Income Tax Severed Letters - 2004-07-23

Ruling

2004 Ruling 2004-0070131R3 - Split-Up Butterfly

Unedited CRA Tags
55(3)b) 55(3.1)(c)

Principal Issues: Standard butterfly. Minor issue regarding previous amalgamation

Technical Interpretation - External

19 July 2004 External T.I. 2004-0057841E5 - Test Wind Turbine - CRCE

Unedited CRA Tags
Reg 1219(1) Reg 1219(3)

Principal Issues: Whether each of three wind turbines would qualify as a "test wind turbine" for purposes of CRCE under proposed amendments to section 1219 of the Regulations.

Position: Provided the amendments come into force as proposed and the taxpayer proceeds with the development of a wind farm project as planned, each of the wind turbines would so qualify.

Reasons: Based upon the wording of the proposed amendments, a written opinion received from Natural Resources Canada and the facts of the situation.

16 July 2004 External T.I. 2004-0070211E5 - expensed vs. capitalized

Unedited CRA Tags
9(1) 20(1)(a) class 12(o) class 10(j)

Principal Issues: Provide comments on 1) when certain items purchased, i.e, computer software and hardware, office equipment and furniture, should be expensed vs capitalized; and 2) Classes 12(o), 10(j) and 8(i)

Position: 1) Use criteria in par. 4 of IT-128R, and on page 12 and 13 of the 2003 Business and Professional Guide- can't provide comments on specific assets purchased; 2) general comments provided

Reasons: only general comments can be provided

15 July 2004 External T.I. 2004-0077791E5 - Employee Motor Vehicle Expense Deduction

Unedited CRA Tags
6(1)(b) 8(1)(h.1) 8(10)

Principal Issues: Whether an employee can deduct motor vehicle expenses where an allowance for such expenses is also received.

Position: Question of Fact.

Reasons: Motor vehicle expenses incurred by an employee for travelling in the course of employment may be deducted in computing employment income under paragraph 8(1)(h.1) of the Act, unless the employee receives an allowance for such expenses and the amount is excluded from income under paragraph 6(1)(b). If the employee can show that the employment-related motor vehicle expenses are in excess of the allowance and voluntarily includes the amount of the allowance in income, the CRA will permit the deduction if the requirements in section 8 of the Act are otherwise met, including the employer's certification by signing the T2200.

15 July 2004 External T.I. 2004-0078521E5 - Deduct. of Meals Invoiced To A Client

Unedited CRA Tags
67.1

Principal Issues: Whether the cost of meals incurred in respect of a business would be fully deductible when they are invoiced separately to a client.

Position: Question of fact.

Reasons: There is an exception to the application of subsection 67.1(1) of the Act in paragraph 67.1(2)(c) in respect of amounts for which another person compensates the taxpayer.

13 July 2004 External T.I. 2004-0058141E5 F - Transfert du droit aux revenus provenant d'un bien

Unedited CRA Tags
248(3) 75(2)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(3)
assignment of the rents from a rental property to a corporation would result in a disposition to a deemed trust under s. 248(3)
Summary Under
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1)
rollover not available to assignment of the rents from a rental property to a corporation for shares since the transferee was a deemed trust under s. 248(3)
Summary Under
Tax Topics - Income Tax Act - Section 75 - Subsection 75(2)
s. 75(2) applicable to assignment of the rents from a rental property to a corporation giving rise to a deemed trust under s. 248(3)

Principales Questions: Quelles sont les implications fiscales du transfert à une société des droits de percevoir les revenus sur un immeuble détenu par un particulier qui garde la propriété du bien ?

Position Adoptée: Les paragraphes 248(3) et 75(2) de la Loi semblent s'appliquer à la transaction.

Raisons: Il semble s'agir d'un démembrement du droit de propriété sous forme d'usufruit ou de droit d'usage en vertu du Code civil du Québec. Le paragraphe 248(3) de la Loi crée une fiducie réputée et le bien est réputé transféré à la fiducie.