Income Tax Severed Letters - 2006-07-21

Ruling

2006 Ruling 2005-0160571R3 - Transfer of asset to a REIT by a tax-exempt entity

Unedited CRA Tags
149(1)(o.2) 149(10) 108(2)(a) 13(7)(e)

Principal Issues: Transfer of asset to a REIT by a tax-exempt entity

Position: Rulings given

Reasons: Complies with the Act

2006 Ruling 2006-0171431R3 - Innovative Instrument

Unedited CRA Tags
20(1)(c) 104(7.1) 104(6)

Principal Issues:
1. Whether the XXXXXXXXXX note constitutes borrowed money to ACO for the purpose of paragraph 20(1)(c).
2. Whether subsection 104(7.1) will apply to deny a deduction to the Trust under paragraph 104(6)(b) of amounts payable to its unit holders.

Position:
1. Yes.
2. No.

Reasons:
1. In previous rulings, we concluded that deductibility under paragraph 20(1)(c) is dependent upon there being a borrower and lender relationship between the parties to the XXXXXXXXXX note. There is a good argument that a loan exists until such time as a mandatory conversion event occurs.
2. The existence of the voting rights attached to the Special Trust Securities is not intended to give ACO a percentage interest in the Trust's property in excess of ACO's income interest in the Trust.

XXXXXXXXXX 2006-017143

2006 Ruling 2006-0187491R3 F - Modification à un acte de fiducie

Unedited CRA Tags
104 248(1)

Principales Questions: Est-ce que la prolongation du terme de la fiducie d'une période de XXXXXXXXXX ans amène des conséquences fiscales pour la fiducie ou ses bénéficiaires?

Position Adoptée: Non

Raisons: Positions antérieures

2006 Ruling 2005-0160541R3 - Income Trust Reorganization

Unedited CRA Tags
132.2 253.1 132(6) 97(2)

Principal Issues: Whether transferring the business of the income trust's corporate subsidiary to a partnership on a rollover basis using sections 85, 97(2) and 132.2 meets the requirements of the Act and is within policy. Before the proposed transactions, the trust owns notes and shares of the corporate subsidiary that carries on a business. At the end of the proposed transactions, it owns a limited partnership interest and shares of the general partner of a partnership that carries on that business.

Position: The proposed transactions meet the requirement of the Act and rulings on the various rollover provisions and section 245 are granted.

Reasons: The provisions of the Act; the trustees of the trust do not form the majority of the directors of the corporate general partner.

Technical Interpretation - External

18 July 2006 External T.I. 2006-0193261E5 - Reward points/airline ticket

Unedited CRA Tags
118.1 248(35)

Principal Issues: Whether the donation of an airline ticket that has been acquired by redeeming reward points qualifies as a gift for the purposes of section 118.1 of the Income Tax Act.

Position: Yes

Reasons: Where the reward points are redeemed to acquire an airline ticket that is immediately transferred to a registered charity, it is the fair market value of the airline ticket at the time it is transferred to the charity that is relevant to the determination of the donation tax credit.

Technical Interpretation - Internal

18 July 2006 Internal T.I. 2006-0170871I7 - Investment banker fees

Unedited CRA Tags
20(1)(bb)
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(bb)

Principal Issues: Are investment banker fees paid by bidder on a commission basis to acquire remaining shares of target deductible under 20(1)(bb)?

Position: No

Reasons: Such fees are costs of acquisition

28 June 2006 Internal T.I. 2006-0182461I7 - DTC in respect of a US Resident Dependant

Unedited CRA Tags
118.3(2)

Principal Issues: Whether there may be allowed under subsection 118.3(2) in respect of a dependant resident in the US, the amount that would have been allowed had that dependant been resident in Canada.

Position: Yes

Reasons: Pursuant to paragraph 3, Article XXV (as amended) of the 1980 Canada-US Tax Treaty, there may be allowed under subsection 118.3(2) in respect of a dependant resident in the US, the amount that would have been allowed had that dependant been resident in Canada