Income Tax Severed Letters - 2008-12-19

Ministerial Correspondence

9 December 2008 Ministerial Correspondence 2008-0299051M4 - Definition of spouse

Unedited CRA Tags
248

Principal Issues: Can a person have two spouses

Position: Under the Income Tax Act, a person can have a spouse as well as a common law partner at the same time

Reasons: The law

Technical Interpretation - External

10 December 2008 External T.I. 2008-0303191E5 - Prescribed International Organization

Unedited CRA Tags
2(1); 110(1)

Principal Issues: (1) Under Canadian income tax law, what is the tax treatment of salary received by Canadian employees from the XXXXXXXXXX ?
(2) Does the reimbursement by XXXXXXXXXX of any Canadian income taxes paid by these employees constitute a taxable benefit for purposes of Canadian income tax law?

Position: (1) The salary is taxable pursuant to section 5 of the Income Tax Act and no offsetting deduction at 110(1)(f)(iii) is available.
(2) Yes.

Reasons: (1) A resident of Canada must pay income tax on his/her worldwide income. Since the XXXXXXXXXX is not a prescribed international organization pursuant to section 8900 of the Income Tax Regulations, no offsetting deduction is available.
(2) This constitutes Rulings' long-standing position.

9 December 2008 External T.I. 2008-0268281E5 - Bonds sold on secondary market

Unedited CRA Tags
212(1)(b); 214(6); 214(7); 214(8)

Principal Issues: When a bond issued by a resident of Canada is sold by a non-resident to a resident of Canada on the secondary market, is there withholding on the accrued interest or the premium?

Position: Possibly

Reasons: It depends on whether or not the vendor and purchaser are dealing at arm's length, and on the terms of the obligation.

9 December 2008 External T.I. 2008-0291081E5 - Motor Vehicle Expenses - Special Work Site

Unedited CRA Tags
6(6)

Principal Issues: 1) Is travel from a special work site to an employee's principal place of residence considered business or personal?
2) Where an employee is working at a special work site under subsection 6(6), is travel from the temporary place of residence (e.g., hotel) to the special work site considered business or personal?

Position: 1) Personal and non-taxable.
2) Personal and taxable.

Reasons: 1) Personal, however, the benefit will be excluded from income pursuant to subparagraph 6(6)(b)(i) of the Act.
2) It is well established tax policy that traveling between an employee's home (in this case, the employee's temporary place of residence, the hotel) and an employer's business to which an employee reports regularly is personal in nature. The benefit derived from the use of an employer-provided motor vehicle in respect of such travel will give rise to a taxable benefit under section 6 of the Act. This benefit will not be excluded from income pursuant to subparagraph 6(6)(b)(i) of the Act.

XXXXXXXXXX 2008-029108
Renee Sigouin
December 9, 2008

8 December 2008 External T.I. 2008-0264691E5 F - GRIP Addition/ Majoration CRTG

Unedited CRA Tags
89(7)
Summary Under
Tax Topics - Income Tax Act - Section 89 - Subsection 89(7) - Element A - Paragraph (c)
dividends of full rate taxable income from sub to parent generated addition to parent’s GRIP addition

Principal Issues: In a given situation, where Parentco owns all the shares of Subco, Subco earned $ 160,000 of full rate taxable income in each of the years 2001 to 2005 and paid to Parentco in each of those years a taxable dividend of $ 110,000, whether Parentco's and Subco's GRIP Addition, pursuant to subsection 89(7), could be $ 504 000 and $ 0, respectively ?

Position: Yes.

Reasons: It would be reasonable to consider that $ 504 000 of the total dividends of $ 550 000 that Parentco received from Subco during the relevant period was attributable to an amount described in variable A of the formula in respect of Subco's GRIP Addition under subsection 89(7).

5 December 2008 External T.I. 2008-0294201E5 - Recaptured CCA - active or property income

Unedited CRA Tags
13(1); 20(1)(a)

Principal Issues: Recaptured CCA - whether active income or property income.

Position: None taken

Reasons: Our position regarding the income tax treatment of recaptured CCA is discussed in IT-73R6. If further assistance is needed and the situation involves specific taxpayers and completed transactions, the information can be submitted to the local TSO for their views. If the situation involves proposed transactions, a request for an income tax ruling can be submitted in the manners set out in IC-70-6R5.

4 December 2008 External T.I. 2008-0288041E5 - Payment made by provincial government

Unedited CRA Tags
3, 5, 6; 9, 12(1)(x); 56(1)(n), (o)

Principal Issues: Whether a payment received by a corporate taxpayer from a provincial government to do research is taxable.

Position: Yes.

Reasons: Income from business.