Income Tax Severed Letters - 2005-07-01

Technical Interpretation - External

28 June 2005 External T.I. 2005-0124311E5 - Stop Loss Rules- Grandfathering

Unedited CRA Tags
112(3) 112(3.2)

Principal Issues:
1. Whether a life insurance policy issued by a different carrier that replaces a life insurance policy that existed on April 26, 1995 would affect or result in a loss of grandfathering provided for in paragraph 131(1)(b) of S.C. 1998, c.19.
2. Will our response to the first question be altered if the replacement policy provided for an increase in coverage?

Position:
1.Not necessarily
2. No

Reasons:
Grandfathering for the purposes of the stop loss rules is fact dependant and will be determined on a case-by-case basis. The shares acquired, redeemed or cancelled will be grandfathered where, in accordance with subparagraph 131(1)(b)(iii) the "main purpose" of the insurance policy as at April 26, 1995 was to fund the acquisition, redemption or cancellation of shares owned by the shareholder on April 26, 1995. Accordingly where the policy in existence on April 26, 1995 met the requirements of paragraph 131(1)(b) of S.C. 1998, c.19 the replacement of that insurance policy with another life insurance policy will not be relevant.

28 June 2005 External T.I. 2005-0114761E5 - XXXXXXXXXX

Unedited CRA Tags
118.1

Principal Issues: Whether a XXXXXXXXXX may issue official income tax receipts in respect of charitable donations to it.

Position: Yes.

Reasons: Subject to confirmation by TSO, the XXXXXXXXXX appears to be a public body performing a function of government in Canada. Proposed amendments to Act will add, for gifts made after May 8, 2000, a "municipal or public body performing a function of government in Canada" as a qualified donee for charitable gifting purposes.

27 June 2005 External T.I. 2005-0125561E5 - RRSP/DPSP benefits received by a status Indian

Unedited CRA Tags
81(1)(a) 146(8) 147(10)

Principal Issues: With respect to a status Indian whose employment income was tax exempt, are benefits received from a deferred profit sharing plan or a group RRSP in relation to such employment taxable?

Position: Question of fact

Reasons: Consistent with previous positions and based on the connecting factors test

2005-012556
XXXXXXXXXX Kimberly Duval
(613) 599-6054
June 27, 2005

22 June 2005 External T.I. 2005-0134251E5 - Taxable Benefit Parking

Unedited CRA Tags
6(1)(a)

Principal Issues: Whether employer provided parking constitutes a taxable benefit.

Position: Question of fact depending on the circumstances.

Reasons: No taxable benefit exists when the employer provides a free parking space for business reasons, and the employee regularly has to use his or her vehicle to carry out the duties of employment. As well, if the fair market value cannot be determined, no benefit is applicable to the employee. This could be the case, for example, where a business operates from a shopping center or industrial park and parking is available to both employees and non-employees.

21 June 2005 External T.I. 2005-0126931E5 - Christian Science Practitioners

Unedited CRA Tags
118.4(2)

Principal Issues: Whether Christian Science Practitioners qualify as "medical practitioners" under the Act.

Position: Depends on whether laws of jurisdiction where services are performed authorize the services that they provide. To our knowledge no province or territory currently authorizes Christian Science practitioners as medial practitioners.

Reasons: Legislation. One must look to provincial (or territorial, state, etc...) legislation to determine whether payments to a medical practitioner will qualify for the medical expense tax credit.

21 June 2005 External T.I. 2005-0129551E5 - Shareholder Debt

Unedited CRA Tags
15(2) 15(2.4)

Principal Issues: Whether the assignment of a shareholder debt from one corporation to another results in a new loan under 15(2).

Position: No. Just the assignment of an existing loan to another corporation does not result in a new loan or indebtedness.

Reasons: The paragraph 15(2.4)(b) exception to subsection 15(2) of the Act refers to the creditor/debtor relationship that exists at the time of the issuance of the loan. A subsequent assignment of a loan to another person does not result in a new loan. Therefore, it is our general view that a loan that was previously exempted from the application of subsection 15(2) of the Act, because of paragraph 15(2.4) (b), would continue to be exempt as long as the original loan remains outstanding.

20 June 2005 External T.I. 2005-0134971E5 - QUALIFIED FARM PROPERTY

Unedited CRA Tags
110.6(1)

Principal Issues: Whether the land owned by a taxpayer is considered to be "qualified farm property"?

Position: Question of fact, general comments provided.

Reasons: Question of fact, insufficient facts provided.

10 May 2005 External T.I. 2005-0119721E5 - Fines and penalties

Unedited CRA Tags
67.6 9 7309

Principal Issues: Whether various penalties and fines are deductible and whether the interest on such fines and penalties is deductible: Federal Income Tax, Provincial Income Tax, GST, Ontario Retail Sales Tax, Source Deductions, Ontario Work Place Safety Insurance Board, and Ontario Ministry of Transportation

Position: Fines and Penalties: Proposed section 67.6 of the Act provides that no deduction is allowed for any fines and penalties other than as prescribed by draft section 7309 of the Regulations. Interest on Unpaid Taxes, Fines, Penalties, Levies and Premiums: a) Federal Income Tax: No b) Provincial Income Tax: No c) GST and Ontario Retail Sales Tax: in certain circumstances d) Unremitted CPP and EI source deductions: Yes e) Ontario Work Place Safety Insurance Board, and Ontario Ministry of Transportation: Deductible if incurred for the purpose of earning income from business.

Reasons: Previous comments given in various interpretations

2005-011972
XXXXXXXXXX G. Moore
(613) 957-8982
May 10, 2005

Conference

3 May 2005 Roundtable, 2005-0116631C6 - life insurance policy of subsidiary; winding-up

Unedited CRA Tags
69(5) 148(7) 88(2)

Principal Issues: whether 69(5) or 148(7) applies on 88(2) wind-up

Position: likely 69(5)

Reasons: seems more specific, but we require an actual fact situation for a full analysis

Technical Interpretation - Internal

7 June 2005 Internal T.I. 2005-0132721I7 - Prescribed International Org.

Unedited CRA Tags
110(1)(f)

Principal Issues: Whether an employee of the XXXXXXXXXX would qualify for a deduction under paragraph 110(1)(f).

Position: No.

Reasons: The XXXXXXXXXX is not as international organization that is a specialized agency brought into relationship with the United Nations.