Income Tax Severed Letters - 2002-02-15

Miscellaneous

2001 Miscellaneous 2001-0109781 - MATCHABLE EXPENDITURES

Unedited CRA Tags
18.1

Principal Issues:
Minor changes.

Position: N/A

Reasons:N/A

Ruling

2002 Ruling 2001-0115373 - Dividend Reinvestment Plan

Unedited CRA Tags
15(1)

Principal Issues: Whether a discount of up to 5% offered under a dividend reinvestment plan is taxable as a benefit to the shareholder under subsection 15(1).

Position: No.

Reasons: Long standing administrative position.

2002 Ruling 2001-0091433 - PUBLIC BODY PERFORM A FUNCTION OF GOVT.

Unedited CRA Tags
149(1)(C)

Principal Issues: Will the XXXXXXXXXX (Council) be exempt from tax by virtue of 149(1)(c) of the Act.

Position: Yes

Reasons: The Council is a public body performing a function of government in Canada as it has negotiated a land claims agreement and is currently implementing it. It is also currently negotiating a self-government agreement with XXXXXXXXXX

2002 Ruling 2001-0106873 F - DEDUCTIBILITY DES INTERETS

Unedited CRA Tags
20(1)(c) 245(2)

Position Adoptée:
Oui.
RAISON POUR POSITION ADOPTÉE:
Il y a une expectative de revenu.

2001 Ruling 2001-0084793 - Butterfly

Unedited CRA Tags
55(3)(b) 112(1)

Principal Issues: Sequential split-up butterflies

Position: Meets the requirements of the law

Reasons: Meets the requirements of the law

2001 Ruling 2001-0091383 - internal reorganization

Unedited CRA Tags
55(3)(a)

Principal Issues: Whether an internal reorganization is subject to the exemption under paragraph 55(3)(a)?

Position: Yes

Reasons: There are no triggering events as described in subparagraphs 55(3)(a)(i) to (v).

2001 Ruling 2001-0094883 - LOSS CONSOLIDATION

Unedited CRA Tags
20(1)(c) 20(3)

Position:
Favourable rulings given.

2001 Ruling 2001-0095243 - DSU PLAN

Unedited CRA Tags
REG 6801(d)

Principal Issues: Will the payment of a percentage of annual commissions and bonuses in the form of deferred share units result in an SDA?

Position: No.

Reasons: The conditions of paragraph 6801(d) of the Regulations are satisfied.

2001 Ruling 2001-0110533 - RETIRING ALLOWANCE

Unedited CRA Tags
60(j.1)

Principal Issues:
Is a retiring allowance in the amount equal to or less than the amount eligible for the paragraph 60(j.1) rollover reasonable for the purposes of section 67?

Position: Yes.

Reasons: Published position 1992 Prairie Provinces Tax Conference.

Ministerial Correspondence

19 February 2002 Ministerial Correspondence 2002-0118054 - PENSION PAYMENT TO XXXXXXXXXX

Unedited CRA Tags
N/A

Principal Issues: A taxpayer has asked whether rumoured payments of tax by XXXXXXXXXX would be a taxable benefit to XXXXXXXXXX .

Position: Can not discuss as we are bound by confidentiality.

Reasons: Subsection 241(1) of the Act is clear and subsections 241(4) and (5) do not provide an exception in this instance.

12 February 2002 Ministerial Correspondence 2002-0117654 - QUALIFYING AMOUNTS

Unedited CRA Tags
110.2(1)

Principal Issues:
Whether an amount received form XXXXXXXXXX in settlement of complaint filed with the Canadian Human Rights Commission, is a qualifying amount under subsection 110.2(1) of the Act.

Position:
The facts of this case support that conclusion.

Reasons:
Subsection 110.2(1).

Technical Interpretation - External

12 March 2002 External T.I. 2002-0117905 - T4 Filing

Unedited CRA Tags
6(1)(a)

Principal Issues: Who is required to comply with the filing requirements of Regulation 200(2)(g) in respect of a benefit within the meaning of paragraph 6(1)(a).

Position: The person making the payment or conferring the gift on the employee.

Reasons: The law - .

12 March 2002 External T.I. 2002-0125315 - ATTENDANT CARE SERVICES EXPENSE

Unedited CRA Tags
9

Principal Issues: Whether a payment made by an employer for the attendant care services of an employee with a disability while on duty in the employer's business qualifies as a deduction in computing the business income of the employer.

Position: Generally, yes

Reasons: The payment seems to be incurred to earn business income, is not capital in nature, is likely reasonable in the circumstances and is not otherwise prohibited by a specific provision of the Income Tax Act.

11 March 2002 External T.I. 2002-0125275 - SYED HASSAN JAFFAR V HMQ SPECIAL WORKSITE

Unedited CRA Tags
6(6)

Principal Issues:
Will the adverse decision of the Tax Court of Canada in Syed Hassan Jaffar v. Her Majesty The Queen cause the CCRA to change its interpretation of what constitutes a special work site under subsection 6(6) of the Act?

Position:
No.

Reasons:
The case is restricted to the facts. In addition, the Jaffar case was heard by the TCC under the Informal Procedure - pursuant to Section 18.28 of the Tax Court of Canada Act, decisions rendered under this procedure do not have precedential value.

11 March 2002 External T.I. 2001-0115215 - MEDICAL EXPENSES

Unedited CRA Tags
118.2(2)(l.7) 118.2(2)(m)

Principal Issues: Paragraph 118.2(2)(l.7) of the Income Tax Act (the "Act") provides that a portion of the amount paid for the acquisition of a van that has been adapted (at the time of its acquisition or within 6 months after that time) for the transportation of a patient that requires the use of a wheelchair qualifies as a medical expense. The amount that could qualify as a medical expense is the lesser of $5,000 and 20% of the amount paid for the acquisition of the van after deducting any amount included therein, which qualifies as a medical expense pursuant to paragraph 118.2(2)(m) of the Act (Paragraph 118.2(2)( m) effectively refers to section 5700 of the Regulations-of which paragraphs 5700(m) and (n) refer to certain devices or equipment that may be added to a vehicle). We have been asked whether (i) 20% of the cost of the van and (ii) the actual cost of the device or equipment are eligible for the medical expense tax credit.

Position: The amounts referred in (i) and (ii) are both eligible medical expenses.

Reasons: Paragraph 118.2(2)(m) of the Act has been carved out of paragraph 118.2(2)(l.7) of the Act.

8 March 2002 External T.I. 2002-0123095 F - TRANSFERT - CREDIT DEFICIENCE

Unedited CRA Tags
118.3(2) 118(6) 118(1)(d)

Principales Questions:
Est-ce qu'un particulier a droit de réclamer un montant pour personne déficiente transféré d'une personne à charge, tel que prévu au paragraphe 118.3(2) de la Loi?

Position Adoptée:
Commentaires généraux sur la situation particulière.

7 March 2002 External T.I. 2001-0106275 F - BOURSE D'ETUDES ET DE PERFECTIONNEMENT

Unedited CRA Tags
56(1)(m) 56(3)

Position Adoptée:
Non.

7 March 2002 External T.I. 2001-0091785 - ACTIVE BUSINESS ASSETS - CASH

Unedited CRA Tags
110.6 125

Principal Issues:
1. Will cash accumulated in order to pay bonus to shareholder considered to be assets used in an active business?
2. Will interest earned on short-term investment of cash accumulated to pay bonus be income from an active business?

Position:
1. Question of fact, generally where cash/near cash is accumulated to pay bonus per established company policy-yes.
2. As above question of fact-however where we have determined assets are used in an active business, the income so generated would be active business income

Reasons:
1. Previously stated position--unchanged
2. Active business assets generate active business income or income incidental to the active business
2001-009178
XXXXXXXXXX L. Holloway
613-957-2104
March 7, 2002

6 March 2002 External T.I. 2001-0096795 - REPRICING OF STOCK OPTION

Unedited CRA Tags
110(1)(d) 7(1) 110(1)(d)

Principal Issues:
Will the offer by the employer to cancel outstanding stock options for a promise to grant new options to the employee at a date that is least six months and one day after the cancellation of the old option be a disposition for purpose of subsection 7(1.4).

Position: Question of fact whether a disposition has occurred.

Reasons:
A determination can only be made after a thorough review of all agreements.

6 March 2002 External T.I. 2001-0112935 - FRANCHISE BUSINESS

Unedited CRA Tags
125 110.6

Principal Issues:
1. Whether a corporation's income derived from sale of franchises and royalties is eligible for the small business deduction.
2. Whether the corporation's shares meet the 'active business' test in the definition of qualified small business corporation shares in ITA 110.6(1).

Position: General comments

Reasons: 1 &2 Insufficient information to determine whether the corporation's business is a specified investment business.

6 March 2002 External T.I. 2002-0120185 - CHILD SUPPORT

Unedited CRA Tags
56(1)(b)

Principal Issues: Two previously married individuals ("Individual A" and "Individual B") became divorced and, pursuant to the divorce judgment (the "Judgment"), Individual A was required to make child support payments to Individual B. The child support was deductible by Individual A under paragraph 60(b) of the Income Tax Act (the "Act") and was required to be included in the income of Individual B under paragraph 56(1)(b) of the Act. After April 30, 1997, Individual A and Individual B entered into an amending agreement (the "Amending Agreement") which was approved by the court and which provided for an increase in the child support paid in respect of a child that was not set out in the Judgment. Does the Judgment have a "commencement day" as defined in subsection 56.1(4) of the Act?

Position: Yes -

Reasons: As indicated in paragraph 7 of IT-530, an agreement or order made before May 1997 will have a commencement day where the order or agreement is varied after 1997 to increase or decrease child support amounts payable.

6 March 2002 External T.I. 2001-0097575 - BEARER DEPOSITORY RECEIPTS

Unedited CRA Tags
7(7)

Principal Issues:
1. Is a Bearer Deposit Receipt (BDR) considered a security for subsection7(7) of the Act?
2. Would the BDR satisfy the requirements in section 6204 of the Regulations?

Position:
1. No, the BDR is not considered to be a share.
2. No, as it is not considered to be a share.

Reasons:
1. Based on the facts presented the employee may not have beneficial ownership in the underlying shares.
2. It is not a share.

5 March 2002 External T.I. 2002-0124935 - REPLACEMENT PROPERTY

Unedited CRA Tags
44(1)

Principal Issues: What are the income tax implications of using the proceeds of disposition from the disposition, at a gain, of industrial condominium units to purchase or build a property for the purpose of renting the property?

Position: Replacement rules do not apply.

Reasons: From the limited information submitted, the properties being sold and those being purchased all seem to be "rental property" excluded from the definition of "former business property".

4 March 2002 External T.I. 2002-0117495 - DISABILITY INSURANCE-RETURN OF PREMIUM

Unedited CRA Tags
9

Principal Issues:
Is the partial return of premiums, which were originally paid for by the policyholder, to the policyholder under an individual disability insurance contract taxable to the policyholder?

Position:
A refund of a premium under an individual disability insurance contract would not be required to be included in a policyholder's income unless the policyholder in computing income previously deducted such premium.

Reasons:
If the policyholder has not previously deducted such premium then the return of the premium is simply a return of a personal living expense.

XXXXXXXXXX 2002-011749
Shaun Harkin, CMA
March 4, 2002

4 March 2002 External T.I. 2001-0106325 F - ALLOCATION POUR UNE AUTOCARAVANE

Unedited CRA Tags
6(1)b)(vii.1) 18(1)r) 67(1)

Principales Questions:
1. Une allocation pour l'usage d'une autocaravane (" motorhome ") reçue par un employé, pour voyager dans l'accomplissement des fonctions de son emploi, pourrait-elle être exclue en vertu du sous-alinéa 6(1)b)(vii.1)?
2. L'employeur serait-il sujet à la restriction visée à l'alinéa 18(1)r)?

Position Adoptée:
1. Commentaires généraux
2. Non.

1 March 2002 External T.I. 2002-0121795 - GUARANTEE FEES AND EARNED INCOME

Unedited CRA Tags
146(1)

Principal Issues:
Will bank guarantee fees paid by a corporation to its owner/manager be considered earned income within the meaning assigned by subsection 146(1) of the Act?

Position: No.

Reasons:
Unles the taxpayer is in the business of providing loan guarantees, the amount would not be considered employment or business income for purposes of inclusion in the earned income definition.

1 March 2002 External T.I. 2002-0118215 F - ACTIONS EMISES GRATUITES AUX EMPLOYES

Unedited CRA Tags
7(1.1) 110(1)(d.1) 53(1)(j)

Principales Questions:
1. À quel moment l'employé d'une SPCC doit-il inclure l'avantage imposable lorsqu'un employeur lui émet, à titre gratuit, des actions de son capital-actions?
2. Quel est la nature du revenu et sa modalité d'imposition?

Position Adoptée:
1. Au moment de la disposition des actions.
2. i) Un avantage imposable selon l'article 7 égal à la JVM des actions à la date d'acquisition.
ii) Une déduction selon 110(1)d.1) s'il rencontre les conditions qui y sont stipulées.
iii)Généralement, un gain en capital lors de la disposition.

1 March 2002 External T.I. 2001-0095115 F - ACTIF UTILISE PRINCIPALLEMENT-SEPE

Unedited CRA Tags
110.6(1) 248(1)

Principales Questions:
1. Est-ce qu'un immeuble dont une partie est utilisée par une société liée dans une entreprise exploitée activement et dont une autre partie est louée à des tiers est un actif utilisé principalement dans l'exploitation d'une entreprise ?
2. Pourrait-on affirmer que l'immeuble n'est pas utilisé dans l'exploitation d'une entreprise du seul fait que, pour des raisons commerciales, Holdco doit d'abord le louer au franchiseur, qui subséquemment, le sous-loue à Opco ?
3. Les actions du capital-actions du franchiseur détenues par Opco peuvent-elles constituer des éléments d'actifs utilisés principalement dans l'exploitation d'une entreprise active ?

Position Adoptée:
1. Aucune
2. Non
3. Probablement que oui.

1 March 2002 External T.I. 2002-0119715 - RCA DISCRETIONARY PROVISION

Unedited CRA Tags
207.5

Principal Issues: Would a plan that allows its Trustees the discretion of making payments to an employee prior to termination be considered an RCA?

Position: No

Reasons: A plan that includes a provision that permits the trustees of the plan to make payments to an employee prior to termination, where there is no substantial change in the services rendered by such an employee, would not qualify as an RCA.

28 February 2002 External T.I. 2001-0114175 - Patronage Dividend and Foreign Tax Credit

Unedited CRA Tags
135(3) 20(12) 126 135(7)

Principal Issues: Whether the U.S. patronage dividend would be considered to be foreign business income, foreign non-business income or income from an active business carried on in Canada to a Canadian co-operative corporation?

Position: It is a question of fact to be determined after all the relevant facts and circumstances of the situation have been examined.

Reasons: It could be either of the above depending on the facts of the situation.

28 February 2002 External T.I. 2002-0117865 - CLERGY RESIDENCE-DISABLED CLERGY

Unedited CRA Tags
8(1)(c)

Principal Issues: Does a minister who becomes disabled and no longer performing subparagraph 8(1)(c)(ii) duties still eligible for the clergy residence deduction?

Position: yes

Reasons: the minister has not retired - being on disability or sick leave would not exclude the deduction

28 February 2002 External T.I. 2001-0076625 - Pension Distr. to a Canadian Beneficiary

Unedited CRA Tags
56(1)(a)(i) 126 Article XXVI (3)(e) and (g) 20(12)

Principal Issues: Whether U.S. estate tax is deductible or creditable in respect of a lump-sum pension payment received by a beneficiary as a consequence of death of another person?

Position: No.

Reasons: The estate tax is not an income or profit tax and there is no provision in the Income Tax Act or the Canada-United States Income Tax Convention to allow for such deduction or credit.

28 February 2002 External T.I. 2002-0109835 - SCIENTIFIC RESEARCH

Unedited CRA Tags
127(9) 37(1) 12(1)(x)

Principal Issues:
Whether contributions made by a government to a taxpayer in respect of costs incurred from SR&ED activities for which warrants to purchase shares in the taxpayer may be issued to the government, if the contributions are not repaid, can be considered as "government assistance" under subsection 127(9) or an acquisition of interest in the taxpayer under paragraph 12(1)(x).

Position:
The scenario described appears to support that the contributions would constitute government assistance.

Reasons:
The question of issuing warrants which are only options to acquire shares as well as the repayment of the contributions before any warrants or shares were issued appear to indicate that the government was entering into a commercial transaction with a reasonable expectation of receiving a return of its investment. Evidence to this effect depends on a finding of fact which could be obtained by reviewing the relevant agreement between the parties, the particular records of the government as well as verbal or written representations from the government.

28 February 2002 External T.I. 2002-0116795 - GARNISHMENT OF PAYMENT TAX DEBTOR

Unedited CRA Tags
224(1)

Principal Issues:
Whether a "proper court judgment and order" is required before subsection 224(1) of the Act can be used to garnishee a payment to a "tax debtor".

Position: No.

Reasons: Subsection 224(1) of the Act provides that the requirement to make a payment under a garnishment is legally valid when the garnishment is delivered in writing and the CCRA has shown that a liability to make a payment under the Income Tax Act exists.

28 February 2002 External T.I. 2002-0120315 F - Butterfly Transactions

Unedited CRA Tags
55(3.1) 55(3)(b) 55(2)

Principal Issues: 1) Whether paragraph 55(3.1)(c) of the Act would apply with respect to a transferee corporation in a particular situation where shares of a subsidiary have been butterflied and additional shares of such subsidiary are issued to unrelated persons after the butterfly distribution and in the series of transactions that includes the receipt of a dividend by a transferee corporation. 2) Whether paragraph 55(3.1)(c) of the Act would apply with respect to a transferee corporation in another particular situation where shares of a subsidiary that constitute butterflied property are disposed of by another transferee corporation to unrelated persons after the butterfly distribution and in the series of transactions that includes the receipt of a dividend by the transferee corporation.

Position: 1) Yes. Technically, paragraph 55(3.1)(c) of the Act could apply. 2) Yes. Technically, paragraph 55(3.1)(c) of the Act could apply.

Reasons: Wording of paragraph 55(3.1)(c) of the Act.

27 February 2002 External T.I. 2002-0123165 - STRIPPED BONDS

Unedited CRA Tags
12(4) 12(9) REG 7000(1)(b)

Principal Issues: Annual taxation of interest on stripped bonds

27 February 2002 External T.I. 2002-0121305 - DAMAGES-RETIRING ALLOWANCE

Unedited CRA Tags
248(1)

Principal Issues: Are various amounts received by T/P as a result of a settlement for employment termination taxable?

Position: question of fact

Reasons: some amounts may be considered retiring allowance and therefore taxable

27 February 2002 External T.I. 2001-0104695 - UK PENSION TRANSFERS

Unedited CRA Tags
56(1)(a) 60(j)

Principal Issues: Can amounts paid out of a UK pension plan be transferred to an RRSP?

Position: Question of Fact.

Reasons: Where a UK pension plan is considered a pension plan under the Act, paragraph 60(j) could apply to permit a transfer to be made on a tax-free basis under Canadian tax law. Subject to Article XVII of Canada-UK treaty.

27 February 2002 External T.I. 2002-0124505 - EMPLOYMENT INCOME-INDIANS

Unedited CRA Tags
81(1)(a)

Principal Issues: Whether employment income guidelines apply to exempt the employment income of status Indian employees?

Position: Question of Fact

Reasons: General comments provided.

26 February 2002 External T.I. 2002-0122735 - EMPLOYEE VS SELF-EMPLOYEED CONTRACTOR

Unedited CRA Tags
9 5

Principal Issues:
Whether an individual is an employee or self-employed contractor in certain non-arm's length situations.

Position:
General information provided on four criteria used in such a determination; referred taxpayer to RC4110; and suggested they contact the Trust Accounts Division of the local TSO for a formal ruling.

Reasons:
Consistent with most recent opinions on this issue.

25 February 2002 External T.I. 2000-0046485 F - Majoration et Immobilisation

Unedited CRA Tags
88(1)(c) 88(1)(d) 54.2

Principales Questions:
Est-ce que, dans le cas présenté, une société mère pourrait majorer, en vertu des alinéas 88(1)c) et d) de la Loi, le coût de certains biens (des actions d'une autre société), qui lui sont attribués lors de la liquidation de sa filiale?

Position Adoptée:
Probablement que non.

25 February 2002 External T.I. 2001-0114905 - SHAREHOLDER-MANAGER REMUNERATION

Unedited CRA Tags
67

Principal Issues: Whether salaries and bonuses paid to shareholder-managers are subject to section 67 of the Act.

Position: Yes. However, our administrative position with respect to shareholder-manager remuneration may apply.

Reasons: Section 67 applies to all expenses claimed by a taxpayer.

25 February 2002 External T.I. 2002-0121855 - TRANSFER OF RRSP FOREIGN PROPERTY

Unedited CRA Tags
206(2)

Principal Issues: Transfer of RRSP from on trustee to another - foreign property transferred first.

Position: Subject to the provisions of subsection 206(2), however administrative relief may apply.

Reasons: Where all the property of the RRSP has been transferred and the remaining Canadian property is transferred in the month immediately following the transfer of the foreign property, administrative relief from the penalty may be provided.

25 February 2002 External T.I. 2002-0122085 - RELOCATION EXPENSES

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

Principal Issues:
(1) Whether the reimbursement of moving expenses gives rise to a taxable benefit to the employee receiving the reimbursement.
(2) Whether the employee is entitled to claim moving expenses.

Position: (1) Yes.(2) No.

Reasons: The move is not an "eligible relocation" within the meaning thereof in subsection 248(1) of the Act. Therefore, the reimbursement of the moving expenses gives rise to a taxable benefit to the employee pursuant to paragraph 6(1)(a) of the Act and the moving expenses are not deductible in computing taxable income because they do not meet the requirements in subsection 62(1) of the Act.

22 February 2002 External T.I. 2001-0114625 - TRUST AS EPSP BENEFICIARY

Unedited CRA Tags
144(1)

Principal Issues: Can a trust for the benefit of a corporation's employees be a beneficiary of an employee profit sharing plan?

Position: No.

Reasons: The arrangement requires that certain amounts be allocated to employees. These requirements would not be satisfied when an allocation is made to a trust for the benefit of an employee.

21 February 2002 External T.I. 2001-0109765 F - Debts to be Bad Debts of Bankrupt Corp.

Unedited CRA Tags
50(1)

Principal Issues: What are the guidelines or criteria used by the CCRA to determine whether a corporation is insolvent for the purposes of clause 50(1)(b)(iii)(A) of the Act.

Position: No established guidelines or criteria on this point.

Reasons: The question whether a particular corporation is insolvent or not is a question of law and fact to be determined from all of the relevant facts and circumstances of a particular situation. Reference to the answer given to question 1.4 of the Round Table of the 1992 APFF Congress. The word "insolvent" should be given its ordinary meaning, since this term is not defined in the Act. Dictionary definition of "insolvent": "unable to pay its debts." Accordingly, a corporation possessing neither assets nor liabilities at the end of a taxation year (or a corporation with no outstanding liabilities at such time) could not, as a general rule, be considered insolvent for the purposes of subparagraph 50(1)(b)(iii) of the Act.

21 February 2002 External T.I. 2001-0098645 - TAX TREATMENT UNJSPF PENSION

Unedited CRA Tags
56(1)(a)(i) 147.3

Principal Issues:

1. Whether pension income received from the UNJSPF in form of a lump sum payment or periodic pension payment is taxable in Canada?

2. Whether the amount from UNJSPF could be transferred to an RRSP?

PositionS:

1. Yes, pursuant to subparagraph 56(1)(a)(i) of the Act.

2. If the plan is an RPP, it is possible for a lump sum.

Reasons:

15 February 2002 External T.I. 2001-0113295 - UNPAID LEAVE VS SICK LEAVE ON RETIREMENT

Unedited CRA Tags
56(1)(a)(ii) 60(j.1)

Principal Issues: In a particular situation, whether some portion of paid leave can be considered sick leave such that, upon retirement, payment in respect of sick leave component of paid leave will qualify as a retiring allowance.

Position: No.

Reasons: Question of fact whether some portion of payment is in respect of sick leave and employer has said that none of payment is in respect of sick leave.

Technical Interpretation - Internal

12 March 2002 Internal T.I. 2001-0116207 - NURSING HOME AND DISABILITY RESTRICTION

Unedited CRA Tags
118.2(2)(b.2) 118.2(2)(e) 118.3(1)(e) 118.3(2)(b)

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues

Are residents of group homes under 118.2(2)(b.2) and institutions under 118.2(2)(e) denied the disability tax credit if such residence also qualifies as a nursing home?

Position

11 March 2002 Internal T.I. 2002-0125737 - RESEARCH FELLOWSHIP AWARD

Unedited CRA Tags
56(1)(N) 5(1)

Principal Issues:
Whether income received by an individual, where the source of funds is provided under a fellowship award program, is taxable under paragraph 56(1)(n) of the Act, or is employment income that is taxable under subsection 5(1).

Position:
The amounts represent employment income that is taxable under subsection 5(1).

Reasons:
The general terms and conditions governing fellowship awards issued by the Grantor, when combined with the specific information provided, indicate that there is an employer-employee relationship. Further, the general terms and conditions governing fellowship awards issued by the Grantor specifically state that its fellowship awards are "salary". It is also apparent that the Payer regards the amounts received by the Payee as employment income, CPP and EI are withheld at source.

6 March 2002 Internal T.I. 2002-0121847 - REACQ. OF REMAINDER INTEREST

Unedited CRA Tags
43.1 69(1)

Principal Issues:
Tax consequences of reacquiring a remainder interest by the life estate holder of a property where subsection 43.1(1) previously applied on the disposition of the remainder interest.

Position:
Normal disposition of remainder interest back to original holder subject to subsection 69(1)

Reasons:
43.1(2) applies only where life interest is extinguished upon death and such is not the case here.

4 March 2002 Internal T.I. 2002-0118727 - HOME OFFICE EXP. - RENTAL INCOME

Unedited CRA Tags
18(12) 18(1)(a) 67

Principal Issues:
Whether the cost of a work space in the home is deductible in computing rental income.

Position: Question of fact.

Reasons:
A taxpayer would have to show that an office in the home was used in the course of earning rent income. Also, a reasonable basis for determining the deduction of home office expenses would have to be used, e.g., the square metres of floor space used for the home office. The reasonable basis used would have to take into account the personal use, if any, of the home office.

28 February 2002 Internal T.I. 2001-0069447 - Foreign Tax Credit for U.S. Citizen

Unedited CRA Tags
Act. XXIV U.S. 126(1)

Principal Issues: Various issues regarding foreign tax credits for U.S. citizens resident in Canada

Position: See Memo

Reasons: See Memo

28 February 2002 Internal T.I. 2001-0097117 F - TPS/TVH SUR UN AVANTAGE IMPOSABLE

Unedited CRA Tags
9 18(1)

Principales Questions:
Une société gagne du revenu d'entreprise ou de bien et ses employés servent à gagner ce revenu. Est-ce que la TPS/TVH perçue et remise à l'égard d'avantages imposables relatifs à l'utilisation ou au fonctionnement d'une automobile mise à la disposition d'un employé ou d'un actionnaire est déductible?

Position Adoptée:
Si la TPS/TVH perçue et remise est à l'égard de l'avantage inclus dans le revenu d'un employé en vertu de l'alinéa 6(1)a), e), k) ou l) de la Loi, nous sommes d'avis que la société peut la déduire dans le calcul de son revenu d'entreprise ou de bien. Par contre, si la TPS/TVH perçue et remise est à l'égard de l'avantage inclus dans le revenu d'un actionnaire en vertu du paragraphe 15(1) de la Loi, nous sommes d'avis que la société ne peut pas la déduire.

28 February 2002 Internal T.I. 2001-0112207 - Investment Tax Credit Percentage

Unedited CRA Tags
127(9)

Principal Issues:
Would grandfathering provisions alter the determination of the specified percentage applicable in respect of certain property qualifying for ITC.

Position:
Whether grandfathering provisions will effect the determination of the appropriate percentage in respect of a particular qualified property is a question of fact. However, where qualification under a transitional provision is in respect of property under construction on a particular date, the ability to so qualify would cease once the period of construction of that property is completed unless expressly otherwise provided.

Reasons:
Based upon the tests provided in the transitional provisions of the Act relevant to the situation under consideration and existing jurisprudence.

25 February 2002 Internal T.I. 2001-0114167 F - DOMMAGES - DISCRIMINATION

Unedited CRA Tags
56(1)a) 248(1)

Principales Questions:
Est-ce que la somme accordée dans un règlement à l'amiable faisant suite au dépôt d'une plainte relative à l'article 7 de la Loi canadienne des droits de la personne est imposable?

Position Adoptée:
Si les faits démontrent que des dommages-intérêts généraux (c'est-à-dire des dommages pour perte d'estime de soi, humiliation, angoisse, insultes, et plus précisément dans la présente situation des dommages pour avoir souffert un préjudice moral (pain and suffering)) ont été reçus et que la somme est raisonnable selon les critères mentionnés dans la lettre, cette partie de la somme reçue serait non imposable. Si tel n'est pas le cas ou si la somme reçue dépasse la somme raisonnable qu'on peut considérer comme des dommages-intérêts généraux, la somme reçue ou l'excédent selon le cas constituerait une allocation de retraite.