Income Tax Severed Letters - 2007-04-27

Ruling

2007 Ruling 2006-0217281R3 - Qualification as "exempt foreign trust"

Unedited CRA Tags
94(1) 108(1) 149(1)
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(1) - Exempt Foreign Trust - Paragraph (h)
commingled trust fund (CTF) whose units can be withdrawn for their NAV and with income distributions generally being reinvested at unitholder’s option was an exempt foreign trust

Principal Issues: Whether two US trusts would qualify as "exempt foreign trusts" under the proposed amendments to s. 94(1) of the Act.

Position: Yes.

Reasons: All conditions to qualify as "exempt foreign trusts" are met.

2007 Ruling 2007-0219811R3 - Non Arm's Length Transfer of Depreciable Property

Unedited CRA Tags
Reg. 1102(14) Class 41(a)

Principal Issues: Whether subsection 1102(14) of the Regulations will apply to the distribution of depreciable property to the partners on the dissolution of a partnership

Position: Yes

Reasons: Where depreciable property is transferred in a non arm's length transaction, subsection 1102(14) deems the property to satisfy all of the criteria necessary to be included in the particular class

2007 Ruling 2005-0154441R3 - Qualified Farm Property used in a partnership

Unedited CRA Tags
110.6(1)

Principal Issues: Whether property used in a family farm partnership is qualified farm property to taxpayer and the taxpayer's children.

Position: Yes

Reasons: The property was owned by the taxpayer, the taxpayer's spouse or children and principally used in at least 5 years in a farming business in Canada by a partnership, an interest in which was an interest in a family farm partnership of the taxpayer or the taxpayer's spouse.

2007 Ruling 2006-0203321R3 - Proposed arrangement - draft ruling

Principal Issues: Ruling request on a proposed arrangement.

Position: File closed. No ruling issued.

Reasons: Requested information has not been received. A draft ruling was sent to the taxpayer for the sole purpose of verifying that the facts and proposed transactions were correctly stated. It has come to our attention that the draft ruling has been used as a marketing tool. From our perspective this course of action is unacceptable.

Technical Interpretation - External

20 April 2007 External T.I. 2007-0227951E5 - Women's Ministry- Clergy Residence

Unedited CRA Tags
8(1)(c)

Principal Issues: Is a the director of Women's Ministry and member of a pastoral care team for a church entitled to the clergy residence deduction?

Position: No

Reasons: 1. Does not meet the status test. 2. Unclear whether the person is an employee. 3. Not fully considered but she does not appear to perform most of the functions of a minister.

19 April 2007 External T.I. 2007-0229961E5 - Meaning of "Maintaining of Horses for Racing"

Unedited CRA Tags
248(1)

Principal Issues: How broadly does the CRA interpret the expression "maintaining of horses for racing" included in the definition of "farming" in ss 248(1)?

Position: Racehorse owners will be considered to be in the business of farming irrespective of whether they maintain the horses themselves or contract out that function. The provision of services relating to the maintaining of horses for racing, for a fee, generally does not constitute farming. Ancillary income from activities conducted in connection with maintaining of horses for racing may be considered farming income also, but only to the extent that those other activities do not constitute a separate business.

Reasons: Juster v. the Queen [74 DTC 6540], McLaws v. the Queen [76 DTC 6005], Levy v. the Queen [90 DTC 6346], Bourque v. the Queen [96 DTC 6412] & previous administrative positions relating to single or separate businesses.

17 April 2007 External T.I. 2007-0230381E5 F - Option d'achat de biens immeubles

Unedited CRA Tags
49
Summary Under
Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) - Paragraph 49(1)(a)
allocation of option proceeds between principal residence and business asset to be allocated based on the reasonable value attributed to each type of property

Principales Questions: Si une option porte sur différents genres de biens dont une résidence principale, peut-on exclure de l'application du paragraphe 49(1) de la Loi, la partie de la contrepartie reçue pour l'option et sa prolongation qui peut être raisonnablement attribuée à la partie pour la résidence principale?

Position Adoptée: Il serait raisonnable d'exclure la partie de la contrepartie que l'on peut attribuer à la portion visant la disposition de la résidence principale.

Raisons: Même traitement que si des options séparées avaient été accordées pour chaque genre de biens.

20 March 2007 External T.I. 2007-0219881E5 - Clergy residence (parental leave)

Unedited CRA Tags
8(1)(c)

Principal Issues: Is a regular minister away from his qualifying functions on parental leave eligible to claim the clergy residence deduction?

Position: No

Reasons: Employment maintenance income does not qualify for the deduction under paragraph 8(1)(c) of the Act

2007-021988
XXXXXXXXXX C. Tremblay, CMA
(613) 957-2139
March 20, 2007