Income Tax Severed Letters - 2007-10-12


2007 Ruling 2007-0233881R3 - XXXXXXXXXX Corporate Reorganization

Unedited CRA Tags

Principal Issues: Payment of several dividends in a series - application of subsection 55(2).

Position: Subsection 55(2) should not apply if each dividend is protected by safe income.

Reasons: See above.

2006 Ruling 2006-0173611R3 - Taxation of Indian Trust

Unedited CRA Tags
149(1)(c) 75(2) 104(24) 3(a)

Principal Issues: (A) Does the First Nation qualify as a public body performing a function of government for purposes of paragraph 149(1)(c)? (B) Will subsection 75(2) apply to the particular trust income in the circumstance? (C) Whether income of the trust that is not subject to the provisions of 75(2) will be considered payable to the First Nation and thus deductible pursuant to subsection 104(6)? (D) Will the per capita distributions by the First Nation to its members be considered income from a source within the meaning of paragraph 3(a) of the Act? (E) Are distributions of the trust governed by section 107(2)?

Position: (A) yes (B) yes (C) yes (D) no (E) yes, subject to subsections 107(2.001), (2.002) and (4) and (5)

Reasons: (A) The First Nations provides and administers a fairly extensive list of public works, social services and infrastructure programs. It has negotiated Health Agreements with the Crown and has passed bylaws within its community. (B) The First Nation will be the settlor of the particular trust, directing the settlement payments to the trust on behalf of the First Nation. The First Nation, including all its members, is the sole beneficiary and on termination of the trust, all of the trust property will be transferred to the First Nation. (C) To the extent income earned exceeds income realized; the excess shall be irrevocably payable to the First Nation and will be evidenced by a demand promissory note. (D) Consistent with a previous position, the per capita distributions to the First Nation members would not be considered income from a source within the meaning of paragraph 3(a) of the Act. (E) The particular trust will qualify as a personal trust since First Nation will be the settlor and the interest will not be acquired for any consideration.

XXXXXXXXXX 2006-017361

December 4, 2006

Technical Interpretation - External

3 October 2007 External T.I. 2007-0250341E5 - Collapsing an EPSP & Changing Service Providers--R

Unedited CRA Tags
144 146 248

Principal Issues: 1. What are the tax consequences for the members of the plan of collapsing an EPSP to create a new saving vehicle? 2. Is the transfer of an RRSP from one service provider to another a taxable event?

Position: 1. May transfer property, other than cash, at cost to a beneficiary. If the transfer is to a person other than another EPSP trust then a disposition occurs and may have to allocate any capital gains realized to beneficiaries.
2. Generally yes, refer to CRA website.

Reasons: 1. Subsection 144(7.1) of the Income Tax Act. Definition of disposition in subsection 248(1) of the Act. 2. Subsection 146(16) of the Act.

1 October 2007 External T.I. 2007-0252741E5 - RESP - educational programs

Unedited CRA Tags

Principal Issues: Will flying lessons qualify as a "qualified educational program" or as a "specified educational program" under the RESP provisions?

Position: General comments were provided.

Reasons: It is a question of fact.

27 September 2007 External T.I. 2007-0242611E5 - Common Law Partner

Unedited CRA Tags

Principal Issues: Whether the time during which a person cohabiting with a taxpayer for five days per week can be included in applying the twelve-month duration test for the purposes of determining whether a person is a common law partner of the taxpayer.

Position: General comments

Reasons: It is a question of fact whether at any particular time a person cohabits in a conjugal relationship with the taxpayer. The fact that for a period of time during a twelve-month period a person was only present in the house five days per week, would not in and of itself, exclude that period in applying the twelve-month duration test.


21 June 2007 Roundtable, 2007-0229361C6 - 2007 - CLHIA question 13 - SERPS

Unedited CRA Tags

Principal Issues: What factors it considers in determining whether a SERP is an SDA or a pension plan?

Position: A number of factors need to be considered in determining whether a particular plan is a SERP or an SDA. Some of these are outlined in the response.

Reasons: The definition of an SDA excludes registered pension plans. It does not preclude plans that have terms similar to those found in a pension plan or plans that provides benefits that are similar to those provided under a pension plan.