Income Tax Severed Letters - 2003-08-22

Miscellaneous

18 July 2003 Miscellaneous 2003-002382A50 - Feasibility Studies and CRCE

Unedited CRA Tags
Reg. 1219 66(15) 66.1(6)

Principal Issues: Whether the cost of a pre-feasibility study and a feasibility study related to a proposed XXXXXXXXXX would constitute CRCE.

Position: Whether or not a particular expenditure will constitute CRCE must be determined from the facts of a particular situation. General comments given respecting aspects of such studies which may constitute CRCE.

Reasons: Nature of the determination.

Ruling

2003 Ruling 2002-01244230 - UNIT TRUSTS FOREIGN PROPERTY PUBLIC

Unedited CRA Tags
REG 5000(1)(C.2) 206(1) 259

Principal Issues:
1. Will the units of the Fund be foreign property?
2. Is an election under subsection 259(3) applicable to all unitholders of a qualified trust?

Position:
1. No, provided that the limit in paragraph 5000(1)(e) of the Regulations is not exceeded.
2. No.

Reasons:
1. The trust is a trust described in paragraph 5000(1)(c.2) of the Regulations.
2. Pursuant to the preamble in section 259(1) of the Act, an election under subsection 259(3) only applies to taxpayers described in section 205 of the Act.

2003 Ruling 2002-01461530 - POOLED FUND TRUST

Unedited CRA Tags
206(1) REG 5000(1)(e) 245(2)

Principal Issues:
Will the establishment of a pooled fund trust and the subsequent transfer of property from a master trust to the pooled fund trust with the master trust holding all of the units of the pooled fund trust, for the purpose of increasing the percentage of underlying foreign property, be abusive for purposes of subsection 245(2) of the Act?

Position: No

Reasons:
Paragraph 5000(1)(e) of the Act provides that where a taxpayer holds an interest in a pooled fund trust, the interest in the pooled fund trust shall not be considered foreign property of the taxpayer, where the cost amount of the pooled fund trust's foreign property does not exceed 30% of the cost amount of all property held by the pooled fund trust. We have previously ruled that GAAR will not apply to similar trust arrangements.

2003 Ruling 2002-0124423 - UNIT TRUSTS FOREIGN PROPERTY PUBLIC

Unedited CRA Tags
REG 5000(1)(C.2) 206(1) 259

Principal Issues:
1. Will the units of the Fund be foreign property?
2. Is an election under subsection 259(3) applicable to all unitholders of a qualified trust?

Position:
1. No, provided that the limit in paragraph 5000(1)(e) of the Regulations is not exceeded.
2. No.

Reasons:
1. The trust is a trust described in paragraph 5000(1)(c.2) of the Regulations.
2. Pursuant to the preamble in section 259(1) of the Act, an election under subsection 259(3) only applies to taxpayers described in section 205 of the Act.

2003 Ruling 2002-0146153 - POOLED FUND TRUST

Unedited CRA Tags
206(1) REG 5000(1)(e) 245(2)

Principal Issues:
Will the establishment of a pooled fund trust and the subsequent transfer of property from a master trust to the pooled fund trust with the master trust holding all of the units of the pooled fund trust, for the purpose of increasing the percentage of underlying foreign property, be abusive for purposes of subsection 245(2) of the Act?

Position: No

Reasons:
Paragraph 5000(1)(e) of the Act provides that where a taxpayer holds an interest in a pooled fund trust, the interest in the pooled fund trust shall not be considered foreign property of the taxpayer, where the cost amount of the pooled fund trust's foreign property does not exceed 30% of the cost amount of all property held by the pooled fund trust. We have previously ruled that GAAR will not apply to similar trust arrangements.

2002 Ruling 2002-01271430 F - ENTITE IMPOSALBE DEVIENT OSBL

Unedited CRA Tags
149(1)(l)

Principales Questions:

2002 Ruling 2002-0127143 F - ENTITE IMPOSALBE DEVIENT OSBL

Unedited CRA Tags
149(1)(l)

Principales Questions:

Technical Interpretation - External

25 July 2003 External T.I. 2003-00187650 - Art. 14 & 15 Cnd-Japan Treaty - Teacher

Unedited CRA Tags
Cnd-Japan Treaty

Principal Issues: Whether Article 14 or 15 of the Canada-Japan tax treaty applies in a scenario where a Canadian resident teaches in a Japanese University for a period of three months.

Position: Article 15 applies since the nature of the relationship between the Japanese University and the taxpayer falls within the character of an employer/employee relationship, and because the taxpayer is paid by the Japanese University.

25 July 2003 External T.I. 2003-0018765 - Art. 14 & 15 Cnd-Japan Treaty - Teacher

Unedited CRA Tags
Cnd-Japan Treaty

Principal Issues: Whether Article 14 or 15 of the Canada-Japan tax treaty applies in a scenario where a Canadian resident teaches in a Japanese University for a period of three months.

Position: Article 15 applies since the nature of the relationship between the Japanese University and the taxpayer falls within the character of an employer/employee relationship, and because the taxpayer is paid by the Japanese University.

24 July 2003 External T.I. 2003-00123250 - CDN - Norway Treaty Art.21 Offshore Rent

Unedited CRA Tags
CDN-Norway Treaty

Principal Issues: Whether payments made by a resident of Canada to a resident of Norway for the use of moveable property in Canada (including bareboat rental arrangements) are exempt from Canadian withholding tax under the new Canada-Norway tax treaty

Position: Yes unless the Norwegian resident carries on his rental business activities through a PE in Canada.

24 July 2003 External T.I. 2003-0012325 - CDN - Norway Treaty Art.21 Offshore Rent

Unedited CRA Tags
CDN-Norway Treaty

Principal Issues: Whether payments made by a resident of Canada to a resident of Norway for the use of moveable property in Canada (including bareboat rental arrangements) are exempt from Canadian withholding tax under the new Canada-Norway tax treaty

Position: Yes unless the Norwegian resident carries on his rental business activities through a PE in Canada.

22 July 2003 External T.I. 2003-0029305 - Indian Employment Income Exemption

Unedited CRA Tags
81(1)(a)

Principal Issues: Will a status Indian's employment income be tax exempt?

Position: Question of fact.

Reasons: General information provided.

22 July 2003 External T.I. 2003-00293050 - Indian Employment Income Exemption

Unedited CRA Tags
81(1)(a)

Principal Issues: Will a status Indian's employment income be tax exempt?

Position: Question of fact.

Reasons: General information provided.

21 July 2003 External T.I. 2003-0026465 - CLERGY RESIDENCE

Unedited CRA Tags
8(1)(c)

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

Do specialized minister such as the Worship Director and Christian Education within the Presbyterian Church qualify for the 8(1)(c) deduction?

Position TAKEN:

No

21 July 2003 External T.I. 2003-00264650 - CLERGY RESIDENCE

Unedited CRA Tags
8(1)(c)

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

Do specialized minister such as the Worship Director and Christian Education within the Presbyterian Church qualify for the 8(1)(c) deduction?

Position TAKEN:

No

18 July 2003 External T.I. 2003-002382A - Feasibility Studies and CRCE

Unedited CRA Tags
Reg. 1219 66(15) 66.1(6)

Principal Issues: Whether the cost of a pre-feasibility study and a feasibility study related to a proposed XXXXXXXXXX would constitute CRCE.

Position: Whether or not a particular expenditure will constitute CRCE must be determined from the facts of a particular situation. General comments given respecting aspects of such studies which may constitute CRCE.

Reasons: Nature of the determination.

8 July 2003 External T.I. 2003-00234550 - PARTIAL YEAR VESTED RA TRANSFER TO RRSP

Unedited CRA Tags
60(j.1)

Principal Issues:
Where only a partial year of pension benefits for a pre-1989 year have vested in an employee, can the additional $1500 be included in calculating the retiring allowance amount eligible to be transferred to an RRSP?

Position: No

Reasons:
Consistent with prior positions. Where service is credited and will result in a pension benefit of any amount in respect of a particular year, employer contributions have vested in respect of that year of service and the additional $1500 cannot be credited for that year.

8 July 2003 External T.I. 2003-0023455 - PARTIAL YEAR VESTED RA TRANSFER TO RRSP

Unedited CRA Tags
60(j.1)

Principal Issues:
Where only a partial year of pension benefits for a pre-1989 year have vested in an employee, can the additional $1500 be included in calculating the retiring allowance amount eligible to be transferred to an RRSP?

Position: No

Reasons:
Consistent with prior positions. Where service is credited and will result in a pension benefit of any amount in respect of a particular year, employer contributions have vested in respect of that year of service and the additional $1500 cannot be credited for that year.

27 June 2003 External T.I. 2002-01762650 - Holocaust victim assets litigation

Unedited CRA Tags
12(1)(c) 81(1)(g)

Principal Issues: Will payments from the settlement by Swiss Banks under the Holocaust Victim Assets Litigation (Deposited Asset Class) be taxable in Canada?

Position: We are unable to say, although, our understanding is that in tax policy terms, these amounts ought not to be included in income under the Act.

Reasons: Each case will depend on its facts, and will have to be looked at individually.

27 June 2003 External T.I. 2002-0176265 - Holocaust victim assets litigation

Unedited CRA Tags
12(1)(c) 81(1)(g)

Principal Issues: Will payments from the settlement by Swiss Banks under the Holocaust Victim Assets Litigation (Deposited Asset Class) be taxable in Canada?

Position: We are unable to say, although, our understanding is that in tax policy terms, these amounts ought not to be included in income under the Act.

Reasons: Each case will depend on its facts, and will have to be looked at individually.

26 June 2003 External T.I. 2003-00207150 - Fiscal year, cessation of operations

Unedited CRA Tags
249

Principal Issues: whether cessation of a branch's operations results in a taxation year end

Position: no

Reasons: business will continue to be carried on so there would be no new taxation year end

26 June 2003 External T.I. 2003-0020715 - Fiscal year, cessation of operations

Unedited CRA Tags
249

Principal Issues: whether cessation of a branch's operations results in a taxation year end

Position: no

Reasons: business will continue to be carried on so there would be no new taxation year end

Technical Interpretation - Internal

17 July 2003 Internal T.I. 2003-00037770 - Hedging Gains and Gross Resource Profit

Unedited CRA Tags
Reg 1204(1)(b) Reg 1204(1.1) Reg 1206(1)

Principal Issues: 1) Should the hedging gain be included in gross resource profits?
SECTIONS: Regulations 1204(1)(b), 1204(1.1), 1206(1)

Position: 1) A portion of the gain will be included in gross resource profits.

Reasons: Regulation 1204(1)(b), Echo Bay Mines decision.

17 July 2003 Internal T.I. 2003-0003777 - Hedging Gains and Gross Resource Profit

Unedited CRA Tags
Reg 1204(1)(b) Reg 1204(1.1) Reg 1206(1)

Principal Issues: 1) Should the hedging gain be included in gross resource profits?
SECTIONS: Regulations 1204(1)(b), 1204(1.1), 1206(1)

Position: 1) A portion of the gain will be included in gross resource profits.

Reasons: Regulation 1204(1)(b), Echo Bay Mines decision.

8 July 2003 Internal T.I. 2003-00259570 - TAXATION OF INDIAN EMPLOYMENT INCOME

Unedited CRA Tags
81(1)(a)

Principal Issues: Was an Indian's employment income taxable?

Position: Question of Fact

Reasons:
General information provided. Very few details were provided with which to make a determination. We would have to assume that the individual is a status Indian since this is not stated anywhere. The memo indicates that the taxpayer claims to live on a reserve and that his employer was resident on reserve. - if so, Guideline 2 may apply to exempt the employment income which would in turn make his EI benefits tax exempt.

8 July 2003 Internal T.I. 2003-0025957 - TAXATION OF INDIAN EMPLOYMENT INCOME

Unedited CRA Tags
81(1)(a)

Principal Issues: Was an Indian's employment income taxable?

Position: Question of Fact

Reasons:
General information provided. Very few details were provided with which to make a determination. We would have to assume that the individual is a status Indian since this is not stated anywhere. The memo indicates that the taxpayer claims to live on a reserve and that his employer was resident on reserve. - if so, Guideline 2 may apply to exempt the employment income which would in turn make his EI benefits tax exempt.