Income Tax Severed Letters - 2005-01-14

Principales Questions: La définition de bien substitué à l'alinéa 248(5)b) de la Loi s'applique-t-elle pour les fins du paragraphe 7(1.1) de la Loi?

Position Adoptée: Non.

Raisons: La définition de bien substitué au paragraphe 248(5) de la Loi s'applique aux dispositions de la Loi qui contiennent les mots "bien substitué".

2004-010170
XXXXXXXXXX Michelle Desrosiers
Notaire, M.Fisc.
Le 13 janvier 2005

Principal Issues: Will a deemed dividend result under 84.1(1)(b) in the taxpayer's crystallization transactions

Position: Yes.

Reasons: Parties appear not to be dealing at arm's length.

Principal Issues: Whether, given the reference in proposed paragraph 1219(3)(f) of the Regulations to a wind energy conversion system being "installed", work with regard to non-test wind turbines which may ultimately form part of a wind farm project may proceed without limitation during the 120 calendar day testing period provided the wind turbines are not fixed to their respective foundations.

Position: No.

Reasons: The provisions of proposed paragraph 1219(3)(f) of the Regulations represent only one of the conditions that must be satisfied in order to obtain test wind turbine status. While a wind turbine may not be installed from an engineering perspective prior to being fastened to its foundation at the fixed location at which it is to be used, it must also be considered that the above proposed paragraph requires a 120 calendar day testing period and that proposed paragraph 1219(3)(d) of the Regulations requires that the "primary purpose" for installing a wind turbine intended to be a test wind turbine must be to perform the "test" described therein. As such, while preparatory work with regard to non-test wind turbines intended to form part of a wind farm project is not precluded during the relevant 120 calendar day testing period, it will be a question to be determined from the facts and circumstances of a particular wind farm situation whether the extent of such preparatory work would preclude satisfaction of the above-mentioned "primary purpose" test.

Principales Questions: Quel sera le traitement fiscal de sommes qui pourraient être reçues à titre de dédommagement pour une perte de revenu?

Position Adoptée: Commentaires généraux.

Raisons: Question de fait.

Principal Issues: What constitutes personal use of an employer-provided motor vehicle by construction site foremen? Mainly where the motor vehicle is used to travel between a foreman's home and a construction site or an employer's premises and the foreman is required to take the motor vehicle home, either because the construction site is not secure, the motor vehicle is equipped with special tools, material or equipment, or the foreman is on call for emergencies or must pick up tools, equipment, fuel or other employees while on route to the construction site or the employer's premises.

Position: Generally, travel between an employee's home and regular place of employment is considered personal, unless the exception paragraph 5 of IT-63R5 is met.

Reasons: Longstanding position supported by jurisprudence.

Principal Issues: Whether or not the exceptions in paragraphs 67.1(2)(a) or 67.1(2)(c) of the Income Tax Act apply so that the 50% limitation in 67.1(1) of the Act does not apply to a department store and a book publisher selling promotional packages.

Position: Paragraph 67.1(2)(c) is not applicable in this situation. It is our general view that since the taxpayer will receive compensation for all items in the promotional packages, the exception in paragraph 67.1(2)(a) of the Act will apply so that the 50% limitation in subsection 67.1(1) of the Act will not apply.

Reasons: Paragraph 67.1(2)(a) applies where the ordinary course of a business of the taxpayer is that of providing food, beverages or entertainment for compensation.

Principal Issues: 1.Nature of assistance given to student -forgivable loans vs. scholarship/bursaries and affect on other tax credits/deductions such as childcare deductions and charitable credit....

Position: 1. General discussion only-- whether bona fide loan exists is a question of fact- whether forgivable or not

Reasons: 1. Loan described was more in the nature of assistance/scholarship-bursary; forgivable loan must be forgiven upon meeting certain conditions- financial hardship is more in nature of awarding a scholarship or bursary.