Income Tax Severed Letters - 2005-10-07

Principal Issues: Specific questions relating to the acceptability of certain transactions relating to a "cost plus" PHSP of a limited liability partnership.

Position: General comments provided.

Reasons: Comments would only be provided in the context of an advance income tax ruling submitted in the manner outlined in Information Circular IC 70-6R5.

Principal Issues: Whether farm property consisting of land and a gravel pit operation would be qualified farm property under the definition in 110.6 subparagraph (a)(vii).

Position: Yes.

Reasons: The property was acquired in XXXXXXXXXX so the pre 1987 rules apply and both the taxpayer's mother and father had used the land 5 or more years in the business of farming.

Principales Questions: 1. Quels documents pourraient démontrer qu'un montant est payable à un bénéficiaire d'une fiducie?
2. Est-ce qu'un fiduciaire peut attribuer à un bénéficiaire du revenu le gain en capital imposable et attribuer à un bénéficiaire du capital la partie non imposable du gain en capital?

Position Adoptée: 1. Une résolution écrite et signée par les fiduciaires d'une fiducie( ou les procès-verbaux d'une réunion des fiduciaires), en vertu de laquelle ces derniers confèrent un droit irrévocable à un bénéficiaire de la fiducie pour recevoir une partie du revenu de la fiducie, constitue un moyen pour établir que le bénéficiaire est en droit d'en exiger le paiement.
2. Oui si l'acte de fiducie contient une clause spécifique qui permet légalement de le verser de cette façon.

Raisons: 1. Position antérieure.
2. À défaut d'une disposition contraire dans l'acte de fiducie, le gain en capital réalisé par une fiducie ne fait généralement pas partie du "revenu" aux fins civiles. L'ARC et la jurisprudence ne reconnaissent pas les clauses laissant aux fiduciaires d'une fiducie l'entière discrétion quant à la détermination de ce qui constitue du capital ou du revenu. Les clauses spécifiques prévoyant clairement que certains types de paiement constitueront du revenu pour la fiducie sont cependant acceptables.

XXXXXXXXXX 2004-009366

Principal Issues: Will a Claimant remain non-taxable on a structured settlement annuity payment should an insurer transfer the ownership of the structured settlement to another insurer.

Position: YES, however such a transfer is not in accordance with our comments in IT-365R2 and the CRA will not provide an advance income tax ruling on this type of transfer by an insurer.

Reasons: The CRA is not a party to the structured settlement arrangement.

Principal Issues: Whether amount paid for collection and storage of umbilical cord blood qualifies as a medical expense for purposes of 118.2(2).

Position: No.

Reasons: Not a service relating to an existing medical condition or disease. Not a diagnostic procedure.

2005-013778
XXXXXXXXXX Eliza Erskine
(613) 954-3199
September 14, 2005

Principal Issues: Whether the residents of XXXXXXXXXX may claim the full fees paid to the lodge as medical expenses.

Position: No, however, some residents may be eligible to claim a portion of the fees for remuneration paid for attendant care as medical expenses.

Reasons: It is unlikely the residents received full-time care in a nursing home as required by paragraphs 118.2(2)(b) and (d). However, some residents may be eligible to claim remuneration paid for attendant care pursuant to paragraph 118.2(2)(b.1)

Principal Issues: 1) Where an employee travels between his/her residence and the University during a sabbatical leave for the purpose of supervising graduate students are the travel and other subsistence expenses allowable research expenses?
2) Are there guidelines to determine the reasonability of amounts paid to an employee while on sabbatical leave?
3) Where a computer is purchased before the beginning of a sabbatical leave can the purchase of the computer be considered an allowable research expense?
4) What is the current definition of sojourning? Is the employee sojourning where an employee remains in one place for more than 30 days?

Position: 1) Personal or living expense for travel between residence and university. Allowable research expenses if incurred away from home while carrying on the work.
2) Amounts will be considered reasonable if designed to cover the out-of-pocket costs that the employee will incur for the expense.
3) Purchases made for a research project in the year but prior to the receipt of the research grant will be considered allowable research expenses if the expense is not otherwise deductible in computing the researcher's income for the year.
4) Sojourning is not defined in the ITA but means temporarily residing in a place. The determination is dependent on a number of factors. More than 30 days in one place will likely be considered sojourning.

Reasons: 5(1), 56(1)(o) and IT-75R4

Principal Issues: Application of 62(1) for moving expenses in a number of situations.

Position: Question of fact, general information provided

Reasons: Departmental Position, 2002-013918, IT-178R3