Income Tax Severed Letters - 2007-03-16

Principal Issues: Whether the cost of implanting individual teeth by means of a peg implanted into a patient's jawbone to secure the tooth would qualify as an approved dental expense.

Position: Yes, provided the payment is to a medical practitioner or a dentist.

Reasons: Payments made to a "medical practitioner" or a "dentist", who is a person authorized to practice as such pursuant to the laws of the jurisdiction in which the service is rendered, would generally constitute a medical expense for the purposes of paragraph 118.2(2)(a). Some of these payments may qualify as medical expenses pursuant to paragraph 118.2(2)(o), for laboratory, radiological or other diagnostic procedures, if they have been prescribed by a medical practitioner or a dentist.

2006-021802
XXXXXXXXXX J. Eckler
(416) 952-8930
March 8, 2007

Principal Issues:
Whether Mr. A is entitled to the overseas employment tax credit ("OETC") in subsection 122.3(1) of the Act?
Assuming the CIDA allowance is eligible under subparagraph 6(1)(b)(iii) of the Act, would the employer's allowance also be tax-free?

Position:
No.
No.

Reasons:
The "all or substantially all test" in paragraph 122.3(1)(b) of the Act is not met.
The allowance received by M. A from his employer and relating to the non-CIDA project would not be received by Mr. A "as a person described in paragraph 250(1)(b), (c), (d) or (d.1)". That allowance would be taxable and should be reported on a T4 information slip, unless the exception contained in subsection 6(6) of the Act was applicable.

Principal Issues: (1) Is an NPO taxable on the capital gain realized upon the sale of real property it owns?
(2) Will an NPO lose its exempt status if it purchases a replacement office building with tenants who will remain in occupancy and pay rent for a transitional period of 2 months?

Position: (1) No
(2) Question of Fact, but likely not.

Reasons: (1) A validly organized and operated NPO is not taxable on capital gains.
(2) Although an NPO cannot have profit as a motive, it can earn income. The particular circumstances of the acquisition as well as the use to which the organization puts the income will be relevant.

2007-022458
XXXXXXXXXX Renée Shields
(613) 948-5273
March 2, 2007

Principales Questions: Est-ce que les montants périodiquement payés à des retraités pour compenser l'abrogation de leur programme d'assurance-maladie privé sont imposables?

Position Adoptée: Non

Raisons: Selon nos recherches au sein de la LIR, dans nos différents bulletins d'interprétation et dans les différentes interprétations techniques, nous sommes d'avis que les sommes compensatoires versées aux ex-employés ne sont pas imposables en vertu de la LIR. Les paiements effectués ne rencontrent pas les critères des paragraphes 5(1) et 6(3) non plus que de l'article 56. Ce type de paiement de provient pas des sources énumérées dans la LIR.