Income Tax Severed Letters - 2006-10-06

Ministerial Correspondence

28 September 2006 Ministerial Correspondence 2006-0203641M4 - Taxation of federal inmate

Unedited CRA Tags
122.5 63(2)

Principal Issues: Whether the Act provides a special status for individuals confined to a prison or similar institution.

Position: No, but the GST tax credit cannot be claimed in respect of such individuals and the spouse of such individuals have special rules when calculating child care expenses.

Reasons: Pursuant to section 122.5 and subsection 63(2) of the Act.

September 28, 2006

28 September 2006 Ministerial Correspondence 2006-0204101M4 - Scholarship Exemption

Unedited CRA Tags

Principal Issues: Whether the proposed amendments to subsection 56(3) will apply to post-doctoral scholarships.

Position: Question of fact.

Reasons: The draft legislation requires that the award be received in connection with an individual's enrolment in an educational program for which the individual may claim the education tax credit.

20 September 2006 Ministerial Correspondence 2006-0203001M4 - Automobile Expenses - Sole Proprietors

Unedited CRA Tags

Principal Issues: A request to allow sole proprietors to deduct a per kilometre allowance for motor vehicle expenses instead of maintaining receipts for individual expenses.

Position: Not permissible under the Act.

Reasons: Such expenses would require receipts.

18 September 2006 Ministerial Correspondence 2006-0202991M4 F - Revenu de placements sur une réserve

Unedited CRA Tags

Principales Questions: Imposition des revenus de placements d'un Indien inscrit résidant sur une réserve.

Position Adoptée: Questions de faits

Raisons: À moins que le revenu de placements ne soit généré exclusivement sur la réserve, l'Agence est d'avis que ce revenu n'est pas exonéré.

6 September 2006 Ministerial Correspondence 2006-0198921M4 - Deductibility of Legal Fees

Unedited CRA Tags

Principal Issues: Whether legal fees incurred to defend against involuntary commitment are deductible?

Position: No

Reasons: There is no provision in the Income Tax Act that would permit such a deduction.

6 September 2006 Ministerial Correspondence 2006-0194211M4 - Principal Residence Exemption-Trust Residual

Unedited CRA Tags
40(2)(b) 54 248(25)

Principal Issues: Whether the principal residence exemption would be available during the years a house was owned by a trust and inhabited by a person who only had a life interest. On her death, her five brothers would have the right to the residual in the trust.

Position: Yes.

Reasons: A housing unit may be designated as a principal residence of a personal trust that is resident in Canada for each year in which the property is ordinarily inhabited by a specified beneficiary of the trust. In order to qualify as a "specified beneficiary", a person must, inter alia, be an individual who is "beneficially interested" in the trust. The term "beneficially interested" is partially defined in the Act. A person beneficially interested in a trust includes any person that has a right as a beneficiary under a trust to receive income or capital of the trust. Since the amendment to that definition in 1997 to make it an "inclusive" type of definition, the term may now include a person who has the right to reside in a housing unit owned by the trust rent-free.

31 August 2006 Ministerial Correspondence 2006-0196591M4 - Interest deductibility

Unedited CRA Tags

Principal Issues: Whether (1) businesses should be allowed to deduct interest on loans for investments and (2) CRA is obligated to provide advanced rulings and interpretations in writing?

Position: (1) As stated in Interpretation Bulletin IT-533; (2) As stated in Information Circular IC 70-6R5

Reasons: (1) The law; (2) procedures when making such a request

Technical Interpretation - External

28 September 2006 External T.I. 2006-0181771E5 - Qualified farm property

Unedited CRA Tags
110.6(1) ITAR26(5)

Principal Issues: Whether a particular farm property qualifies as farm property

Position: Question of fact but it appears that property may qualify, based on information provided.

Reasons: Conditions of paragraphs (a)(vi) and (vii) of the definition of "qualified farm property" in subsection 110.6(1) of the Income Tax Act appear to be met.

28 September 2006 External T.I. 2006-0188391E5 - Interest Free Loan - Life Lease

Unedited CRA Tags
3 9

Principal Issues: Whether the equity deposit in the lease agreement should be considered an interest free loan.

Position: Question of Fact.