Income Tax Severed Letters - 2006-02-17

Principal Issues: (1) Is the date that a return of income is filed that is referred to in 164(3)(c)(i) the date of filing of the original return? (2) Is the date of an overpayment the date that amounts were paid in excess of taxes payable, rather than the date a request for a refund is made?

Position: General Comments provided.

Reasons: The legislation

Principal Issues: Two questions are posed:
1) if a status Indian incorporates a reserve-resident company and employs himself to perform duties off-reserve, is his employment income tax-exempt?
2) if a status Indian operates a farm on a reserve, can he deduct farm losses from other taxable business income earned off-reserve?

Position: 1) Income from the corporation to the individual might be tax exempt. It will be a question of fact
2) A farming loss is unlikely to arise, therefore would not be available to offset taxable business income

Reasons: 1) It will be a question of fact whether the individual receives amounts from a corporation in his capacity as shareholder or in his capacity as an employee. If the amount is determined to be employment income, then Guideline 2 will likely have application.
2) Business income from a farm operated on a reserve by a status Indian is likely tax-exempt. As such, paragraph 18(1)(c) provides that no deduction may be taken for expenses incurred to earn that income. It is therefore not likely that a loss could arise in this situation.

2005-016145
XXXXXXXXXX Renée Shields
(613) 948-5273
February 13, 2006

Principal Issues: Whether compensation received by an employee on sick leave can qualify for the OETC.

Position: Question of fact.

Reasons: Where all of the other requirements of subsection 122.3(1) of the Act are otherwise satisfied, the sick leave will be part of the "qualifying period".

Principal Issues: (i) Is driving between work locations during the course of the workday personal or employment related travel? (ii) If a non-taxable allowance is received for only certain employment travel, can a deduction be claimed for additional employment related travel? (iii) Is driving between home and various work locations personal travel?

Position: (i) Travel between work locations during the course of a workday is likely employment related travel. (ii) Possibly. (iii) Question of Fact

Reasons: (i) The travel was made in order to carry on the duties of employment. (ii) Subparagraph 8(1)(h)(iii) denies a deduction where a taxpayer receives an allowance for travel expenses that was, because of subparagraph 6(1)(b)(v), (vi) or (vii), not included in computing the taxpayer's income for the year. However, if employment-related motor vehicle expenses are in excess of the non-taxable motor vehicle allowance and a taxpayer voluntarily includes the allowance in income, the CRA will generally permit the deduction if the requirements in section 8 of the Act are otherwise met. (iii) Generally, travelling between an employee's home and the place where he or she regularly reports for work is considered personal travel. However, where an employee proceeds directly between their home and a location other than their regular place of work, it may be considered employment related travel. It is a question of fact as to whether a particular location is an employee's regular place of work.

Principal Issues: Whether Canada is precluded (by virtue of paragraph 14(3) of the Canada-Korea Tax Convention) from taxing a Canadian resident individual's income from employment in respect of personal services as a pilot aboard an aircraft operated in international traffic by an airline resident in the Republic of Korea ?

Position:
Yes

Reasons: Paragraph 3 of Article 14 exempts from Canadian tax the remuneration described above of a Canadian pilot.

Principal Issues: Whether the Disability Tax Credit may be claimed where the cost of nursing home care is also claimed as a medical expense.

Position: Question of Fact

Reasons: Where the reason for residing in a nursing home has met the conditions of paragraph 118.2(2)(e), the disability tax credit will not be denied solely because the residence qualifies as a nursing home.

Principal Issues: Whether a proposed cogeneration facility will qualify for inclusion in Class 43.1

Position: General comments provided

Principal Issues:
Dans le cadre de son emploi, un employé supervise, dans un pays étranger, trois projets de construction dont l'un est financé partiellement par un programme d'aide au développement international visé à l'article 3400 du Règlement.
Si les conditions prévues à l'alinéa 122.3(1)b) de la Loi sont respectées, l'employé pourra-t-il bénéficier du CIEÉ sur la partie de son revenu d'emploi raisonnablement attribuable aux deux projets sur trois qui ne sont pas financés par un programme d'aide au développement international?

Position:
Non.

Reasons:
Interprétation de la Loi.