Income Tax Severed Letters - 2007-07-06

Ministerial Correspondence

20 June 2007 Ministerial Correspondence 2007-0237141M4 - requirement for copy of will on filing fin return

Unedited CRA Tags
150 231.2(1) 221

Principal Issues: Why is a full copy of the will required in filing the final return for the deceased?

Position: T4011, guide for filing returns for deceased persons, requires a copy of the death certificate and a copy of the will or other document to establish that the person filing the return is the legal representative. The other document could be letters of administration or grant of probate. In addition, a copy of the will is required in order to obtain a clearance certificate.

Reasons: The enquirer was concerned about the privacy rights of the deceased. The Supreme Court of Canada has examined the Minister's broad discretionary powers to request documentation in light of the Canadian Charter of Rights and Freedoms and determined that such broad powers are required to maintain the integrity of the tax system and noted that the production of documents is the least intrusive means by which the CRA can effectively monitor compliance with the Act.

Technical Interpretation - External

3 July 2007 External T.I. 2007-0236551E5 F - Crédit d'impôt pour études

Unedited CRA Tags
118.6
Summary Under
Tax Topics - Income Tax Act - Section 118.6 - Subsection 118.6(1) - Qualifying Student
post-doctoral fellow is not a student

Principales Questions: Un stagiaire postdoctoral a-t-il droit au crédit d'impôt pour études prévu au paragraphe 118.6(2) à l'égard de son stage?

Position Adoptée: Non

Raisons: Il n'est pas un étudiant et n'est pas inscrit à un programme de formation admissible ou à un programme de formation déterminé.

XXXXXXXXXX 2007-023655
Michel Lambert CA, M.Fisc
Le 3 juillet 2007

3 July 2007 External T.I. 2007-0224411E5 - Teachers' Convention Travel Expenses

Unedited CRA Tags
8(1)(h) 8(10) 8(1)(h.1) 8(4)

Principal Issues: Whether travel expenses incurred by an Alberta teacher in complying with his or her legal and professional obligations under the Alberta School Act (1988) to attend the annual two-day teachers' convention are deductible from employment income.

Position: Where an Alberta teacher fits the facts and requirements as described in the Imray case, including a duly completed form T2200, reasonable travel expenses are deductible from employment income.

Reasons: The facts in this situation are very similar to the Imray case.

25 June 2007 External T.I. 2007-0237331E5 - Qualified Farm Property

Unedited CRA Tags
110.6(1) 70(6) 70(9) 73(3)

Principal Issues: Whether farm property was eligible for the capital gains deduction as "qualified farm property" under a number of scenarios and variations.

Position: General comments only. Referred taxpayer to Guide T4003 - Farming Income 2006.

Reasons: Questions not specific enough.

25 June 2007 External T.I. 2006-0217861E5 - Interest in a family farm partnership

Unedited CRA Tags
110.6(1)

Principal Issues: Whether an interest in a partnership must have been held for at least 24 months in order to qualify as an "interest in a family farm partnership" within the meaning of subsection 110.6(1).

Position: Although partnership must have been in existence for at least 24 months, there is no such requirement as regards the partnership interest.

Reasons: If a partnership has not been in existence for at least 24 months, it cannot meet the "throughout any 24 month period ending before" condition in paragraph (a) of the definition of "interest in a family farm partnership". There is no requirement in the definition that the interest be held for a given period of time.

30 May 2007 External T.I. 2006-0183851E5 F - Paragraphs 83(2) and 84.1(1)

Unedited CRA Tags
83(2) 84.1(1)(b) 84(7)
Summary Under
Tax Topics - Income Tax Act - Section 83 - Subsection 83(2)
s. 83(2) election can be made on a s. 84.1 deemed dividend
Summary Under
Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) - Paragraph 84.1(1)(b)
s. 84.1(1) dividend is payable per s. 84(7) so that s. 83(2) election available

Principal Issues: Whether a private corporation could make a capital dividend election pursuant to 83(2) in regards to a deemed dividend under 84.1(1)(b)?

Position: Yes.

Reasons: Question of fact

Technical Interpretation - Internal

14 June 2007 Internal T.I. 2007-0229311I7 F - Capital Dividend Account

Unedited CRA Tags
83(2) 89(1)
Summary Under
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (b)
recording of dividend payable and dividend receivable between sub and parent was insufficient to constitute the payment of a capital dividend, so that there was no CDA addition
Summary Under
Tax Topics - General Concepts - Payment & Receipt
making accounting entries does not constitute payment of a dividend
Summary Under
Tax Topics - Income Tax Act - Section 184 - Subsection 184(3)
invalid payment of capital dividend (because no payment) was subject to Pt. III tax (given valid s. 83(2) election) for which no s. 184(3) election could be made as no payment
Summary Under
Tax Topics - General Concepts - Effective Date
a declared dividend cannot be revoked

Principal Issues: Whether an accounting journal entry recording a dividend as an amount payable to a shareholder is sufficient to consider the dividend received by the shareholder

Position: No.

Reasons: Existing CRA position.

29 May 2007 Internal T.I. 2007-0223381I7 F - Capital Dividend Account

Unedited CRA Tags
83(2) 89(1) 87(2)(z.1); 88(2)(e.2)
Summary Under
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(z.1)
s. 87(2)(z.1) causes subsidiary CDA balances to flow through to the parent

Principal Issues: In a given fact situation, where a wholly-owned subsidiary is wound-up in its parent corporation and both parent and subsidiary have a CDA immediately before the winding-up, whether the parent must take into consideration the different amounts of its subsiduary's CDA in computing its CDA immediately after the wind-up.

Position: Yes.

Reasons: The Law.