Income Tax Severed Letters - 2006-06-02

Principal Issues: What are the tax implications of the receipt of a bonus by the estate of the deceased shareholder of the corporation?

Position: Question of fact.

Reasons: Where the employer has a contractual obligation to pay a bonus annually or on some other periodic basis, but the bonus for the period has not been declared as of the date of death, the amount is considered to be a periodic payment of remuneration taxable under subsection 70(1) of the Act.

Principal Issues: Whether the cost of an executive medical in the form of a comprehensive health assessment or an executive health and lifestyle assessment is qualifying medical expenses for purposes of paragraph 118.2(2)(a)

Position: Yes, to the extent that services rendered under the executive medical was performed by a medical practitioner and the services relates to the diagnosis, treatment or prevention of disease

Reasons: The costs of health care services qualify as a medical expense for purposes of the medical expense tax credit if the services relate to the diagnosis, treatment or prevention of disease and the services are performed by a medical practitioner or nurse acting within the scope of their professional training.

Principales Questions: Quelle est la durée de l'exercice d'une entreprise ou d'un bien d'une société qui débute le 31 décembre 1996 et se termine le 3 janvier 1998?

Position Adoptée: Pour l'établissement d'une cotisation en vertu de la Loi de l'impôt sur le revenu, l'exercice de l'entreprise ou du bien de la société se termine le 3 janvier 1998 et l'exercice subséquent débute le 4 janvier 1998. Pour certaines circonstances précises, l'exercice de la société sera réputé se terminer le 31 décembre 1997.

Raisons: Loi de l'impôt sur le revenu.

Principal Issues: Do provincial tax credits received by a taxpayer in respect of the acquisition of shares of a venture capital corporation reduce the adjusted cost base of the shares?

Position: No.

Reasons: Where government assistance is in respect of capital property other than depreciable property, paragraph 53(2)(k) of the Act generally provides for a reduction to the adjusted cost base of the property by the amount of the assistance received. However, clause 53(2)(k)(i)(C) of the Act provides an exception for "the amount of prescribed assistance that the taxpayer has received or is entitled to receive in respect of, or for the acquisition of, shares of a prescribed venture capital corporation..."

Principal Issues: 1. Whether an allocation to a retired partner of a share of the partnership's work in progress, all in accordance with the partnership agreement is the type of agreement contemplated in 96(1.1)?
2. Whether drawings taken before ceasing to be a partner would be taken under an agreement contemplated in 96(1.1)?

Position: In both instances - insufficient information to conclude. General comments provided.

Reasons: These matters involve questions of fact. Best addressed when all the relevant facts are available.

Principal Issues: Whether the distance driven by an employee between a special work site or remote work location and his or her principal place of residence, are considered personal use for the purpose of computing a standby charge and operating benefit in respect of an employer-provided vehicle?

Position: No, provided all the conditions specified under subsection 6(6) are met.

Reasons: Where all the conditions set out in subsection 6(6) are met transportation benefits or allowances in respect of expenses incurred for travel between an employee's principal place of residence and a special work site or remote work location are also excluded from employment income, this includes for the purposes of computing a standby charge and operating benefit.