Income Tax Severed Letters - 2003-06-20

Principal Issues: Taxation of amount received on termination of employment

Position: General information provided

Reasons: To clarify taxation of various elements of a settlement.

Principal Issues:
When does a change in the terms of a debt obligation result in a "new" obligation

Position: Question of fact, based on the laws of contract in the relevant jurisdiction

Reasons: Case law

Principal Issues: Whether the cost of guide or service dogs for the mentally handicapped and intellectually challenged qualifies for the medical expense tax credit.

Position: An amount paid for a specially trained animal qualifies for the medical expense tax credit only if the patient is blind or profoundly deaf or has a severe and prolonged impairment that markedly restricts the use of the patient's arms or legs.

Reasons: Paragraph 118.2(2)(l)

Principal Issues: Whether the exception in subparagraph 212(1)(d)(vi) of the Act applies to a payment by a resident of Canada bar owner to a non-resident for video display material, that arrives at the bar by satellite transmission, DVD, video-cassette or through the internet, and that are digitally reproduced on video screens at the bar?

Position: No

Reasons: The payment is not in respect of the "production" or "reproduction" of a literary, dramatic, musical or artistic work, as required by subparagraph 212(1)(d)(vi), and there is a distinction between a copyright to produce or reproduce a work and a copyright to communicate a work to the public by telecommunication.

Principal Issues: Whether travel expenses & expenses of new accommodations to facilitate obtaining medical care/ instruction for a dependant who has received a cochlear implant qualify for the medical expense tax credit

Position: Expenses are not qualifying medical expenses.

Reasons: These costs are not included in subsection 118.2(2).

Principal Issues: Whether, in a particular situation where an individual would first transfer common shares of a particular corporation ("Corporation C") to another corporation ("Corporation B") and, two years after, Corporation B would transfer the said common shares to Corporation C in the context of a freeze in favour of the individual's spouse and minor children at Corporation C's level, subsection 74.4(2) of the Act would apply.

Position: Yes.

Reasons: Pursuant to the terms of subsection 74.5(6), the common shares of Corporation C transferred by Corporation B would be deemed to have been transferred by the individual to Corporation C.