Income Tax Severed Letters - 2003-03-28

Principal Issues:
Whether subsection 15(1) applies to confer a benefit on a parent corporation when a wholly-owned subsidiary exchanges an interest bearing loan for a non-interest bearing loan held by another wholly owned subsidiary.

Principal Issues: Whether, in a particular situation where an individual would sell his or her shares of a corporation to the holding company created by his nephew, section 84.1 would apply.

Position: The potential application of section 84.1 in the given situation would depend on whether or not the uncle and the holding corporation owned by his nephew would deal with each other at arm's length. Paragraph 251(1)(c) provides that, at a particular time, it is a question of fact whether unrelated persons are dealing with each other at arm's length. Such determination can only be made following the review of all facts relating to a particular situation. CCRA would generally not presume that there is a non-arm's length relationship between an uncle or aunt and his or her niece or nephew. However, family ties may be more likely to give rise to non-arm's length relationships, depending on the facts and circumstances.

Reasons: Wording of the Act and previous positions.

Principal Issues:
Does subsection 248(28) apply to prevent the application of both subsection 7(1) and 84(3) to a particular situation.

Position: No.

Reasons:
The position taken in our file 2000-0016875 has been reconsidered and a determination made that it was not supportable in law.

Principal Issues: Whether our position on pre-judgement interest with respect to awards for wrongful dismissal has changed

Position: Not changed. Pre-judgement interest received as part of a wrongful dismissal award is not taxable.

Reasons: Consistent with prior opinions

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 ISSUE:

1. Would an employer paying the cost of a safe or defensive driving course for employees constitute a taxable benefit?

2. Would the cost be deductible to the employer?

3. Must GST be charged on the fees by the school?

Position TAKEN:

Principal Issues: Whether the use of a parking space by other employees while the employee for which the spot is held is out of town would affect the determination of the parking benefit

Position: Determination of benefit would not be affected.

Reasons: The benefit arises from the parking space being held for the employee's use notwithstanding that he or she may not be available to use the spot from time to time.

Principales Questions:
Une allocation de fin de carrière payée à un médecin du Québec entre-elle dans le revenu gagné au sens du paragraphe 146(1) de la Loi pour une année d'imposition où le contribuable n'exploite plus son entreprise? Le montant ajouté en vertu du paragraphe 34.2(5) de la Loi entre-il dans le revenu gagné d'un contribuable pour une année d'imposition où le contribuable n'exploite plus son entreprise?

Principales Questions:
À quel moment le crédit d'impôt du Québec pour le doublage de films en vertu de l'article 1029.8.36.0.0.2 de la Loi sur les impôts (Québec) sera-t-il inclus dans le revenu du contribuable en vertu de l'alinéa 12(1)x) de la Loi?

Position Adoptée:
Au moment où le contribuable a le droit au crédit et qu'il est appliqué à titre de versement d'impôt dû par le contribuable ou au moment où il est effectivement versé.

Principal Issues: Ordering of disposition of shares for the purpose of 40(3.4)(b)(i).

Position: Taxpayer can choose the order of disposition of shares.

Reasons: No procedure in the Act for determining the order of disposition for the purpose of 40(3.4)(b)(i).