Income Tax Severed Letters - 2003-11-21

Principal Issues: 1. Whether ghost car would be "clearly-marked emergency vehicle"; 2. Whether extended-cab pick-up truck would be automobile where its rear seat was removed; 3. Whether standby charge and operating cost benefit would arise from ghost car made available to officer while on call; 4. Whether standby charge and operating cost benefit would arise from availability and use of vehicle modified to carry police dogs by officer in charge of caring for a dog that resides with the officer.

Position: 1. Ghost car would not be clearly-marked vehicle; 2. Would not be considered automobile if it was used, in the year of acquisition, all or substantially all for transporting goods, equipment, or passengers for employment-related purposes; 3. Standby charge and operating benefit could arise from ghost car being made available to officer while on call; 4. No benefit likely with respect to availability and use of Dog vehicle since there is no personal use.

Reasons: 1. Clearly-marked emergency vehicle refers to a vehicle that is readily identified by the general public as a police or fire vehicle due to symbols or lettering on the vehicle. Since ghost cars are designed to be non-descript vehicles they would not be clearly-marked; 2. Extended-cab pick-up trucks have a seating capacity for more than the driver and two passengers notwithstanding the removal of the rear seat. Therefore, they must meet the "all or substantially all" test to be excluded from the "automobile" definition. 3. Use of ghost car to travel between home and work would be personal, as would trips undertaken while on call that were made primarily for personal reasons. Accordingly, standby charge and operating benefit may be applicable. 4. Consistent with Hoedel case, where an officer is fully responsible for care and training of police dog that stays in the officer's home, travel with the dog between home and work would be considered employment-related.

Principal Issues:
Determining the "amount of the advantage" in respect of an annuity stream to be received by a donor in exchange for a cash gift made to a registered charity.

Position:
Valuation must be reasonable. While obtaining quotations from insurance companies is one method of determining the value of the annuity stream to be received by the donor, other approaches may be taken.

Reasons:
The proposed amendments do not prescribe the manner for determining the "amount of advantage".

Principal Issues: Correction to Paragraph 41 of Document 2003-004032 dealing with whether certain corporations are affiliated, related or associated.

Position: Company C is associated with Company E under subsection 256(2).

Reasons: Company C and Company E are deemed to be associated with each other because each company is associated with Company A.

Principal Issues:
1. What are the tax implications of taking a mortgage out of an RRSP? Information on writing off or disposing of a non-performing investment held in an RRSP.
2. How is any subsequent income on the mortgage taxed?

Position:
1. Outlined possible tax consequences and noted we do not provide opinions or rule on the valuation or propriety of such transactions.
2. If the mortgage was removed from the RRSP at fair market value any subsequent income would be taxed in the annuitant's hands.

Reasons:
Explained options available to the RRSP and annuitant in these circumstances.

Principal Issues:
What are the tax implications of taking a mortgage out of an RRSP? Information on writing off or disposing of a non-performing investment held in an RRSP.

Position:
Outlined possible tax consequences and noted we do not provide opinions or rule on the valuation or propriety of such transactions.

Reasons:
Explained options available to the RRSP and annuitant in these circumstances.

Principales Questions:
Est-ce que la position administrative permettant à un employé de recevoir, en franchise d'impôt, deux récompenses non monétaires par année en reconnaissance de réalisations exceptionnelles lorsque le coût total des récompenses pour l'employeur est inférieur à 500 $ (ci-après la " politique ") s'applique à la présente situation?

Position Adoptée:
Aucune position définitive.

Principal Issues: Does the sale of trees result in a capital gain or income for tax purposes?

Position: Question of fact.

Reasons: Can only be determined when all of the facts are known.

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.

XXXXXXXXXX 2003-003409

Attention: XXXXXXXXXX

September 19, 2003

Dear Sir:

Re: Principal Residence Designation by a Personal Trust