Income Tax Severed Letters - 2009-10-09

Ruling

2009 Ruling 2008-0299591R3 - Loss Consolidation

Unedited CRA Tags
20(1)(c), 9, 12(1)(c), 12(1)(x), 112, 15(1), 56(2), 69(1), 246(1), 245(2)

Principal Issues: Is loss consolidation scheme acceptable?

Position: Yes

Reasons: Within established procedures

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Ministerial Correspondence

14 September 2009 Ministerial Correspondence 2009-0332681M4 - Apprenticeship job creation tax credit

Unedited CRA Tags
127(5); 127(9)

Principal Issues: Whether employer can claim apprenticeship job creation tax credit in respect of its apprenticeship expenditures.

Position: Matter referred to TSO for resolution. General comments only.

Reasons: Question of fact.

10 September 2009 Ministerial Correspondence 2009-0333141M4 - First-time home buyers' plan

Unedited CRA Tags
January 27, 2009 Federal Budget - Annex 5

Principal Issues: Would an individual qualify for the first-time home buyers' tax credit (HBTC) if the only consideration paid by the individual for the home is the assumption of an existing mortgage from the previous home owner?

Position: Yes - as long as all the conditions for the HBTC are met.

Reasons: The fact that the only consideration paid by the individual for a home is the assumption of an existing mortgage does not in itself preclude the individual from qualifying for the HBTC if all the conditions for the credit are met.

10 September 2009 Ministerial Correspondence 2009-0333181M4 - First-time home buyers' plan

Principal Issues: Would an individual qualify for the first-time home buyers' tax credit (HBTC) if the only consideration paid by the individual for the home is the assumption of an existing mortgage from the previous home owner?

Position: Yes - as long as all the conditions for the HBTC are met.

Reasons: The fact that the only consideration paid by the individual for a home is the assumption of an existing mortgage does not in itself preclude the individual from qualifying for the HBTC if all the conditions for the credit are met.

20 August 2009 Ministerial Correspondence 2009-0331391M4 - employee stock option losses

Unedited CRA Tags
7(1)

Principal Issues: Under section 7 of the Act, a taxpayer has to include an amount in income that is based on the value of the shares acquired under a stock option determined at the time the option is exercised. Is there any relief where the shares have decrease in value at the time the taxpayer disposes of them.

Position: The letter provides a brief explanation of the existing legislation.

Reasons: CRA must apply the law as written. The Department of Finance is responsible for the implementation and amendment of tax policy.

7 August 2009 Ministerial Correspondence 2009-0309541M4 - Home Renovation Tax Credit

Unedited CRA Tags
January 27, 2009 budget

Principal Issues:
Taxpayer looking for information about what is eligible for the home renovation tax credit.

Position:
None

Reasons:
General comments provided based on budget documents.

Technical Interpretation - External

30 September 2009 External T.I. 2009-0340061E5 F - FERR au profit de l'époux ou du conjoint de fait

Unedited CRA Tags
146(1); 146(8.3); 146.3(5.1)

Principales Questions: Un REER qui est un régime au profit de l'époux ou conjoint de fait peut-il être transféré à un FERR qui n'est pas un FERR au profit de l'époux ou du conjoint de fait?

Position Adoptée: Le FERR peut recevoir des sommes provenant d'un REER au profit de l'époux ou du conjoint mais, en raison de ce transfert, ce FERR sera un FERR au profit de l'époux ou du conjoint de fait.

Raisons: Définition du "régime au profit de l'époux ou conjoint de fait" au paragraphe 146(1).

17 August 2009 External T.I. 2009-0319221E5 - contributions to foreign pension plans

Unedited CRA Tags
Can-USA Treaty Article XVIII 146(1) ITR 8308.2

Principal Issues: Can a Canadian Resident individual who works in the USA deduct contributions made to a foreign retirement plan?

Position: In many situations the contributions can be deducted.

Reasons: The Act and the Canada-USA Income Tax Treaty were amended to provide a deduction for employer and employee contributions in certain situations.

28 July 2009 External T.I. 2007-0257611E5 - RESP registration and taxability

Unedited CRA Tags
146.01; 122; 104

Principal Issues: What are some of the tax consequences if a promoter does not satisfy paragraph 146.1(2)(b) at a particular time?

Position: General consequences described

Reasons: Basic description and clarification of the provisions governing the registration of RESPs.

Conference

24 April 2009 Roundtable, 2009-0316621C6 - Withholding on EBP Payments in Shares and Options

Unedited CRA Tags
153; regulation Part 1

Principal Issues: What are the withholding obligations on certain transactions relating to distributions of shares?

Position: Withholding is required subject to any CRA administrative provisions that may be applicable.

Reasons: Responses were prepared by Trust Accounts.

5 October 2007 Roundtable, 2007-0243241C6 F - Application de 75(2) lorsque société bénéficiaire

Unedited CRA Tags
75(2)

Principales Questions: Si une société est un bénéficiaire d'une fiducie (ou un bénéficiaire éventuel) et si la fiducie souscrit à des actions de cette société, la position est que le paragraphe 75(2) ne s'appliquera pas à l'égard des actions souscrites. Qu'en est-il de l'application du paragraphe 75(2) à l'égard du montant reçu par la fiducie à titre de dividendes sur les actions souscrites ou à l'égard du montant reçu lors de l'achat de gré à gré ou du rachat desdites actions? Where a corporation is a beneficiary of a trust (or possibly a beneficiary) and where the trust subscribes to shares of that corporation, our view is that subsection 75(2) does not apply in respect to the shares. Would subsection 75(2) apply in respect of the amount received by the trust as a dividend paid on the shares subscribed or in respect of the amount received at the time of the acquisition or the redemption of the subscribed shares?

Position Adoptée: Le paragraphe 75(2) ne s'appliquera pas à l'égard des ces montants et ne réputera que le revenu provenant de ces montants est celui de la société. Subsection 75(2) will not apply in respect of those amounts et will not deemed the income earned on those amounts as being the income of the corporation.

Raisons: Le montant reçu à titre de dividendes est le revenu auquel donnent droit les actions qui ne sont pas sujettes au paragraphe 75(2). Le montant reçu lors de l'achat de gré à gré ou du rachat des actions est un bien substitué à un bien qui n'était pas sujet au paragraphe 75(2). The amount received as a dividend represents the income arising from the rights attached to the shares which were not subject to subsection 75(2). The amount received at the time of the acquisition or the redemption of the shares represents a substituted property for a property that was not subject to subsection 75(2).

Technical Interpretation - Internal

1 October 2009 Internal T.I. 2009-0332721I7 - Revocation Tax

Unedited CRA Tags
s. 188(1.1) ITA s. 189(7) & (8) ITA s. 161(1) & (11) ITA s. 225.1(1.1) ITA

Principal Issues: 1. Whether interest is exigible on revocation tax.
2. Whether collection restrictions apply to revocation tax.

Position: 1. No.
2. Yes.

Reasons: 1. By subsection 161(1), interest is not levied on Part V tax.
2. By paragraph 225.1(1.1)(a), the collection commencement date is one year after the day on which the notice of intention to revoke the registration of a charter is mailed.

28 September 2009 Internal T.I. 2008-0300511I7 - Classification of a foreign entity - Anstalt

Unedited CRA Tags
75(2) 94 104 248(1)

Principal Issues: Is a Liechtenstein Anstalt a trust or a corporation for the purposes of the Act during the years 2002 to 2008?

Position: We should apply the position published in the Interpretation Bulletin IT-343R that the Liechtenstein Anstalt is a corporation.

Reasons: It would be difficult to change the position respecting that particular kind of entity published in Interpretation Bulletin IT-343R retroactively without a decision of a Court or without having warned the public of that change in the years under review.

21 September 2009 Internal T.I. 2009-0329241I7 - Personal Services Business

Unedited CRA Tags
125(7), 18(1)(p)

Principal Issues: 1) Whether a personal services business (PSC) is allowed to own any assets, such as motor vehicle, computer equipment. 2) If a PSC provides an automobile, for which a taxable benefit is assessed to an incorporated employee, can it claim capital cost allowance for the related asset.

Position: 1) A PSC can own assets. 2) A PSC can not claim capital cost allowance for an asset where an incorporated employee is assessed a taxable benefit for the use of that asset.

Reasons: 1) Paragraph 18(1)(p) does not prevent a PSC from owing assets, such as a motor vehicle or computer, but rather places a restriction on the expenses that can be claimed in computing taxable income. 2) Capital cost allowance can not be claimed as indicated in paragraph (24) in 758997 Alberta Ltd. v The Queen 2004 TCC 755.