Income Tax Severed Letters - 2004-09-03

Ruling

2004 Ruling 2004-0080791R3 - Immovable Property Situated in Canada

Unedited CRA Tags
A. 13 p. 3, Canada-Spain Convention

Principal Issues: Whether property of which consist principally of immovable property in Canada, for the purposes of paragraph 3 of Article XIII of the Canada-Spain Convention, where Canco 1 and Canco 2 invest indirectly through a trust in a limited partnership that constructs and operates XXXXXXXXXX

Position: No

Reasons: The property of Canco 1 and Canco 2 do not consist principally of immovable property situated in Canada because the property of Canco 1 and Canco 2 is property through which each carry on a business, indirectly through a trust and a limited partnership, and the property does not consist principally of rental property.

2004 Ruling 2004-0083491R3 - Qualified Investment for RRSP

Unedited CRA Tags
4900(1)(j)

Principal Issues: Will an investment in an interest in a debenture secured by a mortgage and issued by an arm's length corporation be a "qualified investment" for an RRSP or a RRIF? Will it constitute "foreign property" within the meaning assigned by 206(1)?

Position: Yes, No

Reasons: The investment represents an interest in a mortgage within the meaning of current paragraph 4900(1)(j) of the Regulations. The proposed changes to paragraph 4900(1)(j) of the Regulations, announced in February 2004, have not been considered for purposes of this Ruling. This investment will not constitute foreign property within the RRSP and/or RRIF, as defined in 206(1) of the Act, provided the property securing the debenture is real property situated in Canada.

Technical Interpretation - External

31 August 2004 External T.I. 2004-0090581E5 - Deferred Salary Leave Plan

Unedited CRA Tags
6801(a)(i)

Principal Issues: Whether a participant in a DSLP can reduce contributions.

Position: Yes, if the deferral period does not exceed 6 years.

Reasons: The Act and previous positions.

31 August 2004 External T.I. 2004-0078941E5 - training expenses

Unedited CRA Tags
18(1)(a) 18(1)(b) 67

Principal Issues: whether amounts paid for coaching services are deductible

Position: general comments provided

Reasons: deductibility depends on particular facts of a situation

27 August 2004 External T.I. 2004-0079061E5 - Bankruptcy - work in progress

Unedited CRA Tags
34 128(2)

Principal Issues: Can a self-employed professional elect under section 34 of the Act for work in progress in a post-bankruptcy return?

Position: Yes, provided that the professional is carrying on a business that is a professional practice.

Reasons: Not prohibited in the legislation.

27 August 2004 External T.I. 2004-0079241E5 - Health spending account

Principal Issues: Is there an income tax legislative or administrative directive that requires a claim in respect of health benefits for a spouse first be submitted to the spouse's medical insurance plan for reimbursement before an individual can make a claim from his or her health spending account?

Position: No.

Reasons: A health spending account is generally governed by the terms under which the plan has been established.

27 August 2004 External T.I. 2004-0073451E5 - Wholly Dependent Person Amount-Child Tax Benefit

Unedited CRA Tags
118(1)(b) 122.61

Principal Issues: Can only the parent receiving the child tax benefit in respect of a minor child, claim the wholly dependent person amount pursuant to paragraph 118(1)(b)?

Position: No.

Reasons: A taxpayer's eligibility to claim the amount for a wholly dependent person pursuant to paragraph 118(1)(b) of the Act is not dependant on whether the taxpayer receives a child tax benefit pursuant to subsection 122.61(1) of the Act.

25 August 2004 External T.I. 2004-0079731E5 - general damages - alleged human rights violation

Unedited CRA Tags
5(1) 6(3)

Principal Issues: whether general damages paid by an employer to an employee for an alleged human rights violation are taxable

Position: not if the amount is reasonable in the circumstances

Reasons: paragraph 12 of IT-337R4

25 August 2004 External T.I. 2004-0077561E5 - Form T5008 Exemption

Unedited CRA Tags
reg 230(7)

Principal Issues: Is a from T5008 required where it is made on behalf of a person exempt from tax under section 149 of the Act.

Position: No

Reasons: 230(7) of the regulations

25 August 2004 External T.I. 2004-0091151E5 - Tuition tax credit

Unedited CRA Tags
118.5(1)

Principal Issues: Are tuition fees paid to a university in Wales for a distance learning program eligible for the tuition tax credit?

Position: Question of fact. General comments given.

Reasons: See 2003-0002555. Referral to TSO.

22 July 2004 External T.I. 2004-0082611E5 - Reporting of interest

Unedited CRA Tags
12(4) 12(11) 220(3.1)

Principal Issues: How to report an investment contract taken out in 1988 that matures this year (2004) and that was not T5'd every third year? What are the consequences to the issuer and to the taxpayer?

Position: Voluntary Disclosure procedures may be available for the issuer. Taxpayer can ask under the fairness legislation to have the tax returns reassessed in the years that are applicable. .

Reasons: Issuer was under the impression that the investment was in an RSP account.

Technical Interpretation - Internal

26 August 2004 Internal T.I. 2002-0142171I7 - Superanuation or pension benefit

Principal Issues: Is a resident of Canada who is in receipt of a U.S. Civil Service pension taxable on the receipt?

Position: To be determined by tax treatment if taxpayer was a resident of the U.S.

Reasons: Pursuant to paragraph 1 of Article 18 of the Canada-U.S. Income Tax Convention, the pension is not subject to Canadian income tax if it would be exempt from U.S. income tax if the recipient had received it while resident in the U.S.

4 August 2004 Internal T.I. 2004-0086531I7 - Taxation of Diplomats

Unedited CRA Tags
81(1)(a) 250(5)

Principal Issues: 1) Is a diplomatic agent taxable in Canada on the earnings from his diplomatic post?
2) Does the diplomatic agent remain a resident of Canada for purposes of the Income Tax Act?

Position: 1) No. 2) Maybe.

Reasons: 1) Subsection 3(1) of the Foreign Missions and International Organizations Act.
2) Depends on whether the person is a resident of XXXXXXXXXX under the Canada-XXXXXXXXXX Tax Agreement.

27 July 2004 Internal T.I. 2004-0079111I7 F - Actions privilégiées à terme

Unedited CRA Tags
248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Term Preferred Share - Paragraph (b)
contingent requirement for the majority shareholder’s shares to be redeemed on death represented a contingent control-acquisition right of the minority SFI under para. (b)
Words and Phrases
absolute contingent

Principales Questions: Quel sens doit-on donner à l'expression "contrôle ou a le droit absolu ou conditionnel de contrôler l'émettrice ou d'acquérir le contrôle de celle-ci" dans la définition d'actions privilégiées à terme au paragraphe 248(1) de la Loi?

Position Adoptée: Le contrôle dont il est question dans cette expression est le contrôle de droit tel que défini par la jurisprudence canadienne. L'expression "droit absolu ou conditionnel" peut inclure des droits éventuels en vertu d'une entente contractuelle.

Raisons: Sens donné par la jurisprudence canadienne.