section 7 stock option plan be denied to an employer by 7(3)? 2. Will a deduction for the cost of the acquisition of the shares of a U.S. parent by a Canadian subsidiary for sales to its employees under a stock option plan be denied by 7(3)?

Position: 1. No. 2. Yes.

Reasons: 1. No shares are sold or issued under the stock option plan where the employee elects to take cash instead of shares. 2. The words of 7(3) are clearly applicable.

9 November 2000 External T.I. 2000-0050525 - RESP PUBLIC TRUSTEE AS SUBSCRIBER

Unedited CRA Tags
146.1(1)

Principal Issues: Can a public trustee enter into an education savings plan on behalf of a parent of a child?

Position: Question of fact.

Reasons: Corporations and trusts are prohibited from entering into an education savings plan. The facts in each particular situation involving a public trustee would have to be reviewed in order to make this determination.

8 November 2000 External T.I. 2000-0048725 - RRSP ROLLOVERS FOR NON-RESIDENTS

Unedited CRA Tags
60(l) 212(1)(l)

Principal Issues: Can a non-resident use the provision of paragraph 60(l) of the Act to rollover a refund of premiums without withholding tax?

Position: Yes, if the requirements of paragraph 60(l) and 212(1)(l) of the Act are met.

Reasons: Our position on rollovers for non-residents is outlined in paragraphs 28 - 31 of IT-500R RRSPs - Death of an Annuitant.

8 November 2000 External T.I. 2000-0034165 - VOLUNTARY DISCLOSURE

Unedited CRA Tags
220(3.1)

Principal Issues:
A taxpayer has failed to report a 1994 capital gain

8 November 2000 External T.I. 2000-0049695 - GST REFUNDS AS QUALIFIED INVEST. FOR RRSP

Unedited CRA Tags
146 212(1)(b)(ii)(C)(I)

Principal Issues: Are GST refunds qualified investments for an RRSP?

Position: No

Reasons: Tax refunds are not considered "bonds, debentures, notes, mortgages or similar obligations of, or guaranteed by, the Government of Canada" as contemplated by subclause 212(1)(b)(ii)(C)(I).

7 November 2000 External T.I. 2000-0033225 - TUITION TAX CREDIT

Unedited CRA Tags
118.5(1)

Principal Issues:
Whether examination fees, administration fees and registration fees with respect to a professional association qualify as tuition tax credits.

7 November 2000 External T.I. 2000-0041815 F - ALLOC. POUR FRAIS DE DEPLACEMENT

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

Principales Questions:
L'allocation pour frais de déplacement versée aux employés en vertu des conventions collectives sectorielles dans le domaine de la construction au Québec est-elle imposable pour l'employé ?

Position Adoptée:
Questions de fait.

7 November 2000 External T.I. 2000-0040615 F - OPTIONS ET CLAUSE DE CAPACITE DE GAIN

Unedited CRA Tags
49(1) 12(1)g)

Principales Questions:
1. Dans le cadre d'une disposition d'actions d'entreprise à un tiers, le vendeur octroie des options à l'acquéreur qui lui permettront d'acquérir les actions dans deux ans pour une somme minimale. Est-ce que l'octroie d'options peut constituer une disposition d'actions ?

2. Si cette transaction est considérée comme une disposition d'options, est-ce que les vendeurs peuvent utiliser la méthode de recouvrement de fonds qui s'applique habituellement aux ventes d'actions ?

Position Adoptée:
1. La question de savoir ce que vise un contrat ne peut être résolue que sur la base des rapports juridiques créés par les termes de l'entente.

2. Non.

7 November 2000 External T.I. 2000-0030835 - EMPLOYER REQUIREMENT TO ISSUE T2200

Unedited CRA Tags
8(10) 8(1)

Principal Issues: What is an employer's responsibility to issue a T2200.

Position: Section 8(10) of the Act applies.

Reasons: The employee may request that the employer sign form T2200 certifying the conditions of that employee's employment. Note however that the Jane M. Baptist case, which in April 2000, ruled that income from special pay duty is income from employment, has been appealed by the taxpayer.

6 November 2000 External T.I. 2000-0018095 - AGRIC. INCOME DISASTER ASSIST.

Unedited CRA Tags
12(1)(x)

Principal Issues:
1 ) Are payments received out of AIDA taxable, and if so, under which section of the Income Tax Act (the "Act");
2 ) for the purposes of the small business deduction, what type of income is AIDA, active or inactive;
3 ) would the determination of whether AIDA was taxable or the type of income depend on the type of farmer receiving the payment (active farmer or farmer on crop share basis, etc.); and,
4 ) any provision to allow payments from AIDA as a deduction from ACB of farmland, similar to the CROW pay out a few years ago.

Position:
1 ) Yes; 2 ) active (generally); 3 ) depends; 4 ) no

Reasons:
1 ) By virtue of 12(1)(x); 2 ) AIDA generally related to active farming income; 3 ) share cropping is considered rental income but qualifies for AIDA if individual incurs risk in production; 4 ) no provision

3 November 2000 External T.I. 2000-0047535 F - CHNT USAGE-UN IMMEUBLE

Unedited CRA Tags
13(7) 45(1)

Principales Questions: Un contribuable détient un immeuble dans lequel il y a quatre logements. S'il y a un changement d'usage d'un logement, est-ce qu'on doit considérer les quatre appartements comme quatre biens distincts pour l'application des règles de changement d'usage aux alinéas 13(7)a), b) et 45(1)a) de la Loi ou si on doit considérer que l'immeuble est un seul bien et que ce sont plutôt les règles de changement d'usage aux alinéas 13(7)d) et 45(1)c) de la Loi qui s'appliquent.

Position Adoptée: On doit considérer les quatre appartements comme quatre biens distincts pour l'application des règles de changement d'usage aux alinéas 13(7)a), b) et 45(1)a) de la Loi

1 November 2000 External T.I. 1999-0009725 - Foreign affiliates meaning of group

Unedited CRA Tags
95(2)(a)(ii)(D) 95(1)

Principal Issues: Whether a foreign affiliate (FAB) was a member of the group for the purposes of subclause 95(2)(a)(ii)(D)(V) as of result of its income being included in the income of another affiliate (FAA) under Subpart F of the U.S. Internal Revenue Code (the "Code") which are similar to Canada's FAPI rules.

Position: No

Reasons: Subclause 95(2)(a)(ii)(D)(V) refers to "computing the liability for income taxes of the members of the group". Notwithstanding that Subpart F of the Code requires the inclusion of the income of FAB in the income of FAA, the computation nevertheless involves the computation of the income tax liability of only FAA. The income tax liability of the FAB is unaffected by the application of Subpart F of the Code.

1 November 2000 External T.I. 2000-0044525 - DEMUTUALIZATION PENSION PLAN

Unedited CRA Tags
139.1(16)

Principal Issues: An RPP receives a demutualization benefit in trust for the annuitant in respect of a paragraph 254(a) annuity contract acquired for the annuitant retiree under the plan. If the RPP distributes the demutualization benefit to the annuitant, will the flow-through rule in subsection 139.1(16) apply to the distribution?

Position: Yes, provided that the requirements of 139.1(16) are met.

Reasons: Subsection 139.1(16) was designed to treat stakeholders (in this case the RPP as Contractholder under the annuity contract) as conduits for cash conversion benefits transferred to individuals.

6 October 2000 External T.I. 2000-0037925 F - FRAIS JURIDIQUES-WAKEMAN-APFF

Unedited CRA Tags
18(1)a)

Principales Questions :

(1) Suite à l'arrêt Wakeman c. R., l'APFF aimerait connaître la position de l'Agence relativement aux frais légaux encourus pour établir le montant d'une pension alimentaire pour l'ex-conjoint et les enfants (tant ceux régis par la Loi sur le divorce que ceux uniquement régis par le C.C.Q.).
(2) Si la position de l'Agence ne correspond pas à celle énoncée dans le bulletin IT-99R5, est-ce que l'Agence entend modifier ce bulletin?

Position Adoptée : l'Agence accepte la position selon laquelle les enfants ont un droit acquis, en vertu d'une législation, à une prestation alimentaire indépendamment du fait que ce droit ait été établi en vertu de la Loi sur le divorce ou d'une loi provinciale. Comme les enfants ont un droit acquis, en vertu d'une législation, à une prestation alimentaire, les frais juridiques engagés en vue d'obtenir une ordonnance alimentaire au profit d'un enfant sont déductibles.

6 October 2000 External T.I. 2000-0037845 F - 15(1), 56(2), 246(1)

Unedited CRA Tags
15(1) 56(2) 246(1)

Principal Issues: Whether ss 15(1), 56(2) or 246(1) could apply in a situation where the child of the sole shareholder of HOLDCO (Mr. X) uses at no cost the condominium owned by HOLDCO's wholly-owned subsidiary OPCO?

Position: Ss 246(1) could apply.

Reasons: HOLDCO confers a benefit indirectly on Mr. X which would be included in Mr. X's income pursuant to ss 15(1) if the amount of the benefit were a payment made directly by HOLDCO to Mr. X.

6 October 2000 External T.I. 2000-0037935 F - Ordre de rectification - Juliar

Unedited CRA Tags
84.1

Principales Questions: Quelle est la position de l'Agence suite à la décision de Juliar et al.v. AG(CAN) et al., 1999 DTC 5743 ?

Position Adoptée: Aucun changement de politique.

6 October 2000 External T.I. 2000-0037855 F - DRUPA

Unedited CRA Tags
96

Principales Questions:
Est-ce qu'une société en nom collectif formée dans l'État du Delaware et assujettie au DRUPA sera considérée comme une société de personnes aux fins de la Loi de l'impôt sur le revenu ?

Position Adoptée:
Le statut d'une société en nom collectif assujettie au DRUPA est présentement sous étude.

6 October 2000 External T.I. 2000-0037995 F - Droit couper et enlever bois d'un boisé

Unedited CRA Tags
12(1)(g) 39

Principales Questions:
Suite à la décision dans l'affaire Sa Majesté la Reine c. Jens Larsen 99 DTC 5757 (C.A.F.), quelle est la position de l'Agence des douanes et du revenu du Canada concernant l'application de l'alinéa 12(1)g) de la Loi à une situation où un contribuable reçoit un montant en contrepartie du droit de couper et d'enlever du bois de son boisé ?

Position Adoptée:
La question de savoir si l'alinéa 12(1)g) de la Loi s'applique à une transaction ou si la disposition est imposée à titre de capital est une question qui doit se fonder sur tous les faits. Généralement, lorsqu'un contribuable qui n'exploite pas une entreprise de vente de bois d'œuvre ou un projet comportant un risque ou une affaire à caractère commercial reçoit un montant en contrepartie du droit de couper et d'enlever du bois de son boisé, cette vente est imposable à titre de gain en capital si toutes les conditions suivantes sont respectées :

6 October 2000 External T.I. 2000-0048825 F - Bulletin d'interprétation IT-233R

Unedited CRA Tags
16.1

Principales Questions: Où en est l'Agence dans sa révision du bulletin d'interprétation IT-233R? / How is the CCRA's review doing on Interpretation Bulletin IT-233R?

Position Adoptée: L'Agence se propose d'annuler ce bulletin, mais avant de le faire, aimerait obtenir les commentaires des fiscalistes avant le 1er janvier 2001. / CCRA is planning to withdraw that bulletin, but before doing so, would like to get tax practitioners' comments before January 1, 2001.

6 October 2000 External T.I. 2000-0037865 F - REATB - Reglement de dette - gain ou perte

Unedited CRA Tags
95(2)g)

Principales Questions: Un gain (ou perte) sur change, tel que proposé au sous-alinéa 95(2)g)(i), se rapportant à un revenu couru serait-il inclus dans le revenu étranger accumulé, tiré de biens, d'une année antérieure au règlement de la dette ?

Position Adoptée: Généralement oui.

6 October 2000 External T.I. 2000-0038045 F - APFF 2000 - Q&R du ministère des Finances

Unedited CRA Tags
n/a

Principales Questions: Questions discutées à la table ronde de l'APFF, le 6 octobre 2000, par le ministère des Finances.

Position Adoptée: Voir les réponses du ministère des Finances.

6 October 2000 External T.I. 2000-0037875 F - surplus exonéré - récupération

Unedited CRA Tags
reg 5907(1) reg 5907(2)

Principales Questions: Est-ce que le gain en capital et la récupération d'amortissement réalisés lors de la disposition d'un immeuble par une société étrangère affiliée résidant aux États-Unis peuvent être inclus dans le «surplus exonéré» de cette société dans l'année de la vente, dans la situation particulière présentée?

Position Adoptée: Non

6 October 2000 External T.I. 2000-0038085 F - Contrôle de fait-droit de veto

Unedited CRA Tags
256(5,1(

Principal Issues: Voir ci-dessous

Position: Voir ci-dessous

Reasons: Voir ci-dessous

6 October 2000 External T.I. 2000-0037895 F - Moment du test du lient - transfert surplus

Unedited CRA Tags
reg 5905(5)a)

Principales Questions: Lors d'une disposition des actions d'une société étrangère, telle que prévue à l'alinéa 5905(5)a) du Règlement dans un cas de lien de dépendance, à quel moment le test de lien de dépendance doit-il être rencontré ?

Position Adoptée: Le test doit être rencontré immédiatement avant la disposition des actions.

6 October 2000 External T.I. 2000-0037805 F - REATB - revenu de bien

Unedited CRA Tags
91(1) 129(4)

Principales Questions: Quelle est la nature du revenu étranger accumulé, tiré de bien, aux fins de la définition «revenu de placement total» prévue au paragraphe 129(4) dans la situation donnée?

Position Adoptée: Il s'agit probablement d'un revenu tiré d'une source qui est un bien.

6 October 2000 External T.I. 2000-0037905 F - Estate freeze trust

Unedited CRA Tags
86(2)

Principal Issues: Can ss. 86(2) apply when an estate freeze is made in favor of a trust for the benefit of adult children of the freezor ?

Position: Yes

Reasons: Provided it is reasonable to regard the excess of the FMV of the old shares over that of the new shares as a benefit the freezor desired to have conferred to his children to whom the freezor is related pursuant to paragraph 251(2)(a).

6 October 2000 External T.I. 2000-0037825 F - Actionnaires ne disposant pas de leurs action

Unedited CRA Tags
55(2)

Principal Issues: Voir ci-dessous

Position:

Reasons:

22 September 2000 External T.I. 2000-0045465 - GOVT ASSISTANCE - FISHERS

Unedited CRA Tags
56(1)(a)(vi) 56(1)(d)

Principal Issues: Taxation of payments under various income assistance programs and its affect on the guaranteed income supplement.

Position: Benefits paid to employees would be taxable as other income under subparagraph 56(1)(a)(vi). Must be considered in establishing an individuals entitlement to the GIS.

Reasons: Consistent with previous opinion and the definition of "pension income" in the OAS regulations does not include payments under the various programs.

Technical Interpretation - Internal

9 November 2000 Internal T.I. 2000-0050747 - GRANDFATHERED SDA

Unedited CRA Tags
248(1)

Principal Issues:
1) How would payments from a grandfathered salary deferral plan be reported for purposes of the Act? 2) If employees previously included the annual interest accrued in respect of deferred amounts in their income, can the income inclusion be reduced to reflect the previously included amounts?

Position:
1) Payments from the plan would be reported as employment income. 2) Yes.

Reasons:
1) Amounts continue to represent employment income. 2) The provisions of 248(28) should apply where this is in fact the case.

6 November 2000 Internal T.I. 2000-0050427 - PRIVATE AIRCRAFT

Unedited CRA Tags
18(1)(l) 15(1) 6(1))(a)
"extensive" personal use is over 33%

Principal Issues:
1 ) Is the cost of the heli-skiing trip deductible by the company including company airplane costs?
2 ) Did the shareholder receive an employment benefit or a shareholder benefit?

Position:
1 ) No 2 ) Not enough information provided

Reasons:
1 ) Cost of airplane is not deductible as confirmed by Supreme Court of Canada in Sie-Mac case
2 ) An analysis needs to be done to determine whether the plane is extensively used by the shareholder employee.

6 November 2000 Internal T.I. 2000-0050847 - DEEP DISCOUNT DEBT PART 1.3 TAX

Unedited CRA Tags
181.2(3)

Principal Issues: Where a corporation issued bonds at a deep discount and carries those bonds on its balance sheet at the original issue price plus an amount "accreted" in respect of the discount each year to maturity, may the accreted amount be deducted from the amount reflected on the balance sheet in calculating the amount of indebtedness reflected by bonds for the purposes of subparagraph 181.2(3)(d)? Does the accreted amount have the nature of interest and thereby constitute "other indebtedness" within the meaning of subparagraph 181.2(3)(f)?

Position: The full amount reflected on the balance sheet is indebtedness reflected by bonds. No amount may be deducted in assessing the amount to be included under 181.2(3)(d).

Reasons: Subparagraph 181.2(3)(f) has no application to amounts that are otherwise described in subsection 181.2(3). The entire amount that is reflected on the balance sheet is described in paragraph 181.2(3)(d).

1 November 2000 Internal T.I. 2000-0050867 - CARRYING ON A BUSINESS

Unedited CRA Tags
248(1) 18(1)(h)

Principal Issues: Whether a corporation is carrying on a "business" within the meaning thereof in subsection 248(1) of the Act given a particular set of facts.

Position: Question of fact, but in this situation probably not.

Reasons: Have to consider whether the expenses are personal or living expenses of the shareholders and whether there is any reasonable expectation of profit.

31 October 2000 Internal T.I. 2000-0048427 F - PENSION ALIMENTAIRE-ARRERAGES

Unedited CRA Tags
56.1(4) 60(b)

Principales Questions:
1) Est-ce que le paiement d'arrérages est déductible dans le cas soumis, en considérant que le montant est établi en fonction de la capacité de payer de chacune des parties ?
2) Est-ce que le montant de la pension alimentaire versé, qui est moindre que celui prévu dans l'ordonnance, est déductible ?

Position Adoptée:
1) Non dans le cas soumis.
2) Oui, les critères de la définition de pension alimentaire au paragraphe 56.1(4) LIR sont satisfaits.

17 October 2000 Internal T.I. 2000-0047227 - CARRYBACK OF UNUSED PART I CREDITS

Unedited CRA Tags
190.1(3) 190.1(5)

Principal Issues: May a corporation carryback unused Part I credits accrued in a year that it was not a financial institution for the purposes of Part VI to offset Part VI tax paid in a year that it was a financial institution for Part VI purposes.

Position: Yes.

Reasons: The definition "unused Part I tax credit" in subsection 190.1(5) of the Act defines the unused Part I tax credits of "a corporation". There appears to be nothing which would limit the accrual of unused Part I credits to corporations that are financial institutions for Part VI purposes at the time.

10 October 2000 Internal T.I. 2000-0047527 - SUBVENTION PAYMENTS

Unedited CRA Tags
212(1)(b)

Principal Issues: Are subvention payments subject to Part XIII withholding tax?

Position: No

Reasons: Not considered to be a payment of, or in lieu of, interest as there was no borrowing by the payor.

3 October 2000 Internal T.I. 2000-0038637 - DEBT PARKING

Unedited CRA Tags
80.01(10)

Principal Issues:
1.Whether there has been a debt parking under subsection 80.01(8).
2.Whether a subsequent repayment deduction would be denied.

Position:
1.Maybe, if holder is non-arm's length with debtor
2.Don't know

Reasons:
1.The debt is a specified obligation ,a parked obligation (if ACO and ECO are non-arm's length) and the specified cost is less than 80% of principal amount.
2.Insufficient facts to suggest a deliberate parking in order to get a repayment deduction under subsection 80.01(10).

3 October 2000 Internal T.I. 2000-0038717 - INTEREST DEDUCTIBILITY

Unedited CRA Tags
20(1)(c) 18(4)

Principal Issues:

1. Existence of reasonable expectation of profit
2. If borrowed money cannot be traced to eligible use can interest deductibility be determined by allocating funds between eligible and ineligible uses?
3. Was interest payable pursuant to a legal obligation when obligation arose only on the last day of the year?
4. Does 18(4) apply only in respect of the portion of a debt that is interest bearing or to the entire debt?

Position:

1. Probably.
2. Yes
3. No
4. To the whole debt

Reasons:

15 September 2000 Internal T.I. 2000-0008807 - STANDBY CHARGE-MULTIPLE PLACES OF BUSINESS

Unedited CRA Tags
6(1)(e)

Principal Issues: Whether use of employer provided vehicle between home and various store locations is personal in nature.

Position: Travel Personal

Reasons: Questions of Fact. However, we have previously taken the position that an employee can have more than one regular workplace. Since the employees visit each of the store on regular basis, each store is considered a regular place of business and thus travel to and from each store is considered personal.