Income Tax Severed Letters - 2005-03-25

Ruling

2005 Ruling 2005-0113331R3 F - Don de biens culturels

Unedited CRA Tags
118.1(1) 118.1(10) 39(1)a)(i.1)

Principales Questions: Le fait qu'il y ait une vente d'oeuvres d'art se qualifiant de biens culturels consécutivement à un don d'autres oeuvres d'art se qualifiant de biens culturels de la même collection au même musée empêche-t-il le donateur de se prévaloir des dispositions des articles 118.1, 110.1 et du sous-alinéa 39(1)a)(i.1) de la Loi?

Position Adoptée: Non.

Raisons: Selon le droit applicable aux transactions visées par la demande, la transaction de don respecte les conditions prévues aux dispositions législatives inscrites en titre et se qualifie de don aux fins fiscales.

Ministerial Correspondence

22 March 2005 Ministerial Correspondence 2005-0115391M4 F - Revenu de placement sur une réserve

Unedited CRA Tags
81(1)(a)

Principales Questions:
Imposition des revenus de placement d'Indiens inscrits résidant sur une réserve provenant d'une institution financière située sur la réserve.

Position Adoptée:
Question de fait.

Raisons:
À moins que le revenu de placements ne soit généré exclusivement sur la réserve, l'agence est d'avis que ce revenu n'est pas exonéré.

1 March 2005 Ministerial Correspondence 2005-0110091M4 - rrsp foreign property tax calculation

Unedited CRA Tags
206(2)

Principal Issues: Fairness of two year grace period when shares of a Canadian corporation are acquired by a foreign corporation.
Cost amount of shares acquired on a share for share exchange of a Canadian corporation by a foreign corporation.

Position: We must apply the law as written.
The cost amount of the new shares is not the cost amount of the old shares.

Reasons: It was a decision of Parliament to provide a grace period of two years.
There is no rollover of the cost amount of shares acquired in the circumstances described.

Technical Interpretation - External

22 March 2005 External T.I. 2005-0112081E5 F - Convention de retraite - lettre de crédit

Unedited CRA Tags
207.5(2) 207.5(1)
Summary Under
Tax Topics - Income Tax Act - Section 207.7 - Subsection 207.7(2)
where LC used to secure RCA benefits and refundable tax generated on funding of LC fees, refundable tax not recoverable based on paying the benefits
Summary Under
Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(1) - Refundable Tax
use of letter of credit to secure RCA benefits
Summary Under
Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(2)
election not available to custodian holding an LC

Principales Questions:
Une fiducie de convention de retraite peut-elle récupérer l'impôt remboursable versé par l'employeur sur sa cotisation à la fiducie pour payer les frais d'émission d'une lettre de garantie lorsque la fiducie verse des prestations de retraite aux bénéficiaires de la fiducie?

Position Adoptée:
Non. Dans le scénario soumis, l'impôt remboursable de l'année précédente n'excède pas celui de l'année courante car elle reçoit une cotisation de l'employeur pour effectuer le paiement des prestations et elle détient toujours la lettre de garantie.

Raisons:
Application de la Loi.

Technical Interpretation - Internal

22 March 2005 Internal T.I. 2005-0115451I7 F - Extinction d'une remise de dette

Unedited CRA Tags
80
Summary Under
Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount
no deduction where forgiven debt is subsequently restored pursuant to improved fortunes clause
Summary Under
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(10)
repayment deduction under s. 80.01(10)
Summary Under
Tax Topics - General Concepts - Effective Date
CRA assesses based on the state of affairs at year end

Principales Questions:
Dans la situation où nous avons appliqué l'article 80 à une créance remise et où un événement postérieur rend la dette de nouveau exigible, est-ce possible d'accorder une déduction?

Position Adoptée:
Aucune déduction n'est possible.

Raisons:
Aucune dépense n'est engagée.

15 March 2005 Internal T.I. 2005-0114311I7 - Deductibility of Employer Provided Meal Allowances

Unedited CRA Tags
6(1)(a) 6(1)(b) 67.1(1) 67.1(2)

Principal Issues: Whether the deductibility of employer's meal allowance expenditures is limited to the 50% restriction provided for under subsection 67.1(1) of the Act where the amounts are excluded from the employee's income pursuant to subparagraph 6(1)(b)(vii) of the Act.

Position: Yes.

Reasons: The paragraph 67.1(2)(d), (e) and (e.1) exceptions to the 50% restriction do not apply.

8 March 2005 Internal T.I. 2003-0054281I7 - Designation of assets and the Canada-US tax treaty

Unedited CRA Tags
2400(1)(f) 219(4)

Principal Issues: Whether a designation of out-of-country assets by the Minister pursuant to paragraph 2400(1)(f) of the Regulations is contrary to Article VII of the Canada-US tax treaty.

Position: It depends. If the business profits attributable to a permanent establishment of a non-resident insurer as determined under Article VII of the Canada-US tax treaty are less than those determined under Canadian domestic law, the treaty will restrict Canada's right to tax to the amount determined under Article VII.

Reasons: The non-resident insurer needs to prepare a thorough functional and factual analysis to demonstrate that the business profits attributable to the permanent establishment as calculated under Article VII are less. The non-resident insurer cannot simply calculate its income under domestic law but without regard to paragraph 2400(1)(f) of the Regulations and use that amount as its business profits attributable to a permanent establishment under Article VII without any supporting functional and factual analysis.

7 March 2005 Internal T.I. 2004-0108481I7 - Ability to renounce exercise price of warrants

Unedited CRA Tags
66(15) 66(12.6)

Principal Issues: Whether amounts can be renounced by a principal-business corporation in respect of consideration given on behalf of an investor to the corporation upon the exercise of a share purchase warrant originally issued by the corporation to a partnership of which the investor was a limited partner.

Position: Potentially; among the requirements to be met is that the investor be the person giving consideration under an agreement in writing with the principal-business corporation for the issue of the flow-through share.

Reasons: Based upon the nature of the determination and the provisions of the Act in question.