Income Tax Severed Letters - 2008-12-12

Technical Interpretation - External

9 December 2008 External T.I. 2008-0289751E5 - Deductibility of Legal Fees

Unedited CRA Tags
18(1)(c) 18(1)(a) 18(1)(b) 18(1)(h)

Principal Issues: The issue is whether an amount paid by an individual to collect or establish a right to payments from a workers' compensation board is deductible in computing net income.

Position: Question of fact but in this case probably not.

Reasons: It is unlikely that any individual has a pre-existing right to amounts under applicable workers' compensation legislation. If the costs were incurred to establish a right to an amount from the WCB then it would appear that such costs would be non-deductible capital expenditures.

XXXXXXXXXX 2008-028975
Michael Cooke, CA
December 9, 2008

5 December 2008 External T.I. 2008-0286381E5 - Employer Provided Parking

Unedited CRA Tags
6(1)(a)

Principal Issues: Taxability of employer-provided parking.

Position: Question of fact, but in this case it appears that there would be a benefit.

Reasons: The parking cost is paid on a per employee basis. As such, it does not appear to be scramble parking since each employee appears to be provided with, or has access to, a parking space and the fair market value of that space can easily be determined. While a question of fact, it also appears that in most cases the employees are not required to use their automobiles in the performance of their duties of employment on a regular basis.

2 December 2008 External T.I. 2008-0301761E5 F - Prepayment of Reassessments - Refund Interest

Unedited CRA Tags
164(3); 164(76); 164(1); 164(5)
Summary Under
Tax Topics - Income Tax Act - Section 164 - Subsection 164(3)
CRA will accept an advance payment of a genuinely anticipated reassessment so as to subsequently generate interest on the advance’s refund

Principal Issues: A taxpayer prepays tax for an anticipated reassessment. The CRA refunds a portion of the amount prepaid to the taxpayer pursuant to subsection 164(1) of the Act. Whether the CRA may have to pay refund interest in that respect.

Position: Yes, pursuant to subsection 164(3) of the Act. However, the practice described in response to question 61 of the Revenue Canada Round Table held at the 1991 Congress of the Canadian tax Foundation, applies only with respect to a bona fide possibility of a reassessment.

Reasons: Wording of the Act and previous positions.

27 November 2008 External T.I. 2008-0294111E5 - 2006 GRIP Addition

Unedited CRA Tags
89(7)

Principal Issues: In a given situation, two corporate shareholders (Bco and Cco) own a third corporation (Aco). Aco's element "A" of the 2006 GRIP Addition per subsection 89(7) is $1,000,000. In 2002, Aco paid a taxable dividend of $800,000 to Bco, and a taxable dividend of $700,000 to Cco. How should Aco's element "A" of $1,000,000 be allocated between Bco and Cco in computing the amount that would be included in paragraph (c) of element "A" for Bco and Cco.

Position: Bco: $533,333, and Cco: $466,667.

Reasons: The amount of element "A" of $1,000,000 of Aco should be apportioned between Bco and Cco based on the amount of the dividends received by Bco and Cco from Aco during taxation years ending after 2000 and before 2006.

Technical Interpretation - Internal

2 December 2008 Internal T.I. 2008-0270981I7 F - Entreprise de prestation de services personnels

Unedited CRA Tags
125(7); 248(1); 96(1); 245(2)
Summary Under
Tax Topics - Income Tax Act - Section 246 - Subsection 246(1)
s. 246(1) could apply re individual’s personal use of residence held in partnership mostly owned by his Holdco

Principales Questions: Avons-nous certaines préoccupations lorsqu'un particulier qui met sur pied une structure complexe, tente de contourner l'application du concept de "entreprise de prestation de services personnels" afin d'obtenir la déduction pour petite entreprise ainsi que plusieurs autres avantages fiscaux?

Position Adoptée: Oui. Quelques arguments peuvent être invoqués pour contrer le stratagème mis sur pied par le contribuable.

Raisons: Voir ci-dessous.

2 December 2008 Internal T.I. 2008-0299151I7 - Alternative Land Use Services (ALUS) Program

Unedited CRA Tags
9(1); 12(1)(x); Reg. 234(2)

Principal Issues: Whether the Prince Edward Island Department of Environment, Energy and Forestry must issue information slips to recipients under the Alternative Land Use Services (ALUS) Program.

Position: Yes, the payments appear to meet the definition of "farm support payment" defined in subsection 234(2) of the Regulations.

Reasons: The law.