Income Tax Severed Letters - 2004-04-23

Principales Questions: Un particulier est associé d'une société de personnes qui exploite une entreprise. Le particulier a fait un choix en vertu du paragraphe 249.1(4) de la Loi afin que la société de personnes ait un exercice financier ne correspondant pas à l'année civile. La société de personnes dispose du fonds de commerce et cesse d'exploiter son entreprise avant la fin de l'année civile 2003. Dans quelle année civile seront inclus les revenus de l'exercice financier qui commence au cours de 2003?

Position Adoptée: Les revenus de la société de personnes pour l'exercice financier qui commence en 2003 et qui comprennent les revenus d'entreprise provenant de la disposition de l'entreprise seront ajoutés aux revenus du particulier en 2003.

Raisons: Puisque l'entreprise de la société de personnes n'a pas été exploitée tout au long de la période qui commence au début de l'exercice financier et qui se termine à la fin de l'année civile, le paragraphe 249.1(4) de la Loi ne s'applique plus. L'alinéa 249.1(1)b) de la Loi s'applique de sorte que l'exercice financier ne se termine pas au-delà de la fin de l'année civile.

Principal Issues: Will we consider that an RRSP advantage has been conferred where a commission rebate is allocated by a broker to a client's non-registered account in a situation where the rebate is computed by reference to the client's total holdings in both his RRSP and his non-registered accounts.

Position: Yes.

Reasons: The amount of the rebate is linked to the existence of an RRSP. Because the advantage is conferred outside of the RRSP, it does not fall under the exceptions to the RRSP advantage provision in subparagraph 146(2)(c.4)(ii).

2004-005643
XXXXXXXXXX C. Lalonde
(613) 957-2060
April 16, 2004

Principal Issues: 1. Whether professional initiation or admission fees paid by an employer on behalf of its employee is a taxable benefit to the employee. 2. Whether such fees paid by an employer on behalf of its employee are deductible by the employer.

Position: 1. The payment of professional initiation or admission fees is a taxable employment benefit to the employee under paragraph 6(1)(a). 2. The professional initiation or admission fees paid by an employer on behalf of its employee are deductible by the employer.

Reasons: 1. The payment of professional initiation or admission fees confers an economic advantage which is primarily for the employee's benefit. 2. The professional initiation or admission fees paid on behalf of an employee are a deductible business expense of the employer where the amount of the payment is included in the employee's income under paragraph 6(1)(a).