Income Tax Severed Letters - 2004-08-13


11 August 2004 Miscellaneous 2004-0071431E5 - Principal Residence Exemption

Unedited CRA Tags
54 40(2)(b)

Principal Issues: Whether the gain on the sale of a residence will be eligible for the "principal residence exemption".

Position: Question of fact.

Reasons: Exemption available only if expected gain from sale is on capital account and conditions in the definition of "principal residence" are met.

10 August 2004 Miscellaneous 2004-0080201I7 - Capital Cost Allowance

Unedited CRA Tags
Reg. 1100(2) Reg. 1100(2.2) Reg. 1102(3)

Principal Issues: Whether subsection 1100(2) of the Regulations applies to property transferred from a non-resident to a Canadian subsidiary where the property was held outside of Canada before the transfer.

Position: Yes.

Reasons: By virtue of subsection 1102(3) of the Regulations, property held outside of Canada by a non-resident is not depreciable property of the non-resident. The subsection 1100(2.2) exception to subsection 1100(2) of the Regulations is therefore not applicable and subsection 1100(2) will apply to the property when it is transferred to Canada.

5 August 2004 Miscellaneous 2004-0066731E5 - Workspace in Home Expenses

Unedited CRA Tags

Principal Issues: Whether a salesperson can deduct home office expenses if he uses the home office to arrange appointments with customers.

Position: Question of fact. General comments provided.

Reasons: Home office must be the place where the employee "principally performs the duties of employment". Determination should be made by TSO after complete review of all facts.

29 July 2004 Miscellaneous 2004-0076561E5 - Deduction of GST paid

Unedited CRA Tags
9(1) 248(16)

Principal Issues: Where a taxpayer does not make a claim for an Input Tax Credit, is the amount of GST paid in respect of an expense deductible under the Income Tax Act?

Position: Question of Fact.

Reasons: Where a taxpayer does not make a claim for an ITC or a rebate under the ETA, the amount of GST paid is included in the cost of the property or the amount of the expense to which it relates. In such a case, the GST paid in respect of an expense is deductible to the extent that the expense is also deductible for income tax purposes.

29 July 2004 Miscellaneous 2004-0077551E5 - Tuition Fees

Unedited CRA Tags

Principal Issues: 1. Does the reduction of the amount of tuition fees paid for children of a teacher of a private school represent a taxable benefit. 2. Salary is foregone in lieu of reduced tuition. Whether the teacher is entitled to a charitable donation tax credit for the foregone salary. 3. Reduced tuition is levied because of the teacher's financial situation. Whether the teacher should be treated in the same manner as other families who receive reduced tuition and are not taxed on the saving.

Position: 1. Yes. 2. Question of fact. 3. Yes.

Reasons: 1. ITA 6(1)(a). 2. The amount of salary foregone would not be considered a charitable donation unless it was included in total employment income on a T4, and then only if it otherwise qualified as a charitable donation. 3. On the basis that the reduced tuition is received because of the teacher's financial situation and not because of the teacher's employment, it should be treated the same for income tax purposes as it is for the other families.

26 July 2004 Miscellaneous 2004-0075531I7 - Notional Tax Payable and Fairness

Unedited CRA Tags
120.31 220(3.1)

Principal Issues: Is the amount calculated in paragraph 120.31(3)(b) interest that can be waived under subsection 220(3.1)?

Position: No.

Reasons: Although the amount is "calculated as interest payable on the amount determined under paragraph (a) if it were so calculated", it is not interest. It is tax.

21 July 2004 Miscellaneous 2004-0085911E5 - Class 43.1 - Solution Gas

Unedited CRA Tags
Class 43.1 Reg 1219

Principal Issues: Whether property forming part of certain planned solution gas facilities would be eligible for inclusion in Class 43.1.

Position: Property described in paragraph (a) to Class 43.1 which satisfies the tests contained in paragraphs (b) and (c) of that class, would qualify for inclusion in Class 43.1.

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

12 July 2004 Miscellaneous 2004-0077981I7 F - Dédommagement-Régime de pension

Unedited CRA Tags
3(1) 248(1) 56(1)a) 6(3)

Principales Questions: Est-ce que le montant versé à un contribuable à titre de compensation est imposable?

Position Adoptée: Non

Raisons: Ce montant ne représente pas une somme reçue au titre ou en paiement d'une prestation de retraite ou de pension au sens du paragraphe 248(1) de la Loi. Il n'est pas non plus une allocation de retraite au sens du paragraphe 248(1) ni un revenu d'emploi. La somme versée n'est pas une source de revenu aux fins de la Loi

23 June 2004 Miscellaneous 2004-0077311E5 - Irregular RRSP payments to a U.K. resident

Unedited CRA Tags

Principal Issues: Irregular RRSP payments to a U.K. resident - are they exempt from Part XIII tax?

Position: No

Reasons: Payments in settlement of all future entitlements under the plan are not exempt under the treaty.

15 June 2004 Miscellaneous 2004-0075961M4 - Ministerial correspondence. XXXXXXXXXX

Unedited CRA Tags

Principal Issues: The writer made representations with respect to the timing and computation of benefits under paragraph 7(1)(a) of the Act where the value of the shares under the option decreases.

Position: We provided comments particular to the situation.

Reasons: The reply is based on decisions reached by the Department of Finance.