Income Tax Severed Letters - 2007-11-30

Principal Issues: Whether certain fees levied by a particular educational institution would qualify as child care expenses and whether the invoice issued by the particular institution could include amounts for tuition as well as child care.

Position: General comments but yes invoice can include both.

Reasons: The law.

Principal Issues: Whether the remuneration of seafarers aboard a ship which does repair work in respect of a site where activities are carried on in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in Canada is exempt from Canadian income tax pursuant to subparagraph 5(b) of the Canada-Norway Income Tax Convention?

Position: No.

Reasons: Pursuant to Paragraph 5(a) of Article 21 of the Canada-Norway Income Tax Convention, the salary and wages of the Norwegian resident seafarers is subject to tax in Canada, unless the employment is carried on in Canada for a period or periods not exceeding in aggregate 30 days in any 12-month period.

Principal Issues: Tax consequences for a resident of Canada of receiving a pension from the Italian state for services rendered to the Italian State when the individual was a non-resident of Canada.

Position: Amount included in subparagraph 56(1)(a)(i) of the Act and deducted from taxable income pursuant to subparagraph 110(1)(f)(i) of the Act. Not entitled to a foreign tax credit.

Reasons: According to paragraph 2 of Article XVIII of the tax treaty between Canada and Italy which is in force (and paragraph 3(a) of Article 18 of the tax treaty that is not yet in force), the pensions paid by, or out of funds created by, the Italian State or a political or administrative subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in Italy.