Income Tax Severed Letters - 2008-06-27


2008 Ruling 2008-0276431R3 - Credit party replacement

Unedited CRA Tags
9(1) 248(1)

Principal Issues: Is the transfer of rights and obligations of a swap from one counterparty to another counterparty (already involved in a mirror-swap) considered a disposition such that income or a loss is realized for tax purposes?

Position: no

Reasons: Rights and Obligations are identical.

2007 Ruling 2007-0226101R3 - conv of MFT from a closed-end to an open-end fund

Unedited CRA Tags
108(2) 104(7.1) 253.1

Principal Issues: 1. Is there a disposition for tax purposes due to changes made? 2.Does 104(7.1) apply given that there will be an in specie distribution where a cash distribution cap is reached?

Position: 1. No disposition. 2. 107(4.1) does not apply.

Reasons: 1. While declaration will be amended to include a right of redemption..all other aspects of units will not change. 2. Units are sold on the open market call for redemption exceeding cash ceiling would be rare and purpose test of 104(7.1) is not met.

Ministerial Correspondence

13 June 2008 Ministerial Correspondence 2008-0276611M4 - Prescribed Automobile Allowance Rates

Unedited CRA Tags

Principal Issues: Requesting a change in rates due to rapidly increasing gas prices.

Position: Forward to the Department of Finance.

Technical Interpretation - External

18 June 2008 External T.I. 2008-0275951E5 - Standard Credit Card Transactions

Unedited CRA Tags
Reg. 404

Principal Issues: Whether standard credit card transactions are loans for the purposes of, inter alia, Part IV of the Income Tax Regulations.

Position: General comments given only.

Reasons: Insufficient information available to conclude. Matter should be determined in the context of an advance income tax ruling submitted in accordance with IC 70-6R5 or, where the transaction is completed, as a request to the appropriate TSO.

17 June 2008 External T.I. 2008-0270781E5 - Medical Student/Resident Financial Assistance

Unedited CRA Tags
56(1)(n) 12(1)(x)

Principal Issues: How should financial assistance paid by Municipal Government in exchange for a requirement by a medical student to set-up a medical practice in the Municipality for a specified period of time be taxed?

Position: Question of fact but it appears that paragraph 56(1)(n) should apply.

Reasons: The law

16 June 2008 External T.I. 2008-0269451E5 - Tax consequences on the death of a prospector

Unedited CRA Tags
35 70(2)

Principal Issues: Tax consequences of shares owned by a prospector at the time of his death where section 35 was applicable to the receipt of the shares.

Position: Where the shares represent capital property, paragraph 70(5)(a) will deem a disposition of the shares and the prospector will have an income inclusion under paragraph 35(1)(d) and a deduction under paragraph 110(1)(d.2).

Reasons: Application of the law.

16 June 2008 External T.I. 2008-0270251E5 F - Bien utilisé dans une entreprise agricole

Unedited CRA Tags
110.6 (1.3)

Principales Questions: Interprétation quant à la définition de ce qu'est un " bien utilisé dans le cadre d'une entreprise agricole " selon le paragraphe 110.6 (1.3) de la Loi de l'impôt sur le revenu

Position Adoptée: Il est de notre compréhension qu'afin de se qualifier à titre de " bien utilisé dans le cadre d'une entreprise agricole ", les biens doivent satisfaire, dépendamment de leur date d'acquisition, soit aux alinéas 110.6 (1.3)a) et b) soit aux alinéas 110.6 (1.3)a) et c).

Raisons: Nous avons comparé les définitions de l'ancien libellé du paragraphe 110.6(1) sous "bien agricole admissible" ainsi que le nouveau paragraphe 110.6 (1.3) de la LIR. Nous pouvons constater que, malgré une formulation différente, la teneur fiscale demeure la même.

13 June 2008 External T.I. 2008-0270721E5 F - Allocations pour l'usage d'un véhicule à moteur

Unedited CRA Tags

Principales Questions: Les allocations pour l'usage d'un véhicule à moteur reçues par un employé pour la distance parcourue entre sa résidence et son lieu de travail sont-elles imposables en vertu de l'alinéa 6(1)b) de la Loi de l'impôt sur le revenu.

Position Adoptée: Oui.

Raisons: Il s'agit d'allocations pour frais personnels ou de subsistance. Cette conclusion est conforme à la jurisprudence ainsi qu'à la politique de l'Agence du revenu du Canada.


9 June 2008 Roundtable, 2008-0270451C6 - Foreign Issued Life Insurance Policies

Unedited CRA Tags

Principal Issues:
Does the CRA intend to publish any guidance as to how foreign issued life insurance policies are to be valued for purposes of subsection 94.2(11)?

Position: See response below

Reasons: See response below

9 June 2008 Roundtable, 2008-0270551C6 - Donation of an Interest in a Segregated Fund Trust

Unedited CRA Tags
38(a.1)(i); 138.1(4)

Principal Issues:
How should the insurer, policyholder and/or charity determine the capital gain to be excluded from income in respect of the donation of an interest in a segregated fund trust?

Position: See comments below

Reasons: See comments below

29 April 2008 Roundtable, 2008-0270431C6 - CALU 2008, Q7, life insurance, transfer to a child

Unedited CRA Tags

Principal Issues: Does 148(8) apply when the transfer of an interest in life insurance policy is made to a child who is a minor or an incapable represented by a guardian of property?

Position: Question of law. Generally, yes.

Reasons: The ownership of the interest is transferred to the child.