Income Tax Severed Letters - 2009-09-04

Ruling

2009 Ruling 2008-0302121R3 - Partnership Reorg-Personal Services Business

Unedited CRA Tags
125(7) 256(2.1)

Principal Issues: Where a partner of a professional partnership creates a professional corporation through which professional services will be provided to the partnership, will the corporation be eligible for the small business deduction?

Position: Question of Fact. Generally yes, if certain conditions are met.

Reasons: Relevant legislation and consistent with other similar rulings.

2009 Ruling 2008-0290081R3 - Foreign Affiliate Reorganization

Unedited CRA Tags
Reg. 5907(5.1); Reg. 5907(2); 15(1)

Principal Issues: 1) Whether subsection 5907(5.1) of the Regulations applies to the capital property disposed of in the course of the proposed corporate reorganization; 2) Whether subsections 15(1), 56(2) or 246(1) apply.

Position: 1) Yes; 2) No

Ministerial Correspondence

25 August 2009 Ministerial Correspondence 2009-0331211M4 - Home Renovation Tax Credit

Principal Issues: Is a wireless broadband tower eligible for the HRTC?

Position: A permanently installed tower on land within an adjoining one half of a hectare of an eligible dwelling would qualify.

Reasons: Enduring in nature.

25 August 2009 Ministerial Correspondence 2009-0318921M4 - Home Renovation Tax Credit

Principal Issues: Are air conditioners and heat pumps eligible for the HRTC?

Position: A fixed air conditioning unit or heat pump that is permanently installed and whose removal alters the nature of the dwelling would be eligible. A portable or window air conditioning unit would not be eligible.

Reasons: Integral to the eligible dwelling.

25 August 2009 Ministerial Correspondence 2009-0331401M4 - Home Renovation Tax Credit

Principal Issues: Would a new dock qualify for the HRTC?

Position: Yes if the dock is attached to land within an adjoining one half acre of an eligible dwelling.

Reasons: Enduring in nature.

25 August 2009 Ministerial Correspondence 2009-0325951M4 - Home Renovation Tax Credit

Principal Issues: What landscaping costs qualify for the HRTC?

Position: A question of fact. Examples provided for guidance.

Reasons: Must meet criteria for eligibility.

17 August 2009 Ministerial Correspondence 2009-0328071M4 - Home Renovation Tax Credit (HRTC)

Unedited CRA Tags
Jan 27, 2009 federal budget

Principal Issues: A request to have linoleum flooring added to the list of examples of the eligible expenditures for the HRTC.

Position: CRA officials will consider adding linoleum as another example.
CRA PUBLICATIONS: Q & As on the HRTC

13 August 2009 Ministerial Correspondence 2009-0331361M4 - Home Renovation Tax Credit

Principal Issues: Whether the replacement of siding, eavestroughs, soffits, and facia on a house are eligible expenditures for the purposes of the HRTC.

Position: Yes

Reasons: Enduring in nature and integral to the eligible dwelling.

13 August 2009 Ministerial Correspondence 2009-0331371M4 - Home Renovation Tax Credit

Principal Issues: Whether an outdoor sauna building is eligible for the HRTC.

Position: Yes providing it is a permanent installation on the land that forms part of an eligible building.

Reasons: Enduring in nature.

13 August 2009 Ministerial Correspondence 2009-0319111M4 - Home Renovation Tax Credit

Principal Issues: Are home security systems eligible for the HRTC?

Position: A permanently installed or wired home security system is eligible. Ongoing monitoring costs by a security company are not.

Reasons: Enduring in nature. Integral to the eligible dwelling.

13 August 2009 Ministerial Correspondence 2009-0331381M4 - Home renovation Tax Credit

Principal Issues: Are solar photovoltaic arrays (solar panels) eligible for the HRTC?

Position: Yes if permanently installed

Reasons: Enduring in nature.

13 August 2009 Ministerial Correspondence 2009-0315471M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
January 27, 2009 federal budget

Principal Issues:
Do expenditures incurred to renovate a co-operative housing unit is eligible for the new home renovation tax credit?

Position:
Yes.

Reasons:
The credit will be available for eligible expenditures incurred to renovate the unit that is eligible to be the individual's principal residence as well as the individual's share of the cost of eligible expenditures incurred in respect of common areas.

10 August 2009 Ministerial Correspondence 2009-0318051M4 - Home renovation Tax Credit

Principal Issues: Eligibility of custom draperies for the HRTC

Position: Custom draperies may qualify in some circumstances.

Reasons: In some circumstances, custom draperies may not keep their value or usefulness if installed in another dwelling.

10 August 2009 Ministerial Correspondence 2009-0319811M4 - Children's Fitness Tax Credit

Unedited CRA Tags
ITA 118.03 Regulation 9400

Principal Issues: Whether a volleyball/basketball camp held 3 days per week for 4 consecutive weeks is a qualifying program of physical activity.

Position: This activity does not qualify.

Reasons: Does not meet definition under current Regulations.

7 August 2009 Ministerial Correspondence 2009-0315801M4 - Home Renovation Tax Credit

Unedited CRA Tags
January 27, 2009 federal budget

Principal Issues:
What is eligible for the home renovation tax credit?

Position: None

Reasons:
General comments provided based on budget documents.

Technical Interpretation - External

14 August 2009 External T.I. 2009-0320481E5 - Support amount - arbitration award

Unedited CRA Tags
56.1(4) 110.2 Ontario's Family Law Act Ontario's Arbitration Act

Principal Issues: Whether the payments made for spouse support pursuant to an award made by an arbitrator in Ontario, in compliance with the Ontario Family Law Act and Arbitration Act, can be considered to be an amount receivable under an order of a competent tribunal or a written agreement for the purposes of the definition of "support amount" in subsection 56.1(4) of the Income Tax Act (Canada).

Position: Yes.

Reasons: See response.

11 August 2009 External T.I. 2009-0333861E5 - Classification of medical equipment

Unedited CRA Tags
class 8(i) class 12(e) class 12(h)

Principal Issues: Whether portable oxygen concentrators, cylinders and regulators rented for a fee are medical or dental instruments, or tools for the purpose of class 12.

Position: No.

Reasons: See response.

2009-033386
XXXXXXXXXX André Gallant
(613) 957-8961
August 11, 2009

11 August 2009 External T.I. 2009-0310471E5 - Ontario tax liability of non-resident corporation

Unedited CRA Tags
CTA 2(2); TA 1(1), 27(1) 29(1); ITA 115, ITA Reg. 400

Principal Issues: Whether a non-resident corporation is subject to tax in Ontario on rental income earned from real estate situated in Ontario for taxation years ending after December 31, 2008.

Position: It is a question of fact whether a rental operation constitutes income from property.

Reasons: If rental income earned by a non-resident corporation from Ontario real estate is considered property income, the particular corporation will not be considered to be carrying on business in Ontario for purposes of deeming a permanent establishment to exist under the Taxation Act (2007).

Technical Interpretation - Internal

20 August 2009 Internal T.I. 2009-0326941I7 F - Intérêts, Taxe sur le capital, déductibilité

Unedited CRA Tags
18(1)a); 18(1)b); 67.6
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose
provincial capital tax and interest thereon generally is deductible/income taxes are not

Principales Questions: 1-Est-ce que la taxe sur le capital est déductible dans le calcul du revenu de l'impôt fédéral?
2-Est-ce que les intérêts sur la taxe sur le capital sont déductibles dans le calcul du revenu de l'impôt fédéral?

Position Adoptée: 1-Oui
2-Oui

Raisons: 1- La taxe sur le capital est considérée comme un dépense effectuée par le contribuable en vue de tirer un revenu d'entreprise.
2-Les intérêts sur la taxe sur le capital peuvent être déductibles en vertu de l'article 9, à condition que la dépense d'intérêt satisfasse aux exigences de la Loi, notamment celles indiquées aux alinéas 18(1)a) et 18(1)b). Les intérêts sur la taxe sur le capital seront déductibles si la taxe sur le capital l'est.

20 August 2009 Internal T.I. 2009-0316341I7 - Pre-Bankruptcy Losses Claimed Post-Bankruptcy

Unedited CRA Tags
s. 111 s. 128

Principal Issues: Whether a bankrupt can claim s. 111 losses in the post-bankruptcy period.

Position: No.

Reasons: S. 128(2)(f) precludes a bankrupt from claiming s. 111 losses in the post-bankruptcy period.

24 June 2009 Internal T.I. 2009-0324851I7 - Beneficial Ownership - Residential Property

Unedited CRA Tags
54; 38

Principal Issues: Whether or not a person "beneficially owned" a property at the time of disposition.

Position: In this case, likely yes.

Reasons: The attributes of "beneficial ownership" are evidenced by the conduct of the parties and supporting documents.