Income Tax Severed Letters - 2003-09-05

Ruling

2003 Ruling 2002-01789430 - Qualification of XXXXXXXXXX - amendment of terms

Unedited CRA Tags
108(2) 132(6) 206

Principal Issues:
1. Whether the redemption feature meets the requirements of paragraph 108(2)(a) of the Act?
2. Will there be a disposition of trust property or units of the trust?
3. Is the only undertaking of XXXXXXXXXX investing in property other than real property or acquiring and holding real property that is capital property?
4. Was XXXXXXXXXX established or is maintained primarily for the benefit of non-resident persons?
5. Will XXXXXXXXXX qualify as a unit trust throughout the year?
6. Will XXXXXXXXXX continue to be a registered investment?
7. Will notes issued by XXXXXXXXXX Trust be foreign property?
8. Will GAAR apply?

Position:
1. Yes, as provision worded broadly.
2. No, based on prior Rulings.
3. Yes, it will not carry on any business.
4. No, non-resident ownership is limited.
5. Yes, pursuant to amended s. 108(2)(b).
6. Yes, unless it ceases to be a mutual fund trust.
7. No, since they are debt issued by a resident of Canada.
8. No, issue considered previously by the GAAR Committee.

Reasons: See Statement of Principal Issues.

2003 Ruling 2003-00010030 - XXXXXXXXXX

Unedited CRA Tags
Section 115.2

Principal Issues: Whether subsection 115.2(2) of the Income Tax Act would apply to the Funds described in the ruling letter?

Position: Yes.

Reasons: All the conditions set out in that subsection are met.

2003 Ruling 2002-0178943 - Qualification of XXXXXXXXXX - amendment of terms

Unedited CRA Tags
108(2) 132(6) 206

Principal Issues:
1. Whether the redemption feature meets the requirements of paragraph 108(2)(a) of the Act?
2. Will there be a disposition of trust property or units of the trust?
3. Is the only undertaking of XXXXXXXXXX investing in property other than real property or acquiring and holding real property that is capital property?
4. Was XXXXXXXXXX established or is maintained primarily for the benefit of non-resident persons?
5. Will XXXXXXXXXX qualify as a unit trust throughout the year?
6. Will XXXXXXXXXX continue to be a registered investment?
7. Will notes issued by XXXXXXXXXX Trust be foreign property?
8. Will GAAR apply?

Position:
1. Yes, as provision worded broadly.
2. No, based on prior Rulings.
3. Yes, it will not carry on any business.
4. No, non-resident ownership is limited.
5. Yes, pursuant to amended s. 108(2)(b).
6. Yes, unless it ceases to be a mutual fund trust.
7. No, since they are debt issued by a resident of Canada.
8. No, issue considered previously by the GAAR Committee.

Reasons: See Statement of Principal Issues.

2003 Ruling 2003-0001003 - XXXXXXXXXX

Unedited CRA Tags
Section 115.2

Principal Issues: Whether subsection 115.2(2) of the Income Tax Act would apply to the Funds described in the ruling letter?

Position: Yes.

Reasons: All the conditions set out in that subsection are met.

Technical Interpretation - External

4 September 2003 External T.I. 2003-0021605 - WITHHOLDING REQUIREMENTS

Unedited CRA Tags
153(1) 125(7)

Principal Issues: Whether a person or partnership must withhold from payments made under an arrangement whereby it contracts with an individual's corporation for services that are currently being rendered by the individual in his or her capacity as an employee.

Position: Provided the contract for service is with the corporation, no.

Reasons: When an individual performs services for a person or partnership on behalf of his or her own corporation under a bona fide contract for service between the corporation and the person or partnership, the person or partnership to whom or to which the services are being provided is not required to withhold source deductions from the payments, as it would generally be required to do if the payments were being made under a contract of service with an employee.

4 September 2003 External T.I. 2003-00216050 - WITHHOLDING REQUIREMENTS

Unedited CRA Tags
153(1) 125(7)

Principal Issues: Whether a person or partnership must withhold from payments made under an arrangement whereby it contracts with an individual's corporation for services that are currently being rendered by the individual in his or her capacity as an employee.

Position: Provided the contract for service is with the corporation, no.

Reasons: When an individual performs services for a person or partnership on behalf of his or her own corporation under a bona fide contract for service between the corporation and the person or partnership, the person or partnership to whom or to which the services are being provided is not required to withhold source deductions from the payments, as it would generally be required to do if the payments were being made under a contract of service with an employee.

29 August 2003 External T.I. 2003-0025375 - QSBC

Unedited CRA Tags
110.6(15)(b) 110.6(1)

Principal Issues: Whether paragraph 110.6(15)(b) will apply to deem the fair market value of a loan receivable by Cco from Bco to be nil.

Position: No

Reasons: In the facts provided, Bco does not own and is not deemed to own shares of the capital stock of Cco, consequently Cco is not connected with Bco within the meaning of paragraph (d) of the definition QSBC share in subsection 110.6(1) and paragraph 110.6(15)(b) of the Act would have no application.

29 August 2003 External T.I. 2003-00253750 - QSBC

Unedited CRA Tags
110.6(15)(b) 110.6(1)

Principal Issues: Whether paragraph 110.6(15)(b) will apply to deem the fair market value of a loan receivable by Cco from Bco to be nil.

Position: No

Reasons: In the facts provided, Bco does not own and is not deemed to own shares of the capital stock of Cco, consequently Cco is not connected with Bco within the meaning of paragraph (d) of the definition QSBC share in subsection 110.6(1) and paragraph 110.6(15)(b) of the Act would have no application.

29 August 2003 External T.I. 2003-0034495 - Payments Based on Production

Unedited CRA Tags
12(1)(g)

Principal Issues: Will payments for property extracted from an individual's land be taxable.

Position: Yes.

Reasons: It-462 deals with payments based on production or use.

29 August 2003 External T.I. 2003-00344950 - Payments Based on Production

Unedited CRA Tags
12(1)(g)

Principal Issues: Will payments for property extracted from an individual's land be taxable.

Position: Yes.

Reasons: It-462 deals with payments based on production or use.

28 August 2003 External T.I. 2003-0008495 - SPLIT RECEIPTING GUIDELINES

Unedited CRA Tags
248(30 248(32)

Principal Issues: We are asked to comment on charitable receipting in respect of particular fundraising activities.

Position: General Comments only.

Reasons: N/A

28 August 2003 External T.I. 2003-00084950 - SPLIT RECEIPTING GUIDELINES

Unedited CRA Tags
248(30 248(32)

Principal Issues: We are asked to comment on charitable receipting in respect of particular fundraising activities.

Position: General Comments only.

Reasons: N/A

5 August 2003 External T.I. 2003-0027705 F - DON A UN ENFANT MAJEUR

Unedited CRA Tags
74.1(2) 56(4.1)

Position Adoptée: Non.

5 August 2003 External T.I. 2003-00277050 F - DON A UN ENFANT MAJEUR

Unedited CRA Tags
74.1(2) 56(4.1)

Position Adoptée: Non.

23 July 2003 External T.I. 2003-00030450 - Corporate Distribution - Foreign Spin Off

Unedited CRA Tags
86.1

Principal Issues: Whether the shares of XXXXXXXXXX , an Australian company, received by a resident of Canada as a result of a foreign spin-off by XXXXXXXXXX , another Australian company, is an "eligible distribution" in section 86.1 such that the resident can obtain a tax deferral on the distribution?

Position: No

Reasons: The conditions in subsection 86.1(2) that make the spin-off an "eligible distribution" are not satisfied.

23 July 2003 External T.I. 2003-0003045 - Corporate Distribution - Foreign Spin Off

Unedited CRA Tags
86.1

Principal Issues: Whether the shares of XXXXXXXXXX , an Australian company, received by a resident of Canada as a result of a foreign spin-off by XXXXXXXXXX , another Australian company, is an "eligible distribution" in section 86.1 such that the resident can obtain a tax deferral on the distribution?

Position: No

Reasons: The conditions in subsection 86.1(2) that make the spin-off an "eligible distribution" are not satisfied.

Technical Interpretation - Internal

4 September 2003 Internal T.I. 2003-00097670 - SUBSECTION OF THE REGULATION1101(5)

Principal Issues: For purposes of subsection 1101(5d) of the Regulations, whether certain railway cars are "rented, leased or used by the taxpayer in Canada" in a situation where they are leased to a non-resident who will sublease them for use in both Canada and the United States.

Position: In this situation, yes.

Reasons: There is no requirement in the provision that the lessee use the railway cars in Canada or be a resident of Canada. The facts of this case indicate that the taxpayer is a resident of Canada and reports all income derived from the leasing activity in Canada. Further, the railway cars are leased under the terms of an agreement that was negotiated, executed, and administered in Canada under the laws of the Province of Ontario.

4 September 2003 Internal T.I. 2003-0009767 - SUBSECTION OF THE REGULATION1101(5)

Principal Issues: For purposes of subsection 1101(5d) of the Regulations, whether certain railway cars are "rented, leased or used by the taxpayer in Canada" in a situation where they are leased to a non-resident who will sublease them for use in both Canada and the United States.

Position: In this situation, yes.

Reasons: There is no requirement in the provision that the lessee use the railway cars in Canada or be a resident of Canada. The facts of this case indicate that the taxpayer is a resident of Canada and reports all income derived from the leasing activity in Canada. Further, the railway cars are leased under the terms of an agreement that was negotiated, executed, and administered in Canada under the laws of the Province of Ontario.

25 August 2003 Internal T.I. 2003-0015917 - manufacturing and processing profits

Unedited CRA Tags
125.1

Principal Issues: Whether activities qualify for M&P deduction.

Position: No.

Reasons: Goods are provided through contracts for service, not sale.

25 August 2003 Internal T.I. 2003-00159170 - manufacturing and processing profits

Unedited CRA Tags
125.1

Principal Issues: Whether activities qualify for M&P deduction.

Position: No.

Reasons: Goods are provided through contracts for service, not sale.

8 August 2003 Internal T.I. 2003-0025837 - EXCHANGEABLE SHARES DEBT FORGIVENESS

Unedited CRA Tags
80 54

Principal Issues: whether section 80 settlement of debt or capital gain

Position: yes

Reasons: legal termination of the debt on payment of the value of certain shares

8 August 2003 Internal T.I. 2003-00258370 - EXCHANGEABLE SHARES DEBT FORGIVENESS

Unedited CRA Tags
80 54

Principal Issues: whether section 80 settlement of debt or capital gain

Position: yes

Reasons: legal termination of the debt on payment of the value of certain shares

15 April 2003 Internal T.I. 2002-0176687 F - IMPOT DES GRANDES SOCIETES AVANCES

Unedited CRA Tags
181.2(3)(c)

Position Adoptée: Oui.