Income Tax Severed Letters - 2009-02-13

Ruling

2008 Ruling 2008-0270291R3 - Pro services by a partner's corp for ptnshp

Unedited CRA Tags
125(7); 56(2); 96(1)

Principal Issues: Whether the active business income earned by a partner's corporation from providing professional services to a partnership of which the partner is a member would be restricted under the rules for specified partnership income or personal services business.

Position: Generally no.

Reasons: The proposed transactions conform to our requirements as set out in other similar rulings.

2008 Ruling 2008-0290491R3 F - Butterfly Transaction - Papillon

Unedited CRA Tags
55(3)(b); 55(3.1); 55(2)

Principal Issues: Split-up butterfly transaction.

Position: Favourable rulings provided.

Reasons: Meets the requirements of the law.

Technical Interpretation - External

5 February 2009 External T.I. 2009-0306351E5 - Employer paid deductible of employees drug plan

Unedited CRA Tags
6(1)(a)

Principal Issues: Whether a payment to an employee to help cover the cost of his or her Ontario Drug Benefit Plan deductible is a taxable benefit.

Position: Yes.

Reasons: Generally, paragraph 6(1)(a) of the Act taxes an employee on the value of any benefit received unless another provision of the Act provides otherwise.

5 February 2009 External T.I. 2008-0298881E5 - Wholly dependent person credit

Unedited CRA Tags
118(1)(b), 118(5)

Principal Issues: Whether or not the taxpayer is entitled to claim the wholly dependent person credit under paragraph 118(1)(b) of the Act.

Position: No

Reasons: Subsection 118(5) provides that no amount may be claimed under subsection (1) where a support amount was required to be paid in respect of the child.

5 February 2009 External T.I. 2008-0304301E5 - Whether association is a "trade union"

Unedited CRA Tags
8(1)(i)(iv)

Principal Issues: Whether dues paid by XXXXXXXXXX workers to an "independent workers association" qualify as annual dues to a trade union for purposes of the deduction under subparagraph 8(1)(i)(iv).

Position: No.

Reasons: This provision generally contemplates organizations that negotiate collectively with employers for improvements in their members' working conditions.

4 February 2009 External T.I. 2008-0273641E5 - Gift of Capital Property by will

Unedited CRA Tags
70 (5) 118.1 (6) proposed 118.1 (5.4) and (6)

Principal Issues:
Whether a designation made pursuant to proposed subsection 118.1 (6) in respect of a gift of a capital property made by an individual's will override the application of paragraph 70(5)(a) the Income Tax Act?

Position:
Yes

Reasons:
Subsection 118.1 (6) is a more specific provision than subsection 70(5). Therefore, it overrides subsection 70(5).

XXXXXXXXXX 2008-027364
I. Landry, M. Fisc.
February 4, 2009

4 February 2009 External T.I. 2008-0292771E5 F - Régime de congé à traitement différé

Unedited CRA Tags
248(1); 6801(a)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 6801 - Paragraph 6801(a)
plan failed to provide: withdrawal must be in employer’s discretion; maximum deferral period of 6 years; a deferral period must precede leave; return to work required

Principales Questions: Quelles sont les règles applicables pour qu'un régime se qualifie aux fins de l'alinéa 6801 a) du Règlement et ne soit pas visé par les règles applicables aux EET?

Position Adoptée: Discussion générale

3 February 2009 External T.I. 2008-0299121E5 - Foreign Income and Expenses - Residency

Unedited CRA Tags
2 118.5 250(1) 8(1)(i)

Principal Issues: What are the requirements to file a Canadian income tax return where a Canadian citizen is working at foreign hospital? Are certain expenses paid by the individual to obtain certification as a medical doctor in the foreign jurisdiction deductible?

Position: General comments only.

Reasons: Don't have all the facts so we are in no position to provide specific comments.

3 February 2009 External T.I. 2008-0303871E5 - Meals and Accommodations as Medical Expenses

Unedited CRA Tags
118.2(2)(g) 118.2(2)(h) 118.2(2)(l.1)

Principal Issues: Whether the cost of meals and accommodations of an accompanying individual qualify as medical expenses during the period the patient stays in a hospital.

Position: No

Reasons: The cost of accommodations and meals of the patient and an accompanying individual while travelling to and from the hospital likely qualify as medical expenses. Once the patient is in the hospital and the accompanying individual is staying in the hotel, these costs are no longer travelling expenses

2 February 2009 External T.I. 2008-0267551E5 - Requirement to issue T4A - tuition paid

Unedited CRA Tags
56(1)(n),56(1)(r) 200(2) reg 135

Principal Issues: Whether tuition costs paid by an organization on behalf of students are taxable pursuant to paragraph 56(1)(n) or (r) of the Act and subject to subsection 200(2) of the Regulations?

Position: Yes

Reasons: Provided that paragraph 56(1)(r) of the Act does not apply, tuition costs paid by an organization on behalf of students will be bursaries and as per subsection 200(2) of the regulations the payer must issue T4A slips.

2 February 2009 External T.I. 2008-0291501E5 - METC - physical therapy

Unedited CRA Tags
118.2(2)(l.9)

Principal Issues: Whether the monitoring of therapy by a licensed neurologist would meet the requirement under paragraph 118.2(2)(l.9) that, in the case of a physical impairment, the therapy be administered under the general supervision of a medical doctor or an occupational therapist.

Position: No.

Reasons: Based on the ordinary meaning of "general supervision".

2 February 2009 External T.I. 2009-0306221E5 - Medical Travel

Unedited CRA Tags
118.2(2)(g) 118.2(2)(h) 118.2(2)(l.1)

Principal Issues: Whether costs incurred for accommodations during period of treatment are qualified medical expenses.

Position: No

Reasons: Travel costs incurred while en route to obtain medical services include costs for accommodations. Travel costs do not include costs for hotel accommodations throughout the period of treatment.

2009-030622
XXXXXXXXXX Rob Ferrari
(613) 957-2138
February 2, 2009

15 January 2009 External T.I. 2008-0272681E5 F - Options d'achat sur devises

Unedited CRA Tags
146(1); 204d)
Summary Under
Tax Topics - Income Tax Act - Section 204 - Qualified Investment - Paragraph (d)
FX puts and calls are qualified if listed

Principales Questions: Est-ce que des options d'achat sur devises inscrites à la cote de la Bourse de Montréal constituent un placement admissible pour une fiducie régie par un REER?

Position Adoptée: Commentaires généraux.

Raisons: Ces options d'achat sur devises pourraient constituer un placement admissible dans la mesure où ces titres ne seraient pas des contrats à terme ou d'autres instruments dérivés dont le risque de perte pour le détenteur peut excéder le coût pour lui.

14 January 2009 External T.I. 2008-0274271E5 F - Rente de la Suisse

Unedited CRA Tags
56(1)a)(i); 56(1)(a)(C.1); 126(1)
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(i) - Clause 56(1)(a)(i)(C.1)
does not extend to pension from Switzerland
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 18
exemption under Art. 18(2) of the Canada-Switzerland treaty

Principales Questions: 1) Est-ce qu'une rente provenant de la Suisse est un mécanisme de retraite étranger visé à la division 56(1)a)(i)(C.1)?
2) Si un résident canadien reçoit une rente de la Suisse, doit-il inclure ce montant dans son revenu?

Position Adoptée: 1) Non
2. Généralement oui.

Raisons: 1) Selon le Règlement 6803, un mécanisme de retraite étranger est un mécanisme visé aux alinéas 408a), b) ou h) de la loi des États-Unis intitulée Internal revenu Code of 1986 ainsi que les modifications successives
2) Le sous-alinéa 56(1)a)(i) vise toute prestation de retraite ou de pension. Si le résident canadien paye un impôt au gouvernement de la Suisse, alors il pourrait peut-être bénéficier du crédit pour impôt étranger du paragraphe 126(1). Si c'est une prestation imposable en Suisse seulement, le sous-alinéa 110(1)f)(i) serait applicable

12 January 2009 External T.I. 2008-0293901E5 F - Article 80

Unedited CRA Tags
80 20(1)c)(ii)
Summary Under
Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) - Commercial Debt Obligation
de minimis interest deductibility on a debt could cause it to be a commercial debt obligation
Summary Under
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii)
indirect use test also applies to the extent of eligible capital attributable to shares repurchased in consideration for debt issuance

Principales Questions: Dans une situation donnée où une société procéderait à l'achat de gré à gré d'actions de son capital actions détenues par une autre société en contrepartie d'une créance, est-ce que le règlement éventuel de la créance pour un montant inférieur à son principal impliquerait l'application de l'article 80?

Position Adoptée: Commentaires généraux.

Raisons: L'article 80 s'appliquerait si la créance se qualifiait comme " créance commerciale " et " dette commerciale ".

9 December 2008 External T.I. 2008-0282561E5 - LIF and the Pension Tax Credit

Unedited CRA Tags
118(3); 118(7); 146.3

Principal Issues: Where a LIF income recipient is under the age of 65, would he/she be eligible for the pension tax credit or pension income splitting in the circumstances?

Position: No

Reasons: The wording of the legislation

5 December 2008 External T.I. 2008-0268241E5 - DSLP, enrolment in two plans

Unedited CRA Tags
Reg 6801(a)

Principal Issues: Where an employee is enrolled in a deferred salary leave plan with an employer, can the participant enrol in a second DSLP with the same employer and commence salary deferral under two plans simultaneously?

Position: Question of fact - general comments provided

Reasons: Such a determination would depend on the terms of the employer's plan and to the extent the conditions under Regulation 6801(a) of the Act are satisfied.

18 November 2008 External T.I. 2008-0272891E5 - Flexible Employee Benefit Program - TFSA

Unedited CRA Tags
146.2; 248(1)

Principal Issues: Can Tax-Free Savings Accounts be part of a flexible employee benefit program?

Position: Yes. Where an employee has either received cash for, or used flex credits to contribute to a TFSA, the amount would be included in an employee's income as salary or wages when it is received or deposited. Any amounts deposited into a TFSA would be subject to the rules governing TFSAs.

Reasons: IT-529, as well as comments in the technical notes.
2008-027289
XXXXXXXXXX Bruce Hartt
(613) 948-5273
November 18, 2008

Technical Interpretation - Internal

4 February 2009 Internal T.I. 2008-0300111I7 - Directors' Liability

Unedited CRA Tags
227.1(1) 227.1(2) 227.1(5)

Principal Issues: What is the amount recoverable from a director?

Position: The amount recoverable is (a) the amount remaining unsatisfied in whole or in part after the sheriff's levy; (b) in the case of a formal dissolution, the amount proved against the company, less any amount paid; (c) in the case of a bankruptcy, the amount proved against the estate less any dividends received.

Reasons: S. 227.1(5)

19 January 2009 Internal T.I. 2008-0305241I7 F - Impôt de la partie I.3 et PCGR

Unedited CRA Tags
181.2(3)
Summary Under
Tax Topics - Income Tax Act - Section 181 - Subsection 181(3)
CRA can challenge taxpayer’s application of GAAP

Principales Questions: Dans une situation particulière donnée où le montant du capital versé fiscal d'une catégorie d'actions du capital actions d'une société est supérieur au montant inscrit à l'égard de cette catégorie d'actions dans le bilan de la société dressé selon les PCGR, quel montant doit être utilisé aux fins du calcul du capital à l'alinéa 181.2(3)a)?

Position Adoptée: Le montant indiqué dans le bilan dressé selon les PCGR.

Raisons: Sous-alinéa 181(3)b)(i) et jurisprudence.

25 November 2008 Internal T.I. 2008-0296231I7 - Group TFSA and non-employees

Unedited CRA Tags
146.2(2); 207.01(1)

Principal Issues: Can non-employees participate in a group TFSA of an employer?

Position: Yes

Reasons: Provided the provisions of paragraphs 146.2(2)(b) and (c) are met and the TFSA arrangement does not provide an advantage to the participants under 207.01(1).