Income Tax Severed Letters - 2005-11-18


2005 Ruling 2005-0149001R3 F - Underground Exploration Program - New Mine & CEE

Unedited CRA Tags
66.1(6) 66.2(5) 248(1) "Mineral Resource"

Principal Issues: A) Whether expenses relating to an underground exploration program to be carried out will be related to a mine that has come into production in reasonable commercial quantities, or to a potential or actual extension thereof.
B) Whether expenses relating to an underground exploration program to be carried out will qualify for inclusion under paragraph (f) of the definition of CEE.

Position: A) No.
B) Yes.

Reasons: Based upon the facts of the situation and a written opinion initially received from Natural Resources Canada, and provided that any economic mineralization found pursuant to the underground exploration program is not exploited using the existing surface and underground infrastructures. Favourable ruling issued in XXXXXXXXXX 2004 with respect to this particular issue. Issuance of another favourable ruling, dealing with the same issues and the same Project, that would cover an additional 12-month period.

Ministerial Correspondence

10 November 2005 Ministerial Correspondence 2005-0155721M4 - Income From An Office Of A Member Of Parliament

Unedited CRA Tags

Principal Issues: Whether the income from the office of Prime Minister is taxable.

Position: Yes.

Reasons: There are exemptions in the Act for certain types of income, such as income earned from the office of Governor General of Canada. However, no exemption exists regarding the income earned from the office of a Member of the House of Commons of Canada, including the office of the Prime Minister, or a Member of a provincial legislative assembly. Income earned by these members from their offices is taxed in the same way as the income of any other Canadian who holds an office or is employed

Technical Interpretation - External

15 November 2005 External T.I. 2005-0138441E5 - Childcare Expenses

Unedited CRA Tags
63(1) 63(2)

Principal Issues: Whether income of a supporting person who has no Canadian sourced income must be considered for the purpose of subsection 63(2) of the Act.

Position: Yes

Reasons: Legislation and intent of Finance (see 9716927).

15 November 2005 External T.I. 2005-0149391E5 - Employer-Provided Apartment

Unedited CRA Tags

Principal Issues: Is there a taxable benefit when an employer provides an apartment to an employee at a special site?

Position: It's a question of fact.

Reasons: There is no taxable benefit in this case because it is the employer who primarily benefits from having the employee at the site.

15 November 2005 External T.I. 2005-0154801E5 F - Service Contract Payments - Filing of T1204

Unedited CRA Tags
Reg. 237 Reg. 200(1) 153(1)(g)

Principal Issues: Whether information returns T1204 and T1204 Summary should be filed in a given situation.

Position: No. In the given situation, the person making the payments is not a "federal body" as defined in subsection 237(1) of the Regulations. However, pursuant to subsection 200(1) of the Regulations, every person who makes a payment described in subsection 153(1) of the Act shall make an information return in prescribed form (T4A slips and T4A Summary) in respect of the payment, unless an information return in respect of the payment has been made under sections 202, 214, 237 or 238 of the Regulations. Fees, commissions or other amounts for services are the type of payments described in paragraph 153(1)(g) of the Act. There is a requirement to file an information return under subsection 200(1) of the Regulations notwithstanding the fact that no withholding of tax is required.

Reasons: Wording of the Act and previous positions.

8 November 2005 External T.I. 2005-0143851E5 - Information Returns under Regulation 237

Unedited CRA Tags
12(1)(x) Reg. 237

Principal Issues: (1) Whether a reimbursement or allowance in lieu of reimbursement paid to an individual for services rendered without remuneration constitutes an amount received in the course of earning income from a business or property pursuant to paragraph 12(1)(x), and (2) whether an information return pursuant to Regulation 237 is required for such payments.

Position: (1) No. (2) No.

Reasons: Where an individual provides services, whether pursuant to a contract for services or not, but receives no remuneration for such services, there is no source of income from a business or property. Therefore, it follows that any reimbursement or allowance for reasonable accommodation and travel expenses, meals or XXXXXXXXXX associated with the provision of such services is not received in the course of earning income from a business or property. As a consequence, such amounts are not included in income pursuant to paragraph 12(1)(x) and an information return in respect of such amounts need not be filed.


7 October 2005 Roundtable, 2005-0132441C6 F - REÉR: Abolition du plafond de biens étrangers

Unedited CRA Tags
146(8.8) 56(1)h)

Principales Questions: Est-ce que le mécanisme de crédit d'impôt prévu à l'article XXIX B(6) de la Convention fiscale de 1980 entre le Canada et les États-Unis d'Amérique s'applique dans la situation décrite?

Position Adoptée: Non.

Raisons: L'impôt canadien dû dans cette situation ne serait pas à l'égard de biens situés aux États-Unis mais à l'égard d'un bien, soit un véhicule de placement régi par un REÉR, qui est situé au Canada.

7 October 2005 Roundtable, 2005-0137041C6 F - Acceptation bancaire

Unedited CRA Tags
12(1)c) 12(3) 12(11) 12(9)

Principales Questions: En ce qui concerne un investisseur qui se porte acquéreur d'une acceptation bancaire, comment l'ARC considère cet investissement aux fins de l'application de l'alinéa 12(1)c) et des paragraphes 12(3), 12(4), 12(9), 20(14) et 20(21) ?

Position Adoptée: L'ARC considère qu'une acceptation bancaire acquise par un contribuable constitue une créance aux fins de l'application de ces dispositions.

Raisons: La loi.

Technical Interpretation - Internal

19 October 2005 Internal T.I. 2005-0151211I7 - Financing expenses

Unedited CRA Tags
20(1)(e) 20(1)(e.1)

Principal Issues: 1. Whether subsidiary may claim deduction where parent raises money by issuing preferred shares (or debentures) to the public, invests the money in preferred shares of (or on-loans the funds to) its subsidiary, and the subsidiary pays parent an amount equal to the parent's costs of the issuance of the shares (or debentures).
2.Whether the indirect use of funds test for 20(1)(c) applies to 20(1)(e)

Position: 1. Depends on facts. 2. No

Reasons: 1. The subsidiary may make a 20(1)(e) deduction if it was required to pay this amount to the parent as the subsidiary's cost of obtaining the capital (or loan) from the parent.
2. There is no jurisprudence that extends the limited caselaw re indirect use of funds to 20(1)(e) [or to 20(1)(d), (e.1) or (f)].