Income Tax Severed Letters - 2009-01-23

Ruling

2008 Ruling 2007-0255961R3 - Internal Reorganization - 55(3)(a)

Unedited CRA Tags
55(3)(a) 55(5)(e) 69(1)(b)

Principal Issues: Spin-off of business assets from a corporation to another, within a related group.

Position: Favourable rulings provided.

Reasons: In compliance with the law and previous positions.

2008 Ruling 2008-0297681R3 - PUC return by public corporation

Unedited CRA Tags
84(4.1); 84(2)

Principal Issues: Whether ss. 84(4.1) would apply to return of paid-up capital by public corporation

Position: No.

Reasons: SS. 84(2) will apply.

Technical Interpretation - External

16 January 2009 External T.I. 2008-0302641E5 - Transfer of A/R by Cash Basis Farmer to Corp

Unedited CRA Tags
28(5)

Principal Issues: Does subsection 28(5) apply to require an income inclusion where accounts receivable are transferred personally from a farming business operated on the cash basis to a wholly owned corporation in exchange for a note.

Position: Yes.

Reasons: The law. The note received from the corporation represents an amount paid in satisfaction of the taxpayer's disposition of accounts receivable owned personally prior to the transfer.

15 January 2009 External T.I. 2008-0301331E5 - Solar Water heater

Unedited CRA Tags
13(7.1); ITR sched II classes 43.1 and 43.2; 13(5)

Principal Issues: 1. Will solar water heater be eligible for class 43.2 on business use portion where taxpayer receives a grant on personal/residential use.

Position: 2. Depends on facts-- but generally yes

Reasons: 2. as long as all the requirements are met & taxpayer claims CCA on cost net of grant per 13(7.1)

14 January 2009 External T.I. 2008-0294521E5 - Employer-paid Social Events

Unedited CRA Tags
6(1)(a) 67.1(2)(f)

Principal Issues: Whether employer-paid transportation and accommodation expenses for an out-of-town employee in order to allow the employee to attend the employer's social event that is generally available to all employees would result in a taxable benefit?
Could any excess, if any be covered under CRA's policy for gifts and awards.

Position: Question of fact, but possibly not a benefit.

Reasons: Previous positions taken

13 January 2009 External T.I. 2008-0296981E5 F - Ajustement au PBR d'une participation

Unedited CRA Tags
53(2)c)(i)B), 31, 111(1)c), 40(3.1)
Summary Under
Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) - Subparagraph 53(2)(c)(i) - Clause 53(2)(c)(i)(B)
full amount of allocated farm loss reduces partnership ACB even if loss restricted under s. 31

Principales Questions:
Quel est l'impact d'une perte agricole restreinte sur le PBR d'une participation dans une société en commandite ?

Position Adoptée:
Le PBR de la participation dans la société de personnes d'un contribuable est réduit d'un montant correspondant à sa part dans la perte agricole, compte non tenu de l'article 31 de la Loi. Advenant le cas où le PBR de la participation dans la société de personnes est négatif, un gain en capital sera réputé.

Raisons:
Application de la Loi. Les dispositions de la division 53(2)c)(i)(B) et du paragraphe 40(3.1) de la Loi sont claires et sans ambiguïtés.

6 January 2009 External T.I. 2008-0289341E5 F - EET - Règles transitoires

Unedited CRA Tags
248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement
no grandfathering under 1986 transitional rule
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(11)
recognition under s. 6(11) of previously-unrecognized portion of deferred amount

Principales Questions: Les règles transitoires applicables aux ententes d'échelonnement du traitement s'appliquent-elles dans une situation donnée?

Position Adoptée: Non

Raisons: Les règles transitoires ne s'appliquent pas pour les services rendus après juin 1986 car rien n'indique que le contribuable a l'obligation de différer la réception d'un montant différé en vertu d'une convention écrite conclue avant le 25 février 1986
et qu'il ne peut pas se soustraire à cette obligation en l'annulant ou autrement.

23 December 2008 External T.I. 2008-0271401E5 F - GRIP/CRTG

Unedited CRA Tags
89(1), 55(2), 55(5)(f)
Summary Under
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - General Rate Income Pool - Element A - Element G
safe income dividend can be included in GRIP if designated as separate dividend

Principal Issues: In a given situation where, in a particular taxation year, Bco receives from its wholly-owned subsidiary (Aco) two taxable dividends (the first, an eligible dividend of $3.5 million and a second of $1.5 million), the two taxable dividends are subject to the application of subsection 55(2), and, Bco has designated the first taxable dividend to be two separate taxable dividends of $3 million (the amount of the safe income on hand attributable to the gain on its shares) and another of $500,000, pursuant to paragraph 55(5)(f), whether Bco could include the first taxable dividend in computing its GRIP even though the said taxable dividend is subject to paragraph 55(2)(a)?

Position: No. Bco could include in its GRIP only $3 million.

Reasons: Previous position reiterated.

9 December 2008 External T.I. 2008-0281441E5 - ACB of cap.int. in a trst-non-tax. port.ofcap.gain

Unedited CRA Tags
53(2)(h)(i.1); 104(21); 104(13)

Principal Issues: Does 53(2)(h)(i.1)(B)(I) apply when the non-taxable portion of a capital gain is payable and is distributed by a unit trust in the year subsequent to the year that the taxable capital gain was realized and paid to unitholders where those taxable capital gains were designated by the trust under 104(21)?

Position: Yes

Reasons: Consistent with previous position