Income Tax Severed Letters - 2006-11-10

Ministerial Correspondence

5 October 2006 Ministerial Correspondence 2006-0199181M4 - Pension Income Credit - RRIF payments

Principal Issues: The taxpayer suggested that the law be changed to allow the pension income credit where RRIF payments are received before age 65.

Position: Confirmed that under the present law, the payment would not qualify and referred issue to Department of Finance for their consideration.

Reasons: Any such change in tax law is the purview of the Tax Policy Branch at Finance.

Technical Interpretation - External

3 November 2006 External T.I. 2006-0178561E5 F - Avantage imposable - assurance maladie grave

Unedited CRA Tags
15(1)

Principales Questions: Comment déterminer l'avantage imposable pour un actionnaire à l'égard d'une police d'assurance maladie grave dont une partie des primes est payée par l'actionnaire et une autre partie par la société?

Position Adoptée: La valeur de l'avantage pourrait correspondre au montant que l'actionnaire devrait débourser, dans des circonstances similaires, afin d'obtenir d'une personne n'ayant pas de lien de dépendance avec lui le même avantage qui découle de la transaction concernée.

Raisons: Question de fait

27 October 2006 External T.I. 2005-0157321E5 F - Winding-up of a wholly-owned corporation

Unedited CRA Tags
88(1)
Summary Under
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c) - Subparagraph 88(1)(c)(ii)
character of property usually regarded as retained in the hands of the parent
Summary Under
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Goodwill
character of property usually regarded as retained in the hands of the parent

Principal Issues: Whether the character of a property acquired by a parent corporation on the winding-up of a wholly-owned subsidiary remains the same for the parent corporation after the winding-up?

Position: Question of fact. General comments provided.

Reasons: Wording of the Act.

27 October 2006 External T.I. 2006-0185911E5 - Deduction for annual membership dues

Unedited CRA Tags
8(1)(i)

Principal Issues: Are membership fees paid to a particular organization deductible pursuant to paragraph 8(1)(i) of the Act?

Position: No, not deductible as an employment expense.
For a member who is self employed, or where membership is purchased by an employer for an employee, the membership fees may be deductible as an expense incurred for the purpose of earning income from business.
Where an employer pays the membership fee for an employee, it will be a question of fact whether the payment results in a taxable employment benefit.

Reasons: Membership in the particular organization is not necessary for the maintenance of a professional status, which is necessary under paragraph 8(1)(i).

26 October 2006 External T.I. 2006-0170341E5 F - Subsections 87(2.1) and 87(2.11)

Unedited CRA Tags
87(2.1) 87(2.11)
Summary Under
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.1)
s. 87(2.11) does not affect the aging of previously-incurred losses and is relevant to carry-backs by the Amalco
Summary Under
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.11)
purposes of s. 87(2.11) is to allow parent to use losses realized by the new corporation (so as to carry back)

Principal Issues: Whether subsection 87(2.11) would take precedence over subsection 87(2.1) in the situation described?

Position: No.

Reasons: Wording of the provisions.

Technical Interpretation - Internal

2 November 2006 Internal T.I. 2006-0204971I7 - Retiring allowance versus non-taxable damages

Unedited CRA Tags
248(1)

Principal Issues: Whether an amount allocated for mental distress on a settlement of damages, following a loss of employment, is non-taxable or a retiring allowance.

Position: Likely a retiring allowance.

Reasons: In order to qualify as non-taxable damages, the taxpayer must be able to demonstrate that the damages relate to events or actions separate from the loss of employment. In this case, the damages appear to relate only to the loss of employment.