Income Tax Severed Letters - 2003-03-28

Ruling

2003 Ruling 2001-0098963 - HEALTH & WELFARE TRUST

Unedited CRA Tags
18(9)

Principal Issues: Whether the proposed trust arrangement will qualify as a health and welfare trust within the requirements of IT-85R2.

Position: Yes.

Reasons: The health and welfare trust will be structured so that it will comply with the requirements outlined in IT-85R2.

Ministerial Correspondence

18 March 2003 Ministerial Correspondence 2003-0004204 - LEGAL FEES SUPPORT PAYMENT

Unedited CRA Tags
60(b)

Principal Issues: Whether the CCRA should extend its policy outlined in ITTN #24 to allow the deduction of legal costs to taxpayers who pay support.

Position: No.

Reasons: The Act does not allow for such a result.

5 March 2003 Ministerial Correspondence 2003-0184464 - MUTUAL FUNDS QUALIFIED INVESTMENTS RRSP

Unedited CRA Tags
REG 4800(1) REG 4801

Principal Issues: Will an open-ended mutual fund that invests directly in real estate be a qualified investment for an RRSP or an RRIF?

Position: Question of fact.

Reasons: Provided general information concerning mutual fund corporations and mutual fund trusts as qualified investments for an RRSP or an RRIF.

Technical Interpretation - External

27 March 2003 External T.I. 2002-0177775 - private services health plan

Unedited CRA Tags
248(1)

Principal Issues: Will a health services plan that provides for a redistribution of health credits qualify as a PHSP?

Position: Possibly, depends on the nature of the plan

Reasons: A PHSP must be a plan of insurance

XXXXXXXXXX 2002-017777
Lena Holloway, CA
March 27, 2003

26 March 2003 External T.I. 2001-0105315 - INTERCORPORATE DEBTS

Unedited CRA Tags
15(1) 56(2) 56(4)
Summary Under
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1)
no conferral of benefit where interest turned off

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.

26 March 2003 External T.I. 2002-0179145 - EMPLOYEE STOCK OPTION DEEMEND DIVIDEND

Unedited CRA Tags
248(28) 7(1.1) 84(3)

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.

26 March 2003 External T.I. 2003-0008645 F - Non-Arm's Length Sale of Shares

Unedited CRA Tags
84.1 251(1)(c) 251(1)(a)
Summary Under
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1)
no presumption that a transaction between companies owned by couple and nephew, respectively, is not arm’s length
Summary Under
Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c)
family relationship (e.g., uncle/nephew) are more likely to give rise to NAL transaction

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.

26 March 2003 External T.I. 2002-0159575 - REGISTERED INVESTMENT

Unedited CRA Tags
204.4(2) 204.4(7) 204.6

Principal Issues:
Would a trust that has been accepted for registration as an RI under paragraph 204.4(2)(b) and that subsequently holds an investment that is not a prescribed investment, be subject to penalty tax under section 204.6, where at the end of a month the trust could qualify for registration under 204.4(2)(a)?

Position: No

Reasons:
The provisions of subsection 204.4(7) of the Act provide that where at the end of any month an RI could qualify for registration under subsection 204.4(2), the RI will be deemed for the purposes of section 204.6 to have been registered under the particular paragraph of subsection 204.4(2) under which it is first registrable in accordance with the ordering of paragraphs in subsection 204.4(7). Accordingly, it is deemed for the purpose of section 204.6, to have qualified under 204.4(2)(a), despite the fact it was previously registered under 204.4(2)(b).

26 March 2003 External T.I. 2003-0008795 - EMPLOYEE STOCK OPTION DEEMED DIVIDEND

Unedited CRA Tags
248(28) 7(1.1) 84(3)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28)

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.

26 March 2003 External T.I. 2003-0008805 - EMPLOYEE STOCK OPTION DEEMED DIVIDEND

Unedited CRA Tags
248(28) 7(1.1) 84(3)

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.

26 March 2003 External T.I. 2003-0003555 - PRE-JUDGEMENT INTEREST

Unedited CRA Tags
12(1)(c)

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

25 March 2003 External T.I. 2003-0006585 - EMPLOYER-PROVIDED PARKING

Unedited CRA Tags
6(1)(a)

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.

25 March 2003 External T.I. 2003-0007625 - TAXPAYER CONFIDENTIALITY OF FEDERAL RETURN

Unedited CRA Tags
241(5)

Principal Issues: Taxpayer concerned over disclosure of tax returns to qualify under BC Pharmacare program

Position: general comments regarding confidentiality

XXXXXXXXXX 2003-000762
Lena Holloway, CA
March 25, 2003

25 March 2003 External T.I. 2003-0002865 - SAFE DRIVING SCHOOL

Unedited CRA Tags
6(1)(a) 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 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:

25 March 2003 External T.I. 2002-0176945 - INTEREST DEDUCTION DIVIDENDS

Unedited CRA Tags
20(1)(c)
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c)

Principal Issues:
Interest deduction on money borrowed to pay dividends

24 March 2003 External T.I. 2002-0165265 F - REMBOURSEMENT DE PRIMES

Unedited CRA Tags
146(8.1) 146(1)
Summary Under
Tax Topics - Income Tax Act - Section 146 - Subsection 146(8.1)
election cannot be made with surviving spouse if bequest of RRSP is to surviving adult child

Principale Question: Le choix conjoint prévu au paragraphe 146(8.1) de la Loi peut-il être effectué par le liquidateur et la conjointe survivante du rentier décédé bien qu'une autre personne soit nommément désignée à titre de bénéficiaire du REÉR dans le testament?

Position Adoptée: Non .

21 March 2003 External T.I. 2002-0161115 F - ALLOCATION DE FIN DE CARRIERE

Unedited CRA Tags
146(1) 12(1)(x)
Summary Under
Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Earned Income
end-of-career allowance received by physician is not earned income

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?

19 March 2003 External T.I. 2003-0002595 - Emigration from Canada

Unedited CRA Tags
128.1(4)

Position: None.

18 March 2003 External T.I. 2002-0122845 F - CREDIT D'IMPOT POUR LE DOUBLAGE DE FILMS

Unedited CRA Tags
12(1)(x)
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x)
timing of receipt of Quebec film dubbing credit

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.

18 March 2003 External T.I. 2003-0181635 - BORROWING GIA GIC UNIVERSAL LIFE

Unedited CRA Tags
20(1)(c)

Principal Issues:
Is Interest deductible when
1) Borrowing to invest in GIC? and a GIA?
2) Borrowing to invest in Universal Life?

18 March 2003 External T.I. 2003-0002915 F - Subsections 40(3.3) & 40(3.4)

Unedited CRA Tags
40(3.3) 40(3.4)
Summary Under
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.4)
taxpayer can designate order of disposition

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).

17 March 2003 External T.I. 2003-0005915 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6

Principal Issues:
Whether the land owned by a taxpayer is considered to be "qualified farm property"?

Position: Question of fact, general comments provided.

Reasons: Question of fact, insufficient facts provided.

Technical Interpretation - Internal

24 March 2003 Internal T.I. 2003-0184127 - COMMODITY OPTIONS

Unedited CRA Tags
9
Summary Under
Tax Topics - Income Tax Act - Section 9 - Timing

Principal Issues:
Whether position re option on securities in IT-479R applies to options on commodities

Position: No

Reasons: IT position is limited to securities options

21 March 2003 Internal T.I. 2003-0007497 - CHILD IN THE HOME OF A RELATIVE

Unedited CRA Tags
81(1)(H) 252(1)(b)

Principal Issues:
Whether paragraph 81(1)(h) applies to amounts received for care of nieces and nephews in home under Child in the Home of a Relative program.