Income Tax Severed Letters - 2002-04-26

Principal Issues:
Can a RRIF carrier with two separate RRIFs with the same annuitant make a single minimum payment for the two RRIFs out of either one of the RRIFs?

Position: No.

Reasons:
Under the registration provisions, each RRIF is required to make its own minimum payment to the annuitant under the plan. Confirmed with Registered Plans Division.

Principal Issues:
1. Does a Canadian resident have to include stock option benefits realized on the exercising of his or her options in his or her income where the options were granted while they were non-residents?
2. Where the Canadian resident paid taxes in a previous year to the country where he or she resided at the time the stock options were granted, will there be a foreign tax credit allowed in respect of those previous taxes?

Position:
1. Yes.
2. No.

Reasons:
1. A resident has to include all of his or her income in accordance with the provisions of the Act. Paragraph 7(1)(a) would apply.
2. A taxpayer can only claim a foreign tax credit for the income taxes paid to another government in respect of the income in that same year. There is no provision that would allow the taxpayer to claim a foreign tax credit in the current year for foreign taxes paid in a previous year.

Principal Issues: Whether child support payments would continue to be deductible by a taxpayer.

Position: No.

Reasons: Since child support would have ceased under the taxpayer's first child support agreement on XXXXXXXXXX , this agreement would have to be varied or a new agreement would have to be made in order to establish child support after this date. Accordingly, there would be a "commencement day."

Principales Questions:
Est-ce que le non-paiement des taxes municipales relativement à un terrain permet au propriétaire de reconnaître la perte en capital sur ce terrain?

Position Adoptée: On doit disposer d'un bien pour être en mesure de calculer le gain ou la perte qui découle de cette disposition. Commentaires généraux.

Principales Questions:
M. A, M. B et M. C exploitent une entreprise en tant qu'associés de la société de personnes ABC qui a une fin d'exercice au 30 juin. Ils désirent s'associer avec M. D. Messieurs A, B et C vont se prévaloir des dispositions des paragraphes 98(3) et 97(2) de la Loi et ainsi transférer leur droit indivis dans les biens dans la nouvelle société de personnes ABCD. Messieurs A, B et C ont-ils cessé d'exploiter l'entreprise aux fins du paragraphe 34.1(8) de la Loi compte tenu que la société ABC a cessé d'exister ?

Position Adoptée:
Nous serions prêts à accepter que le paragraphe 34.1(1) de la Loi ne s'applique pas dans une telle situation, pourvu que la dissolution de ABC et la création de la nouvelle société de personnes ne soient pas motivées par des considérations fiscales.

Principal Issues: whether payments for driving therapy are "medical expenses"

Position: no

Reasons:
1. not paid to a medical practitioner or hospital
2. Although the payment is for training relating to a mental handicap, the payment is not for "care and training" so 118.2(2)(e) does not apply
3. 118.2(2)(l.9) does not apply because the taxpayer is not entitled to the disability tax credit
4. if conditions satisfied, tuition credit per 118.5 may be available

Principal Issues: whether Wisconsin LLC is a corporation for Canadian tax purposes

Position: yes

Reasons: A review of the provisions of the legislation indicated that they were similar to those of states for which we have provided this opinion.

Principal Issues:
Can a taxpayer combine his or her regular RRIF with his or her spousal or common-law partner RRIF?

Position: Yes.

Reasons:
The Act provides for the transfer of property between plans with the same annuitant but the combined plan becomes a spousal or common-law partner plan.

Principal Issues:
Can an educational assistance payment be made to a student before the end of the 13th consecutive week of being enrolled in a qualifying educational program at a post-secondary educational institution?

Position: Yes.

Reasons:
Educational assistance payments could be made in the first 13 weeks of enrollment but the aggregate amount that can be paid in that period is capped at $5,000 unless a greater amount is approved by the Minister of Human Resources Development.

Principales Questions:
Est-ce que l'achalandage de l'entreprise du particulier dans une situation hypothétique constitue la totalité des actifs d'une entreprise aux fins du sous-alinéa 110.6(14)f)(ii) de la Loi?

Position Adoptée:
Aucune

Principal Issues:
Limitation on foreign content held by RRSPs on a trust by trust basis.

Position:
Existing law does not allow the combination of plans to determine foreign content limit.

Reasons:
The law clearly provides that each trust is subject to the foreign content limit.

Principal Issues:
Tax consequences of a guarantee payment made under a segregated fund policy.

Position:
Question of fact whether policyholder will have received or become entitled to receive the guarantee amount at the time it arises under the terms of the contract. If the policyholder has received or has become entitled to receive the guarantee benefit at a particular time, paragraph 138.1(1)(j) will apply to deem the policyholder to have received proceeds of disposition. If the guarantee amount is paid to the policyholder in cash or kind by the insurer, the insurer would be entitled to deduct the amount of the payment in computing income under section 9 of the Act. Where the insurer satisfies the guarantee by transferring assets from its general funds to the segregated fund trust, paragraph 138.1(1)(d) of the Act will apply to deem the insurer to have acquired an interest in the segregated fund trust.

Reasons: The wording of paragraphs 138.1(1)(d) and 138.1(1)(j).
XXXXXXXXXX 2001-010223

Principal Issues:
Will the reserve provided for in subsection 40(1.01) ever be included in income if the gift remains a non-qualifying security?

Position: No

Reasons: Legislation

Principal Issues: Whether a benefit is received by employees as a result of the employer paying the cost of their spouses' travel expenses. There is an expectation from the employer that spouses accompany the particular employees to meetings and, while there, participate in work-related activities.

Position: Given such employment conditions, it is likely that there would be no taxable benefit to the employees as a result of the spouses accompanying them on trips. However, each trip must be considered individually, and the facts must show that the employer requested the employee's spouse to make a particular trip, and the main purpose of the request was so that the spouse could assist in attaining the business objectives of the trip.

Reasons: Our position in IT-131R2.

Position: No