Income Tax Severed Letters - 2007-11-02

Principal Issues: Additional facts and proposed transactions brought to our attention.

Position: Confirmation that, subject to the conditions, limitations, qualifications, and comments set out therein, the original Ruling no. E 2007-0237481R3 and rulings B and D of Ruling no. E 2006 0182431R3 will continue to be binding on the CRA.

Reasons: In compliance with the law.

Principales Questions: Modification à la définition du terme "Unité" à la page 2 de la décision anticipée.

Position Adoptée: Nous confirmons que la décision anticipée rendue dans le dossier 2007-023403 demeure valable sous réserve des conditions et des restrictions générales énoncées dans la circulaire d'information IC-70-6R5 et qu'elle lie l'Agence du revenu du Canada pourvu que les transactions projetées soient complétées avant le XXXXXXXXXX .

Principal Issues: An individual (Plaintiff) was injured when the motor vehicle in which XXXXXXXXXX was a passenger was involved in a collision with another motor vehicle. The Plaintiff commenced an action for damages against the driver of the motor vehicle, in which XXXXXXXXXX was a passenger, and various other defendants. Pursuant to an out of court settlement, the casualty insurer of a certain defendant will purchase a single premium annuity contract with a life insurance company to provide the proposed periodic payments to be received under a structured settlement arrangement. The casualty insurer will direct the life insurance company to pay the periodic payments under the annuity contract to the Plaintiff. Will such payments be taxable in the hands of the recipient?

Position: No.

Reasons: The terms of the structured settlement are consistent with the CRA's position as set out in paragraph 5 of Interpretation Bulletin IT-365R2.

Principal Issues: (A) Will establishing the new programs, in and of itself, preclude the Entity from being an organization described in paragraph 149(1)(l) of the Act? (B) Is Part XIII tax applicable to rental income received by the non-resident entity from the leasing of real property in Canada, where the rental income is included in the computation of taxable income of the entity from operations in Canada pursuant to Part I of the Act?

Position: (A) No. (B) No.

Reasons: (A) Based on the legislation, organizational documents and other Rulings given in similar situations. However, whether or not the corporation is operated for purpose other than profit as required under 149(1)(l) will be a question of fact each year. (B) To the extent the rental income is included in income of the taxpayer for purposes of Part I of the Act; subsection 805(1) of the Regulations provides that Part XIII will not apply. Is should be noted that subsection 805(2) of the Regulations grants the Minister discretion in this regard.