Income Tax Severed Letters - 2005-12-09

Ruling

2005 Ruling 2005-0155471R3 - Structured Settlement

Unedited CRA Tags
56(1)(d)

Principal Issues: The Claimant is requesting a structured settlement ruling with respect to payments to be received in the future as a result of an out of court settlement with the Insurer. The XXXXXXXXXX was seriously injured in a car accident and sued for damages in court. The Insurer will pay the funds in accordance with a Settlement Agreement.

Position: The amounts received pursuant to the Settlement Agreement will not be taxable.

Reasons: The terms of the settlement are considered to be consistent with the CRA's position as set out in paragraph 5 in IT-365R2.

2005 Ruling 2005-0120771R3 - Stock option plan

Unedited CRA Tags
7 110(1)(d)
Summary Under
Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(b)
full deductibility of cash surrender payment made on surrender of options granted on common shares tracking appreciation in partnership interest
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110 - Subsection 110(1) - Paragraph 110(1)(d)
stock option rules apply to common shares tracking a closely-held partnership interest

Principal Issues: Will section 7 apply to a particular employee incentive plan ?
Will the employees be entitled to the 110(1)(d) deduction?

Position: Yes
Yes

Reasons: The plan satisfies the requirements of section 7
The plan satisfies the requirements of paragraph 110(1)(d)

XXXXXXXXXX 2005-012077

2005 Ruling 2004-0103121R3 - Amalgamation of non-profit organizations

Unedited CRA Tags
149(5)

Principal Issues: Rulings requested that: 1. the cost bases for the assets of the amalgamated club will be a continuation from the cost bases of the amalgamating clubs; 2. 149(5) will not apply solely as a result of the amalgamation; and 3. the members of the amalgamating clubs will not have a gain on the disposition of their memberships.

Position: Rulings given

Reasons: 1. Based on corporate law; 2. Property transferred to the amalgamated club used exclusively and directly in the course of providing dining, recreational and sporting facilities provided by the amalgamating clubs for its members; and 3. Members have same rights in the new club.

2005 Ruling 2004-0108281R3 - Inducement payment and ACB of shares

Unedited CRA Tags
12(1)(x)

Principal Issues: (a) whether an amount is included in computing income under paragraph 12(1)(x) of the Act.
(b) whether the taxpayer may make an election pursuant to subsection 53(2.1) of the Act to reduce the cost of shares acquired by the 12(1)(x) amount thereby reducing the adjusted cost base of the property pursuant to paragraph 53(2)(s).

Position: (a) Yes
(b) Yes

Reasons: (a) The amount received is considered to be an inducement for purposes of paragraph 12(1)(x).
(b) The amount that would, but for subsection 53(2.1), be included in the taxpayer's income under paragraph 12(1)(x) was received in respect of the cost of a property acquired by the taxpayer in the year.

2005 Ruling 2005-0127961R3 - Bareboat-Charter

Unedited CRA Tags
212(1)(d)(ix) Art 21 Art 7

Principal Issues: i) Are payments pursuant to a bareboat charter made for the use of corporeal property? ii) Does Article 21 of the Norway Treaty apply to a bareboat charter? iii) Are payments under a bareboat charter covered by Article 7 of the Norway Treaty? iv) Should we consider applying GAAR to the use of single purpose corporations to hold the ships?

Position: i) Yes. ii) No. iii) Yes. iv) No.

Reasons: i) See IT-494. ii) See 2003-0012325. iii) See 913233A. iv) Ownership structure is consistent with the taxpayer's worldwide ownership structure and there are no discernible tax benefits.

2005 Ruling 2005-0143221R3 - exploration/new mine- CEE

Unedited CRA Tags
66.1(6)

Principal Issues: Whether expenses relating to a proposed exploration program will qualify for inclusion under paragraph (f) to the definition of CEE.

Position: Expenses to be incurred in respect of the proposed exploration program may potentially qualify under paragraph (f) to the definition of CEE.

Reasons: Based upon the facts of the situation and a written opinion received from Natural Resources Canada dated October 14, 2005. A representative of that Department visited the site and reached conclusions that supported the above position. The proposed expenditures a) are not related to the existing open pit mine or a potential extension of that mine and b) will be incurred before the underground mine currently being developed comes into production in reasonable commercial quantities.

2005 Ruling 2005-0152441R3 - Interest deduction on notes

Unedited CRA Tags
20(1)(c) 20(1)(f)

Principal Issues: 1) Is interest on the Notes the proceeds of which are used for the purpose of earning income from a business deductible under paragraph 20(1)(c)?
2) Is a discount paid in satisfaction of the principal amount deductible under paragraph 20(1)(f)?

Position: 1) Yes 2) Yes

Reasons: Use of funds is capital. Shallow discount may apply.

XXXXXXXXXX 2005-015244

Ministerial Correspondence

1 September 2005 Ministerial Correspondence 2005-0148481M4 - status Indian post-secondary education assistance

Unedited CRA Tags
81(1)(a)

Principal Issues: Do Status Indians in receipt of post-secondary education assistance from INAC have to include the assistance in their income?

Position: Pending the conclusion of a Government of Canada review of aboriginal policies, the CRA will continue to treat these amounts as tax-exempt.

Reasons: For many years the CRA understood that post-secondary scholarships and bursaries paid to status Indians by INAC were paid pursuant to a treaty obligation and were therefore exempt. However, the basis for this position has been questioned. Given the current uncertainty surrounding the issue, the CRA will continue to treat the amounts as tax exempt until the legal and policy framework of INAC's program is more clearly defined.

Technical Interpretation - External

5 December 2005 External T.I. 2005-0155331E5 - XXXXXXXXXX 2006 Meeting - Q & A's

Unedited CRA Tags
18(4) 95(6)

Principal Issues: Questions & Answers provided by Wayne Adams at 2006 XXXXXXXXXX Meeting
Limited partnerships and thin capitalization
Various questions re 95(6)
Reverse hybrids and treaty

Position: See body of memo

Reasons: See body of memo

On October 24, 2006, Wayne Adams, Director General of the Income Tax Rulings Directorate, Canada Revenue Agency, attended the XXXXXXXXXX meeting and responded to the following questions:

2 December 2005 External T.I. 2005-0161391E5 - test wind turbines - CRCE

Unedited CRA Tags
Reg. 1219(1) and (3)

Principal Issues: whether certain changes to the transactions described in our file 2005-014942 would alter our opinion regarding the ability of each of the 2 proposed exploratory wind turbines to qualify as test wind turbines under Reg. 1219(3).

Position: No

Reasons: requirements of Reg. 1219(3) continue to be met and a favourable opinion confirming this was provided by Natural Resources Canada on November 30, 2005

2 December 2005 External T.I. 2005-0137071E5 - RESP educational assistance payments

Unedited CRA Tags
146.1 56(1)(n) 56(1)(q) 56(3)

Principal Issues: Are educational assistance payments received by a beneficiary under a RESP eligible for the scholarship deduction under 56(3)?

Position: No

Reasons: Subsection 56(1)(n) specifically excludes as amounts considered a scholarship, fellowship, bursary, or prize, those payments received from an RESP under 56(1)(q) and therefore ineligible for the scholarship exemption under 56(3).

1 December 2005 External T.I. 2005-0151141E5 - Taxable Benefit - Motor Vehicle Not Auto Provided

Unedited CRA Tags
6(1)(a) Regulation 7306 Regulation 7305.1 248(1) automobile

Principal Issues: A linesman is on standby for two to six weeks a year and is required by the employer to take a company pick-up truck home. The linesman is not permitted to use the pick-up truck for any other personal purpose. The linesman must be available to respond to emergencies quickly by travelling directly from his home to the point of call with the company pick-up truck. How to calculate the employment benefit for the personal use of the pick-up trucks that are not "automobiles" as defined in subsection 248(1).

Position: Although the per-kilometre rate in section 7306 of the Regulations is generally accepted, the rate in section 7305.1 is more appropriate in this case.

Reasons: The rate in section 7305.1 of the Regulations reflects the economic benefit enjoyed by the linesman for the personal use of the employer's pick-up truck. While this rate does not reflect the capital cost of owning an automobile, it generally does reflect the operating cost. The rate, therefore, better reflects the incremental savings to the linesman of not having to use his personal motor vehicle on the days that the employer requires the linesman to use the company pick-up truck.

1 December 2005 External T.I. 2005-0155975E5 - Cellular Phone Airtime Minutes & Taxable Benefits

Unedited CRA Tags
6(1)(a)

Principal Issues: Whether an employee's personal use of airtime minutes of an employer provided cellular phone plan represent a taxable benefit under paragraph 6(1)(a)

Position: Question of Fact.

Reasons: To the extent the phone plan selected by the employer for the employees' business use is reasonable, and the employees' incidental personal use of the cellular phone does not contribute to additional charges being incurred over the basic phone plan price, the personal use will generally not be regarded as a taxable benefit.

30 November 2005 External T.I. 2005-0150811E5 - Superficial loss on security transactions

Unedited CRA Tags
54 40(2) 38(b)

Principal Issues: Calculation of 61 day period of the superficial loss rule

Position: Confirm and give example

Reasons: 30day period before and after the disposal refers to any acquisitions during that period.

23 November 2005 External T.I. 2005-0147221E5 - Transferring RPP benefits to an RRIF or RRSP

Unedited CRA Tags
146.3(2)(f) 104(27)(d), 60(j)

Principal Issues: Whether benefits received from an RPP on the death of a spouse, where the spouse was not a member of the RPP but had received benefits on the breakdown of a previous marriage, can be transferred directly into an RRIF.

Position: No.

Reasons: No provision in the law unless the spouse is a member of the RPP. However, if the conditions in paragraphs 104(27)(d) and 60(j) are met, the individual may transfer the amount to an RRSP.

22 November 2005 External T.I. 2005-0150821E5 - revocable living trust resident in Canada

Unedited CRA Tags
73(1.01)

Principal Issues: Does the transfer of jointly owned property located in the US by a married couple over the age of 65 who are resident in Canada to a "revocable living trust" result in any tax consequences at the time of the transfer?

Position: Provided that the conditions in ss 73(1.01) are met and the trustee(s) are resident in Canada, each spouse can transfer his or her share of the property to a joint spousal or common-law partner trust with no immediate consequences. Ss 75(2) will apply to attribute any income earned by the revocable living trust to the contributors throughout the period that they are resident in Canada and the trust will be subject to a deemed disposition at the end of the time on which the later of them dies.

Reasons: general comments explaining the conditions necessary for a rollover under section 73

21 November 2005 External T.I. 2005-0121232E5 F - Bien agricole admissible

Unedited CRA Tags
110.6(1)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Qualified Farm or Fishing Property
holding of property for a period by their aunt disqualified it as a QFP

Principales Questions: Est-ce qu'un terrain situé dans une zone agricole reçu en héritage par quatre particuliers est un "bien agricole admissible" pour les fins du paragraphe 110.6(1) de la définition.

Position Adoptée: Non, pas dans ce cas-ci.

Raisons: Il y a eu une interruption entre la période de possession précédant le moment de la disposition par les particuliers et la période durant laquelle la terre a été utilisée dans l'exploitation d'une entreprise agricole par le grand-père contrairement aux exigences du sous-alinéa 110.6(1)a)(vi).

8 November 2005 External T.I. 2005-0117791E5 F - Exonération des gains en capital

Unedited CRA Tags
110.6(1) 110.6(14)(f)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Qualified Small Business Corporation Share - Paragraph (e) - Subparagraph (e)(ii)
asset utilization test referred to in subpara. (e)(ii) takes into account the more stringent test in para. (d)

Principales Questions: (1) L'exception prévue au sous-alinéa 110.6(14)f)(i) de la Loi de l'impôt sur le revenu s'applique-t-il à des actions émises par une société dans le cadre d'un roulement en vertu du paragraphe 85(1) de cette loi?
(2) Si les actions remplacées constituent par ailleurs des actions admissibles de petite entreprise aux termes de cette définition au paragraphe 110.6(1), les actions de remplacement constitueront-elles également des actions admissibles de petite entreprise?
(3) Le test d'utilisation d'actifs que l'on retrouve à l'alinéa 110.6(1)e) de la définition de "action admissible de petite entreprise" tient-il compte du test plus sévère visé à l'alinéa d) de cette définition?

Position Adoptée: (1) Oui.
(2) Oui.
(3) Oui.

Raisons: Interprétation de la Loi de l'impôt sur le revenu.

8 November 2005 External T.I. 2005-0148091E5 F - Résidence principale-deux unités de condominium

Unedited CRA Tags
40(2)(b) 54
Summary Under
Tax Topics - Income Tax Act - Section 54 - Principal Residence
two stacked condos connected by an interior staircase constituted two housing units
Words and Phrases
housing unit

Principales Questions: (1) Le gain en capital provenant de la disposition de deux unités de condominiums, reliées entre elles par un escalier, est-il entièrement admissible à l'exemption des gains en capital sur les résidences principales?
(2) La réponse à la question précédente serait-elle différente si les deux unités étaient vendues à deux acheteurs différents, lors de deux transactions séparées?
(3) La réponse à la deuxième question serait-elle différente si la première transaction de vente avait lieu en 2005 et la seconde en 2006?

Position Adoptée: (1) Question de fait. Dans le cas en l'espèce, les deux unités de condominiums ne peuvent être considérées comme formant un seul et unique logement aux fins de l'exemption du gain réalisé sur la vente d'une résidence principale.
(2) s/o.
(3) s/o.

2 November 2005 External T.I. 2005-0148331E5 - Disclosure of Social Insurance Number

Unedited CRA Tags
237

Principal Issues: Can a municipality disclose the SIN of nurses employed by the municipality to a nurses labour association pursuant to a negotiated term of a collective agreement?

Position: No

Reasons: The SIN can only be disclosed or communicated in the circumstances outlined in subsections 237(3) and (4) or upon express written consent of the individual assigned the number.

26 October 2005 External T.I. 2005-0117551E5 F - État des loyers de biens immeubles

Unedited CRA Tags
9 18 18(1)(a) 18(1)(h)
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense
costs of disinfecting, de-odourizing and repairing a rental home were currently deductible
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(h)
prohibition applied to travel and accommodation expenses incurred in dealing with a rental property left in substandard condition

Principales Questions: À savoir si certains frais engagés dans le cadre de réparations majeures apportées à un immeuble locatif - et certains frais accessoires à ces réparations - sont déductibles dans le calcul du revenu de location du contribuable pour l'année?

Position Adoptée: Question de fait. Certains des frais sont déductibles alors que d'autres ne le sont pas.

Raisons: Interprétation de la Loi de l'impôt sur le revenu; jurisprudence.

Conference

7 October 2005 Roundtable, 2005-0141261C6 - Klotz and the meaning of "personal use property"

Unedited CRA Tags
54

Principal Issues: In Frank Klotz v. The Queen, 2004 DTC 2236, the Tax Court of Canada (TCC) gave a broader interpretation to the expression "personal use property" than the one previously used by the CRA as outlined in Technical Interpretations 2002-0148955 and 2004-0077831E5.
1. Has the CRA reviewed its position regarding the meaning of the expression PUP following the TCC decision in Klotz?
2. What is the CRA position with regard to a loss on the disposition of the following properties:
a) gold ingots held for more than 10 years;
b) vacant land held for more than 5 years as a long-term investment;
c) principal residence of the deceased, held by the estate pending its disposition under circumstances similar to those outlined in our Technical Interpretation 2002-0148955.

Position: 1. No.
2. no position given.

Reasons: 1.The CRA has not changed its position on the meaning of the expression PUP following the decision by the TCC in Klotz. The CRA's position remains the same pending a decision by the Federal Court of Appeal in 3 cases similar to Klotz that were heard concurrently on September 12, 2005.
2. Question of fact. Each case must be decided on its own merit.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE
APFF - CONGRÈS 2005

7 October 2005 APFF Roundtable Q. 24, 2005-0141141C6 - Stock option benefits and SR&ED tax credit

Unedited CRA Tags
127(9)
Summary Under
Tax Topics - Income Tax Act - Section 127 - Subsection 127(9) - Qualified Expenditure

Principal Issues: In Alcatel Canada Inc. v. The Queen, the Tax Court of Canada (TCC) determined that the stock options benefits included in the income of certain employees engaged in SR&ED activities were part of the salaries that qualified for the SR&ED tax credit.
1. Will the CRA accept the decision handed down in Alcatel? 2. If so, what terms or criteria will the CRA use in abiding by the TCC decision?

Position: 1. Yes.
2. See criteria below.

Reasons: 1. The TCC decision is consistent with Rulings' position.
2. N/A

7 October 2005 APFF Roundtable Q. 26, 2005-0141171C6 F - Prepaid Income - Reserves when no contingency

Unedited CRA Tags
20(1)(m)
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m)
no obligation to repay, no reserve

Principal Issues: Whether a taxpayer would be entitled to claim a reserve where he has included in business income amounts received in the taxation year for services not rendered by the end of the taxation year in a situation where the obligation to perform the services is towards a government body and not the client. In other words, the taxpayer is under no obligation under his contract with his client to return the prepayment to the client in the event that the services are never rendered.

Position: No.

Reasons: A taxpayer could not claim a reserve if under an agreement with its client, the taxpayer was allowed to retain the prepayment made by the client in any event, regardless of whether or not the services or goods will in fact ever be provided. In other words, under this type of clause, the taxpayer would be allowed to retain the prepayment even if the taxpayer did not fulfill its obligations under the contract and was in default.

Technical Interpretation - Internal

1 December 2005 Internal T.I. 2005-0155577I7 - Retiring Allowance

Unedited CRA Tags
56(1)(a)(ii)

Principal Issues: Whether a voluntary payment made by a non-employer, (the union) to a union member represents a retiring allowance.

Position: No

Reasons: The payment represents a voluntary personal gift to the individual as a result of his status as a union member and would therefore is not considered a payment to "compensate for the loss of employment" as contemplated by subparagraph 56(1)(a)(ii) of the Act.

1 December 2005 Internal T.I. 2005-0161381I7 - Part XIII Tax

Unedited CRA Tags
212(1)(d)

Principal Issues: Whether certain payments from a Canadian corporation to its non-resident parent are subject to Part XIII tax.

Position: Yes.

Reasons: The portion of the payments that are for "rent" are subject to Part XIII tax by virtue of paragraph 212(1)(d) of the Act and the portion of the payments that are for "services" are subject to Part XIII tax by virtue of subparagraphs 212(1)(d)(iii) and (v) of the Act.

29 November 2005 Internal T.I. 2005-0130101I7 F - ITC - Logging Truck

Unedited CRA Tags
127(9) 4600(2)(f)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 4600 - Subsection 4600(2) - Paragraph 4600(2)(f)
trucking by sub-contractor can qualify

Principal Issues: Whether a logging truck purchased by a taxpayer to be used for the purpose of transporting logs is a qualified property for investment tax credit?

Position: Yes

Reasons: Previous positions & facts.

16 November 2005 Internal T.I. 2005-0153071I7 F - Interprétation de l'alinéa 147.4(1)c)

Unedited CRA Tags
147.4(1)c)
Summary Under
Tax Topics - Income Tax Act - Section 147.4 - Subsection 147.4(1)
further single-premium contract must be acquired for subsequent employees rather than being added with additional premium to existing contract

Principales Questions: Un contrat de rente visé au paragraphe 147.4(1) acquis dans le cadre d'un RPA peut-il faire l'objet de plus d'une prime ?

Position Adoptée: Non

Raisons: L'alinéa 147.4(1)c) prévoit que le contrat ne doit permettre qu'une seule prime au moment de l'acquisition du droit par le particulier ou postérieurement.

9 November 2005 Internal T.I. 2005-0133261I7 F - Frais médicaux payés à l'avance

Unedited CRA Tags
118.2(1) 118.2(2)
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(a)
prepaid dental care does not qualify until the year in which the care is received
Summary Under
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(1) - B - Paragraph (a)
a receipt for prepaid medical care does not qualify

Principales Questions: 1. Est-ce que des frais médicaux payés à l'avance se qualifient pour les fins de l'alinéa 118.2(2)a) de la Loi de l'impôt (la " Loi ") dans l'année où le montant est versé.
2. Est-ce qu'un reçu pour frais payé d'avance peut servir d'attestation des frais médicaux tel qu'exigé par l'alinéa 118.2(1)a) de la Loi?

Position Adoptée: 1. Question de faits.
2. Non, un reçu pour un paiement d'avance n'est pas suffisant.

Raisons: 1. Pour être éligible comme frais médicaux pour les fins du calcul du crédit d'impôt, les frais doivent être engagés, payés et les reçus émis au cours d'une période de 12 mois se terminant dans l'année d'imposition tel que requis par le paragraphe 118.2(1) et l'alinéa 118.2(2)a) de la Loi.
2. Le reçu qui est exigé par la Loi sert d'attestation que les frais ont bien été engagés. Il ne peut pas être émis avant que les services soient rendus.

9 November 2005 Internal T.I. 2005-0154301I7 F - Choix concernant les immobilisations admissibles

Unedited CRA Tags
14(1.01)
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14.1
operating agreement of care facility with province was goodwill because it could not be transferred without a transfer of the care business
Words and Phrases
goodwill
Summary Under
Tax Topics - Income Tax Act - Section 14 - Subsection 14(1.01)
cost of property acquired can be nil
Words and Phrases
cost

Principales Questions: (1) Les contrats d'exploitation, tels que ratifiés par le vendeur et le ministère de la santé et des services sociaux du Québec, peuvent-ils être inclus dans la définition d'achalandage, telle qu'élaborée par la jurisprudence et la doctrine?
(2) Lorsqu'un choix est fait en vertu du paragraphe 14(1.01) de la Loi de l'impôt sur le revenu, quel sens doit-on donner à l'exigence que le coût de l'immobilisation admissible doit être "déterminable"?

Position Adoptée: (1) Oui.
(2) Question de fait.

Raisons: Loi de l'impôt sur le revenu; jurisprudence.

8 November 2005 Internal T.I. 2004-0109351I7 F - Frais juridiques - pension alimentaire

Unedited CRA Tags
18(1)a)
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees
legal expenses to obtain increased support, but not to reduce a support obligation, are currently deductible

Principales Questions: Est-ce que la contribuable peut déduire du calcul de son revenu les frais judiciaires engagés en XXXXXXXXXX aux fins suivantes, malgré le fait que les procédures judiciaires sous-jacentes n'aient pas encore connu leur dénouement:
1. Afin de contester une motion visant l'annulation rétroactive de la pension alimentaire payée par l'ex-époux pour le bénéfice des enfants;
2. Afin de contester une demande de pension alimentaire de la part de l'ex-époux;
2. Afin d'obtenir une ordonnance augmentant le montant de la pension alimentaire payée à un des enfants issus du mariage dont la contribuable a la charge financière.

Position Adoptée: 1. Oui.
2. Non.
3. Non.

Raisons: La jurisprudence et les positions administratives de l'Agence du revenu du Canada.

25 October 2005 Internal T.I. 2005-0149841I7 - Reload Stock Options - 110(1)(d)

Unedited CRA Tags
110(1)(d) 6204(1)

Principal Issues: Will a deduction under paragraph 110(1)(d) of the Act be available where a benefit under subsection 7(1) of the Act is deemed to be received as a result of exercising an employee stock option that includes a "reload stock option"?

Position: No. Based on the description of the "reload stock option" contained in the stock incentive plan reviewed, the share acquired under the original option would not be a "prescribed share" for purposes of paragraph 110(1)(d) of the Act.

Reasons: The restrictions contained in subparagraph 6204(1)(a)(iv) of the Income Tax Regulations concerning prescribed shares, provide that the holder of a share acquired under an option must not be able to cause the share to be redeemed, acquired or cancelled by the corporation issuing the share.

21 October 2005 Internal T.I. 2005-0154751I7 - Debts incurred by charitable foundations

Unedited CRA Tags
149.1(3)(d) 149.1(4)(d)

Principal Issues: Whether debts incurred by public or private foundations for the purpose of acquiring investments are acceptable debts.

Position: We have revised our position such that a debt incurred for the purpose of acquiring investments would be viewed as a "debt incurred in connection with the purchase and sale of investments" for purposes of paragraphs 149.1(3)(d) and (4)(d).

Reasons: It had been our view that the phrase "debts incurred in connection with the purchase and sale of investments" should be interpreted strictly. However, we reconsidered our position XXXXXXXXXX . We informed the Department of Finance of our revised position and they advised that they are no longer concerned if a charitable foundation borrows to acquire an investment.