Income Tax Severed Letters - 2004-04-16

Ruling

2004 Ruling 2003-0051351R3 - ATR - Salary Deferral Arrangement

Unedited CRA Tags
248(1) 6(11) 5(1) 18(1)(a)

Principal Issues: Whether a performance incentive plan is a salary deferral arrangement, as defined in subsection 248(1) of the Act

Position: No.

Reasons: The vesting of rights granted to a participant under the plan is conditional on the company meeting certain performance targets. If the company does not meet the performance targets, any conditional rights granted under the plan are forfeited and the participant does not receive any payment.

Ministerial Correspondence

8 April 2004 Ministerial Correspondence 2004-0069861M4 - Child Care Expenses

Unedited CRA Tags
63(1) 63(2)

Principal Issues: Whether the higher income parent would be entitled to claim child care expenses throughout a period in which the lower income parent was confined to their home?

Position: No

Reasons: The taxpayer with the higher income will be allowed to claim a deduction for child care expenses based on the number of weeks in the year throughout which the lower income individual is certified by a medical doctor to be a person who was incapable of caring for children by reason of mental or physical infirmity and confinement throughout a period of not less than two weeks in the year to bed, to a wheelchair or as a patient in a hospital. In this particular case the confinement was for a period of less than two weeks, the individual was not confined to a bed, to a wheelchair or to a hospital or similar institution and the individual was not mentally or physically infirm.

Technical Interpretation - External

13 April 2004 External T.I. 2004-0054701E5 - Dividends, Interest and Capital Gains

Unedited CRA Tags
128.1 12(1)(j) 12(1)(c) 3(b)

Principal Issues: Tax treatments of certain income from and disposition of shares of taxable Canadian corporations.

Reasons: According to the law.

13 April 2004 External T.I. 2004-0061371E5 - Deductibility of PHSP premiums

Unedited CRA Tags
20.01

Principal Issues: Will an individual proprietor be denied a deduction of the
premiums paid for PHSP coverage where the proprietor is affiliated to a corporation controlled by the proprietor's spouse, that offers PHSP coverage to its employees?

Position: In the situation described, the individual would not be denied
a deduction for the premiums paid in respect of his PHSP.

Reasons: The proprietor's PHSP does not extend coverage to
employees of the corporation.

13 April 2004 External T.I. 2003-0051221E5 - Qualified Investment - CCPC Shares

Unedited CRA Tags
4900(12)

Principal Issues:
Whether shares of a CCPC will remain a qualified investment if the corporation lends to a partnership the amount received on the issuance of shares to an RRSP trust?

Position:
If the shares were qualified investment at the time they were acquired, they will continue to be qualified investment.

Reasons:
As stated in paragraph 6 of interpretation bulletin IT-320R3, the condition that the corporation be a small business corporation must be satisfied only at the time the share of the corporation is acquired by the trust governed by an RRSP. Similarly, the condition that the annuitant is not a connected shareholder must be satisfied only at the time immediately after the share is acquired by the RRSP trust.

XXXXXXXXXX 2003-005122
L. J. Roy, CGA
April 13, 2004

13 April 2004 External T.I. 2003-0052291E5 F - Participation exclue - Par. 40(3.15) de la Loi

Unedited CRA Tags
40(3.15)
Summary Under
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.15)
“exempt interest” status not lost if the partnership property becomes a source of property rather than active business income

Principales Questions: Est-ce qu'une participation dans une société de personnes, qui exploite une entreprise activement dans le domaine de la location d'immeubles et qui conclut un contrat de location de 30 ans de manière à ce que dorénavant elle génère un revenu tiré d'un bien, demeure une "participation exclue" au sens du paragraphe 40(3.15) de la Loi ?

Position Adoptée: Question de fait

Raisons: La définition de "participation exclue" est précise. Si l'entreprise d'une société de personnes cesse d'être exploitée activement, la première condition énoncée à la définition de "participation exclue" n'est plus rencontrée. Toutefois, dans la présente situation, la seconde condition est respectée.

8 April 2004 External T.I. 2004-0058331E5 - Private Health Services Plan

Unedited CRA Tags
248(1)

Principal Issues: Does the health services plan described herein qualify as a
"private health services plan"?

Position: General comments provided.

Reasons: The determination is a question of fact that can only be made
in the context of an advanced tax ruling request.

5 April 2004 External T.I. 2003-0022381E5 - Consent to Assignment

Unedited CRA Tags
56(1)(d)

Principal Issues: Are all relevant parties required to consent to an assignment arrangement.

Position: YES in those that are reffered to in IT-365R2.

Reasons: Paragraph 5 of IT-365R2

5 April 2004 External T.I. 2004-0060601E5 - Respite Care

Unedited CRA Tags
81(1)(h) 5 9

Principal Issues: Are amounts received by respite care providers taxable?

Position: Yes.

Reasons: Amounts received by respite care providers are taxable either as employment or business income. Paragraph 81(1)(h) generally does not apply because the cared-for individual does not reside with the caregiver nor is the caregiver's principal place of residence maintained as the residence of the cared-for individual.

30 March 2004 External T.I. 2004-0061721E5 - Foster Care

Unedited CRA Tags
81(1)(h)

Principal Issues: Are amounts received pursuant to a contract with a provincial government to provide care in a group home exempt income by virtue of paragraph 81(1)(h) of the Act?

Position: Question of fact.

Reasons: The answer depends on whether all of the conditions contained in paragraph 81(1)(h) are satisfied.

29 March 2004 External T.I. 2003-0049231E5 - Conversion of Delaware LLC to Limited Partnership

Unedited CRA Tags
96
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition
conversion from Delaware LLC to DRUPA LP

Principal Issues: Whether there is a disposition of the shares of a Delaware LLC or its underlying assets upon a conversion of the LLC to a Delaware limited partnership (LP)?

Position: Depending upon the facts and the partnership agreement, there may be a disposition of the shares and the assets of the LLC.

Reasons: The conversion is from one legal form to another (i.e. a corporation to a LP) and the Delaware legislation contemplates that the assets of the partnership can be assets of the partners if so provided in the partnership agreement.

XXXXXXXXXX Gilles Gosselin
2003-004923
March 29, 2004

29 March 2004 External T.I. 2004-0054831E5 - Treaty benefits for Luxembourg Investment Funds

Principal Issues: Are FCPs, SICAVs and SICAFs eligible for the benefits of the Canada-Luxembourg Tax Convention?

Position: No.

Reasons: They are not "liable to tax" in Luxembourg.

29 March 2004 External T.I. 2003-0040581E5 - Section 110.5 and Foreign Tax Credit

Unedited CRA Tags
110.5 126(2)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.5
designed only to address wasted FTCs

Principal Issues: Whether section 110.5 can be used to create foreign source income for foreign tax credit purposes in order to solve the timing problem of recongizing income?

Position: No.

Reasons: It was not designed for that

24 March 2004 External T.I. 2003-0032781E5 - Treaty benefits for Irish Investment Undertakings

Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 4

Principal Issues: Are Irish Investment Undertakings eligible for the benefits of the Canada-Ireland Tax Treaty?

Position: No.

Reasons: They do not appear to be "liable to tax" in Ireland.

22 March 2004 External T.I. 2004-0062761E5 - Assignments and shareholder benefits

Unedited CRA Tags
15(2)

Principal Issues: Does Gillette Canada stand for the general proposition that subsection 15(2) of the Income Tax Act does not apply to debts that have been assigned?

Position: No

Reasons: Case was decided on its particulars.

Technical Interpretation - Internal

6 April 2004 Internal T.I. 2004-0067761I7 F - Indemnisation pour perte dans un REÉR

Unedited CRA Tags
146(5) 146(8)
Summary Under
Tax Topics - Income Tax Act - Section 146 - Subsection 146(8)
damages received by the annuitant but promptly on-paid to the RRSP do not constitute a premium or benefit

Principales Questions: Quel est le traitement fiscal d'un montant reçu pour indemniser une perte subie dans un REÉR?

Position Adoptée: À moins d'être versé directement au REÉR ou être dirigé vers lui avec diligence, ce montant est une prestation imposable. Le montant ainsi déposé dans le REÉR n'est pas une prime versée au REÉR.

Raisons: Texte de la Loi.