Income Tax Severed Letters - 2006-09-15

Ruling

2006 Ruling 2005-0148871R3 - Whether NPO taxable on capital gain

Unedited CRA Tags
149(1)(l) 149(5)

Principal Issues: Is an NPO, whose main purpose is to provide dining, recreational and sporting facilities for its members taxable on the capital gain resulting from the disposition of property?

Position: No

Reasons: The property disposed of is used exclusively for providing dining, recreational and sporting facilities. Accordingly, by operation of subparagraph 149(5)(e)(ii), the capital gain resulting from the disposition is not included in calculating the NPO trust's income.

XXXXXXXXXX 2005-014887

XXXXXXXXXX , 2006

2006 Ruling 2006-0182271R3 - Reorganization of a mutual fund trust - s. 132.2

Unedited CRA Tags
132.2 131(8) 89(1) 245(2)

Principal Issues: A. Whether a corporation qualifies as a "mutual fund corporation" within the meaning of subsection 89(1) of the Act; B. Whether the transfer of the assets of a mutual fund corporation to a mutual fund trust would qualify as a "qualifying exchange" within the meaning of subsection 132.2(2) of the Act so that the rules in subsection 132.2(1) of the Act would apply to such transfer; and C. Whether subsection 245(2) of the Act would apply to redetermine the tax consequences confirmed in rulings A and B.

Position: A. Yes; B. Yes; and C. No.

Reasons: See statement of principal issues

Technical Interpretation - External

11 September 2006 External T.I. 2006-0175771E5 - Other Expenses for Work

Unedited CRA Tags
8(1)(g) 8(1)(h) (8(4)

Principal Issues: Whether ambulance paramedics can deduct meals during work under 8(1)(g) and whether a deduction is available for vehicle expenses incurred in getting to and from work locations.

Position: 1) No; 2) General Comments.

Reasons: 1) Paragraph 8(1)(g) of the Act. 2) Question of fact.

11 September 2006 External T.I. 2006-0176061E5 - Meaning of Eligible Relocation

Unedited CRA Tags
248(1) 62

Principal Issues: Whether a move meets the definition of eligible relocation when there is no change in work location?

Position: No.

Reasons: The definition of eligible relocation requires that there be a new work location.

11 September 2006 External T.I. 2006-0193921E5 - Motor Vehicle Allowance

Unedited CRA Tags
6(1)(b)

Principal Issues: Whether an employer can choose to pay an employee a motor vehicle allowance that is less than the rate prescribed in section 7306 of the Income Tax Regulations.

Position: Yes

Reasons: Under the Income Tax Act, a reasonable allowance paid to an employee by an employer for the use of a motor vehicle for travelling in the performance of the duties of the employment will not be required to be included in the income of the employee. An allowance may be considered reasonable even if it is less than the rate prescribed in section 7306 of the Regulations.

8 September 2006 External T.I. 2006-0195841E5 - Capital cost allowance - Class 43.1

Unedited CRA Tags
Class 43.1 Class 43.2 Reg. 1102(1)(c) Reg. 1100(24)

Principal Issues: whether wind turbine purchased to generate electricity and participate in the Ontario net metering program is eligible for inclusion in Class 43.1 and/or Class 43.2

Position: depends on the particular facts

Reasons: legislation

24 August 2006 External T.I. 2006-0186741E5 - Health Care Expense Account

Unedited CRA Tags
248(1)

Principal Issues: Whether a particular health care expense spending arrangement would be viewed as a PHSP if there is added to the plan, a right to compensation for the loss realized on forfeiture of the unused health care expense account credits of an employee on termination.

Position: Question of fact. The proposed change to the arrangement is inconsistent with the plan being a PHSP.

Reasons: The right to compensation, on termination, for the loss of "bonus otherwise payable" (the forfeited credits), guarantees that the employee will be reimbursed for the full amount allocated to that employee for the year of termination and the previous year.

23 August 2006 External T.I. 2006-0199271E5 - transfer of RRSPs in payment of maintenance

Unedited CRA Tags
146(16) 60(c)

Principal Issues: 1. Can an individual transfer an amount out of an RRSP in satisfaction of arrears in spousal maintenance?
2. Can such a payment be reported as the payment of spousal support?

Position: 1 No. 2. No

Reasons: 1. The provisions of 146(16) do not permit transfers on this basis. 2. transfers of amounts from RRSPs cannot be treated as maintenance payments.

14 August 2006 External T.I. 2005-0162911E5 - Subparagraph 149(1)(o.2)(iii) - Investments

Unedited CRA Tags
149(1)(o.2)(iii)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(o.2) - Subparagraph 149(1)(o.2)(iii)
derivatives

Principal Issues: Are derivatives such as forward contracts, futures, swaps and options considered to be "investments" for purposes of subparagraph 149(1)(o.2)(iii) of the Income Tax Act?

Position: Question of fact.

Reasons: Provided the particular derivative is a permissible investment under the PBSA, 1985 or a similar law of a province, then yes.

XXXXXXXXXX 2005-016291
G. Allen
August 14, 2006

18 July 2006 External T.I. 2006-0194301E5 - Phantom stock Plans

Unedited CRA Tags
6801(d) 248(1)

Principal Issues: What are the taxation and withholding obligations in respect of the specific plan?

Position: No specific answer could be provided but general comments were made.

Reasons: The plan in question has existed for some time. We therefore could not provide the rulings requested.

Technical Interpretation - Internal

28 August 2006 Internal T.I. 2006-0171141I7 F - Régime d'assurance collective contre la maladie

Unedited CRA Tags
6(1)a) 6(1)f)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(i)
a qualifying plan can be implemented by individual disability insurance policies taken out for all management employees if there is a similar premium sharing arrangement for all

Principales Questions: Est-ce qu'on peut dire que les primes payées pour des polices d'assurance-invalidité individuelles contractées à l'égard d'employés d'un même groupe sont des primes payées à l'égard d'un régime d'assurance collective contre la maladie ou les accidents?

Position Adoptée: Cela dépend des faits. Il faut déterminer s'il y a un régime soit une entente conclue entre l'employeur et les employés ou un groupe d'employés. S'il y a un régime, il peut comporter une ou plusieurs polices d'assurance. Cependant, pour savoir si une police individuelle fait partie du régime collectif, il faut que le niveau de prestations offertes par la police et le ratio de paiement des primes entre l'employeur et l'employé soient les mêmes que pour les autres employés sinon cette police individuelle ne fera pas partie du régime.

Raisons: Positions antérieures.

24 August 2006 Internal T.I. 2006-0198641I7 - Disability Tax Credit

Unedited CRA Tags
118.3(2) 150

Principal Issues: Whether a supporting person could claim an amount under subsection 118.3(2) of the Income Tax Act where the dependent person has not filed a return of income because they have no taxable income.

Position: Yes

Reasons: The dependent person is not obligated to file a T1 return if they have no taxes payable. However, the person seeking to claim the transferred amount has the responsibility to establish when required their entitlement to it including, if needed, the amount that the dependant could have claimed. In addition, in cases where the dependant is a non-resident, the person seeking to claim the transferred amount has the responsibility to establish when required how the relevant tax treaty may impact their entitlement to it.