Income Tax Severed Letters - 2007-05-18

Ruling

2007 Ruling 2006-0218781R3 - XXXXXXXXXX

Unedited CRA Tags
20(1)(a) 13(26) 212(1)(b)(vii) 20(1)(e)
concession granted for constructing and operating facility

Principal Issues: 1. Is the Project involving a license agreement for XXXXXXXXXX years acceptable as a class 14 asset? 2. Are the events of default acceptable for the withholding tax exemption?

Position: 1. Yes, 2. Yes

Reasons: 1. License Agreement and given before in 2004-0105611, 2005-013328 2.

2007 Ruling 2006-0213701R3 - Partnership Reorganization Personal Services Bus.

Unedited CRA Tags
125(7)("personal services business") 125(7)("specified partnership income") 256(2.1)

Principal Issues: Where a partner of a professional partnership creates a professional corporation through which professional services will be provided to the partnership, will the corporation be eligible for the small business deduction?

Position: Question of fact. Generally, yes, if certain conditions are met.

Reasons: Reading of relevant legislation and consistent with other rulings.

2007 Ruling 2007-0221761R3 - Partnership Reorganization Personal Services Bus.

Unedited CRA Tags
125(7)("personal services business") 125(7)("specified partnership income") 256(2.1)

Principal Issues: Where a partner of a professional partnership creates a professional corporation through which professional services will be provided to the partnership, will the corporation be eligible for the small business deduction?

Position: Question of fact. Generally, yes, if certain conditions are met.

Reasons: Reading of relevant legislation and consistent with other rulings.

2007 Ruling 2007-0221771R3 - Partnership Reorganization Personal Services Bus.

Unedited CRA Tags
125(7)("personal services business") 125(7)("specified partnership income") 256(2.1)

Principal Issues: Where a partner of a professional partnership creates a professional corporation through which professional services will be provided to the partnership, will the corporation be eligible for the small business deduction?

Position: Question of fact. Generally, yes, if certain conditions are met.

Reasons: Reading of relevant legislation and consistent with other rulings.

2007 Ruling 2007-0221781R3 - Partnership Reorganization Personal Services Bus.

Unedited CRA Tags
125(7)("personal services business") 125(7)("specified partnership income") 256(2.1)

Principal Issues: Where a partner of a professional partnership creates a professional corporation through which professional services will be provided to the partnership, will the corporation be eligible for the small business deduction?

Position: Question of fact. Generally, yes, if certain conditions are met.

Reasons: Reading of relevant legislation and consistent with other rulings.

2007 Ruling 2007-0221791R3 - Partnership Reorganization Personal Services Bus.

Unedited CRA Tags
125(7)("personal services business") 125(7)("specified partnership income") 256(2.1(

Principal Issues: Where a partner of a professional partnership creates a professional corporation through which professional services will be provided to the partnership, will the corporation be eligible for the small business deduction?

Position: Question of fact. Generally, yes, if certain conditions are met.

Reasons: Reading of relevant legislation and consistent with other rulings.

2006 Ruling 2006-0217661R3 - Qualified Investment

Unedited CRA Tags
204 212(1)(b)(ii)(C) XXXXXXXXXX

Principal Issues: Will a particular bond be considered a qualified investment for purposes of the rules governing registered retirement savings plans (RRSP) under the Income Tax Act?

Position: Yes

Reasons: Wording of the legislation - the particular bond meets the requirements as provided in the definition of "qualified investment" in section 146(1) and section 204 of the Act.

Ministerial Correspondence

9 May 2007 Ministerial Correspondence 2007-0230921M4 - receipts for medical expenses

Unedited CRA Tags
118.2

Principal Issues: Whether there is any requirement in the Income Tax Act which provides that providers of medical goods and services have to give a receipt when requested to do so.

Position: No.

Reasons: The law

May 9, 2007

16 April 2007 Ministerial Correspondence 2007-0227411M4 - RESP - Meaning of "Enrolled"

Unedited CRA Tags
146.1(1) 146.1(2)(g.1)

Principal Issues: What is the meaning of "enrolled" for purposes of paying an educational assistance payment out of an RESP and for purposes of claiming the tuition tax credit?

Position: RESP - When the promoter of an RESP is provided with satisfactory proof that a beneficiary is enrolled, the promoter may pay an EAP to the beneficiary. Tuition tax credit - the Act requires that the student be enrolled with the educational institution during the year and that the tuition fees be paid in respect of that year.

Reasons: Relevant provisions of the Act.

19 March 2007 Ministerial Correspondence 2007-0225871M4 - FILING DEADLINE FOR T3 SLIPS

Unedited CRA Tags
150(1)(C)

Principal Issues: WHY ARE T3 SLIPS TYPICALLY RECEIVED AFTER T5 SLIPS?

Position: T3 SLIPS ARE DUE 90 DAYS AFTER THE TRUST'S YEAR END, WHICH IS EITHER DEC 15 OR DEC 31 FOR AN INTER VIVOS TRUST. A T5 SLIP IS DUE BY THE LAST DAY IN FEBRUARY

Reasons: 150(1)(C) AND REGULATION 204

Technical Interpretation - External

16 May 2007 External T.I. 2006-0191891E5 - Treatment of options in qualified farm property

Unedited CRA Tags
110.6(1) 49(1) 49(3)

Principal Issues: Is a capital gain arising from the application of subsection 49(1) to the granting of an option (expired) in respect of QFP eligible for the capital gains exemption?

Position: No.

Reasons: Under subsection 49(1), the property considered to be disposed of is a generic property that is distinct from the real property in respect of which the option is granted.

11 May 2007 External T.I. 2005-0156891E5 F - Déductibilité des intérêts - retour de capital

Unedited CRA Tags
20(1)c)(i)

Principales Questions:
1. Les intérêts sur de l'argent emprunté pour souscrire à des actions continuent-ils d'être déductibles suite à une réduction du capital déclaré?
2. Les intérêts sur de l'argent emprunté qui a été utilisé pour effectuer un apport de capital dans une société en nom collectif continuent-ils d'être déductibles suite à une distribution de cet apport?

Position Adoptée:
1. et 2., non si les fonds obtenus ne sont pas utilisés pour gagner du revenu.

Raisons:
Un lien entre l'argent emprunté et le capital ou l'apport de capital remboursé doit être fait.

11 May 2007 External T.I. 2006-0191681E5 F - Déductibilité des intérêts - retour de capital

Unedited CRA Tags
20(1)c)(i)

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

9 May 2007 External T.I. 2007-0231171E5 - Medical Expense - Food, or similar preparations

Unedited CRA Tags
118.2(2)(n) 118.2(2)(k) 118.2(2)(r)

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

9 May 2007 External T.I. 2006-0205741E5 - partition of property

Unedited CRA Tags
248(21) 248(20)

Principal Issues: Whether the property owned jointly by three individuals could be partitioned twice over the course of several years

Position: Question of fact.

Reasons: If the requirements of subsection 248(21) for each partition.

7 May 2007 External T.I. 2007-0224311E5 - Medical Expense - Therapist

Unedited CRA Tags
118.2 118.4(2)

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.

7 May 2007 External T.I. 2007-0226531E5 - Medical Expense - Dependant

Unedited CRA Tags
118.2(1) 118(6) 117.1(1) 117(2)

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.

7 May 2007 External T.I. 2006-0201521E5 - Payments in Relation to Inventions

Unedited CRA Tags
5(1)

Principal Issues: Tax Status of Payments to Employees in Relation to Inventions.

Position: 1. Question of Fact. 2. Generally, when the ownership of the invention vests with the employer, the payments made to the employee are treated as employment income under subsection 5(1) of the Income Tax Act.

Reasons: Consistent with prior positions

17 April 2007 External T.I. 2007-0225551E5 - Member of Two RPPs

Unedited CRA Tags
147.1(8)

Principal Issues: Can a person be a member of more than one RPP at the same time?

Position: Yes.

Reasons: There is no provision in the Income Tax Act prohibiting a person from being a member in more than one RPP at the same time. However, the Act does limit contributions that can be made to a defined contribution RPP and benefits that can accrue in a defined benefit RPP through the pension adjustment limits in 147.1(8) of the Act.

17 April 2007 External T.I. 2006-0187741E5 - first deemed disposition for a spousal trust

Unedited CRA Tags
104(4)(a)

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.

21 March 2007 External T.I. 2004-0091061E5 - stop loss rules for depreciable property

Unedited CRA Tags
13(21.2)

Principal Issues: Does 13(21.2) apply to reduce the proceeds of disposition of depreciable property when such property is transferred from a trust to a majority interest beneficiary (a person affiliated with the trust) and the trust winds up within 30 days of the transfer such that the beneficiary is not affiliated with the trust 30 days after the transfer?

Position: Unlike 14(12), 18(15) & 40(3.3), 13(21.2) does not prevent the deduction of a loss when a trust transfers property to an affiliated person and that affiliated person ceases to be affiliated with the trust within 30 days of the transfer.

Reasons: Despite possible tax policy concerns, the wording of subsection 13(21.2) does not appear to apply if the transferee is no longer affiliated with the trust at the end of the 30 day period referred to in that subsection.

Conference

6 October 2006 Roundtable, 2006-0197021C6 F - JVM - don d'une police d'assurance -vie

Unedited CRA Tags
118.1(3) 148(1) 3501(1)h)(ii) 248(31)

Principales Questions: Quel est le montant admissible d'un don d'une police d'assurance-vie donnée à un organisme de bienfaisance enregistré?

Position Adoptée: Le montant admissible du don doit être établi en tenant compte du paragraphe 3 du IT-244R3.

Raisons: IT-244R3

Technical Interpretation - Internal

7 May 2007 Internal T.I. 2007-0228521I7 F - Allocation pour frais de déplacement

Unedited CRA Tags
6(1)b)(x)

Principales Questions:
Une allocation versée en fonction du nombre de kilomètres parcourus est-elle imposable si on prévoit un montant minimum quotidien?

Position Adoptée:
Probablement pas imposable dans la situation soumise.

Raisons:
Pas imposable si montant minimum était nominal en fonction de l'utilisation réelle et qu'il est établi afin d'indemniser l'employé pour les dépenses encourues pour l'usage de son véhicule dans l'accomplissement des fonctions de son emploi.

18 February 2005 Internal T.I. 2005-0115041I7 - Provincial Allocation-Joint Venture

Unedited CRA Tags
Regulation 402(3)(a)(ii)

Principal Issues: How do participants in a joint venture include salaries and wages in the calculation in subparagraph 402(3)(a)(ii) of the Regulations?

Position: A corporation involved in a joint venture would include its share of the salaries and wages of the joint venture employees that are directly paid by the corporation.

Reasons: Legislation.