Income Tax Severed Letters - 2006-12-01

Ruling

2006 Ruling 2006-0178651R3 - In house loss utilization - Affiliated Group

Unedited CRA Tags
20(1)(c); 55(3)(a)

Principal Issues: Whether loss utilization within an affiliated group is acceptable.

Position: Yes.

Reasons: Previous positions.

Ministerial Correspondence

22 November 2006 Ministerial Correspondence 2006-0209281M4 - Transit Pass Credit

Unedited CRA Tags
118.02

Principal Issues: Whether a transportation pass with a privately-owned company could qualify for the public transit pass tax credit.

Position: Question of fact.

Reasons: A "qualified Canadian transit organization" under the draft legislation is a person authorized under a law of Canada or a province to carry on the business of public commuter transit services through a permanent establishment in Canada and therefore, does not necessarily preclude transportation services offered by a privately-owned company.

Technical Interpretation - External

27 November 2006 External T.I. 2006-0208471E5 - Legal Fees - Child Support

Unedited CRA Tags
18(1)(b)

Principal Issues: Why are legal fees incurred for child support deductible per paragraph 17 of IT-99R5 (Consolidated) - Legal and Accounting Fees?

Position: Position explained.

Reasons: We accepted that the Divorce Act or a provincial family statute creates a pre-existing right to support amounts with regard to the obligation of parents in respect of child support. .

22 November 2006 External T.I. 2006-0189441E5 - Change to employer paid disability plan

Unedited CRA Tags
6(1)(f)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(f)

Principal Issues: Where an employee-pay-all disability plan becomes a plan in which the employer makes 100% of the contributions, how are disability benefits taxed?

Position: If an employee is in receipt of benefits at the time the employee-pay-all plan is converted, the employee may continue to receive non-taxable benefits in such amount and for such length of time as may have been specified in the plan when benefits commenced.
If an employee's benefits commence after the conversion, the benefits will be included in income pursuant to paragraph 6(1)(f) of the Act. Contributions made by the employee to the prior plan cannot be deducted from benefits received from the new plan.

Reasons: Converting a plan from employee-pay-all to employer-pay-all results in a new plan.

22 November 2006 External T.I. 2006-0207371E5 - benefits from deceased annuitant's unmatured RRSP

Unedited CRA Tags
146(1) 146(8)

Principal Issues: What is the authority for instructing RRSP carriers to report income earned by an unmatured, insured RRSP after the date of the annuitant's death and paid to the annuitant's spouse as a refund of premiums?

Position: By virtue of the definitions of "refund of premiums" and "tax-paid amount" in the Act, all amounts paid to a spouse from an insured, unmatured RRSP of a deceased annuitant qualify as a refund of premiums, reportable in Box 18 of the T4RSP. This applies to all income earned by the RRSP after the annuitant's date of death until the distribution to the spouse.

Reasons: Interpretation of the Act.

2006-020737
XXXXXXXXXX Renée Shields
(613) 948-5273
November 22, 2006

Technical Interpretation - Internal

20 November 2006 Internal T.I. 2006-0194431I7 - Carrying on business in Canada

Unedited CRA Tags
2(3)(b) 253

Principal Issues: Did a U.S. corporation carry on business in Canada through permanent establishments in Canada?

Position: According to the facts provided to us, it is our understanding that the corporation carried on business in Canada through permanent establisments. However, an examination of all the relevant facts would be required to provide a definitive answer.

Reasons: The corporation carried on a business of sale of goods that it did not manufacture. Employees or agents of the U.S. corporation solicits orders through the XXXXXXXXXX offices leased by the corporation in Canada.

3 November 2006 Internal T.I. 2006-0192051I7 - Lump sum retroactive pension payment

Unedited CRA Tags
70(2) 56(1)a) 248(1)

Principal Issues:
Is the lump sum payment qualified as "rights or things" under subsection 70(2) of the Act?

Position:
May be treated as rights or things.

Reasons:
The payment is still regarded as income to the estate or beneficiary under paragraph 56(1)(a) of the Act, but if the executor desires to report that amount as income of the pensioner in the year of death pursuant to subsection 70(2) of the Act, no objection will be made to that manner of reporting, nor to any consequential election properly made under subsection 70(2).

11 December 1995 Internal T.I. 95056370 - Traitement fiscal - versement particulier - indien

Unedited CRA Tags
81(1)a) 56(1)u)
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(u)
benefits paid to Cree hunters regarding their hunting and trapping activities were s. 56(1)(u) support payments that were not exempted under s. 87
Summary Under
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87
benefits paid to Crees to support their traditional hunter lifestyle were social assistance

Principales Questions:
Des prestations payées à un Indien inscrit par l'Office de la Sécurité du revenu des chasseurs et piégeurs Cris sont-elles à inclure dans le calcul du revenu de l'autochtone inscrit en vertu de l'alinéa 56(1)u) de la Loi ou en sont-elles exclues en vertu de l'alinéa 81(1)a) de la Loi si lesdites prestations sont payées à l'égard d'activités de chasse, de trappage ou de pêche qui se font:

a)exclusivement dans une réserve;
b)à l'extérieur d'une réserve; ou,
c)à la fois à l'intérieur et à l'extérieur d'une réserve.

selon l'une ou l'autre des deux hypothèses suivantes:

d)l'Indien inscrit réside dans une réserve, ou;
e)l'Indien inscrit réside à l'extérieur d'une réserve.

Position Adoptée:
L'alinéa 56(1)u) de la Loi s'applique à ces prestations peu importe le situs des activités de chasse, de trappage ou de pêche de l'Indien. Cette position ne change pas du seul fait que l'Indien réside ou non dans une réserve. Ces prestations ne sont pas des montants exemptés de l'impôt en vertu de l'alinéa 81(1)a) de la Loi.