Income Tax Severed Letters - 2007-05-18

Principales Questions:
Les intérêts sur de l'argent emprunté pour souscrire à des actions continuent-ils d'être déductibles suite à une réduction du capital déclaré la même journée que la souscription?

Position Adoptée:
Non.

Raisons:
L'argent emprunté n'a pas été utilisé en vue de tirer un revenu.

XXXXXXXXXX 2006-019168
L. J. Roy, CGA
Le 11 mai 2007

Principal Issues: Whether payments for consumable food, supplements, vitamins, or other similar preparations, in order to avoid illness and potential life threatening reactions due to allergies, would be eligible as a medical expense for purposes of the medical expense tax credit.

Position: No.

Reasons: A pharmacist is not required to record the purchase of consumable food, supplements, vitamins, or other similar preparations.

2007-023117
XXXXXXXXXX J. Eckler
(416) 952-8930
May 9, 2007

Principal Issues: Whether the costs associated with a parent's hospitalization would qualify as a medical expense for purposes of a child's medical expense tax credit.

Position: Depending on the facts and circumstances, the costs associated with a parent's hospitalization may qualify as a medical expense for purposes of a child's medical expense tax credit, subject to the constraints imposed in subsection 118.2(1).

Reasons: The medical expense tax credit for a dependent parent of the individual is determined by the formula, in subsection 118.2(1). This formula and the related legislation preclude certain costs, and further restrict a claim for a medical expense tax credit according to the formula articulated in this provision.

Principal Issues: Is a therapist providing a combination of Christian and native healing processes considered a medical practitioner for purposes of the medical expense tax credit?

Position: No.

Reasons: Payments for native and Christian healing would not qualify as a medical expense unless the services were performed by a medical practitioner authorized to practice as such according to the laws of the jurisdiction in which the service is rendered.

Principal Issues: Given that paragraph 104(4)(a) applies to trusts described in both 104(4)(a)(i) and 104(4)(a)(1.1) that meet the criteria in 104(4)(a)(iii) during the relevant period and 104(4)(a)(i) does not necessarily require the trust to have received the property on a rollover basis, will the first deemed disposition of a post-71 spousal or common law partner trust be the date on which the primary beneficiary dies (rather than 21 years after creation) regardless of whether the property was received on a rollover basis?

Position: Yes.

Reasons: In order for the first deemed disposition to occur on the death of the spousal beneficiary, a trust described in 104(4)(a)(i) must be a spousal trust from the moment of creation whereas a trust described in 104(4)(a)(i.1) need only be a spousal trust from the date on the which the property subject to the rollover was transferred to the trust. Provided that the trust is not a tainted spousal trust and that no reliance on 248(8), (9) or (9.1) is needed in order for the trust to qualify as a spousal trust, there is no requirement that the trust receive the property on a rollover basis.