Income Tax Severed Letters - 2009-11-27

Ruling

2009 Ruling 2009-0329411R3 - DSU

Unedited CRA Tags
6801(d) 248(1)

Principal Issues: Whether the deferred share unit plan satisfies the conditions in paragraph 6801(d)?

Position: Yes.

Reasons: Previous positions.

Ministerial Correspondence

18 November 2009 Ministerial Correspondence 2009-0332411M4 - CCA Class of Mobiles Homes

Unedited CRA Tags
Classes 1, 3 and 10

Principal Issues: CCA class of a mobile home.

Position: Class 1, 3 or 10, depending on the circumstances.

Reasons: A mobile home can be classified as a trailer or as a building, depending on whether or not the mobile home is affixed to the land. A mobile home that qualifies as a trailer is included in class 10. Generally, a mobile home qualifies as a trailer if it has an undercarriage, an axle, wheels, a trailer hitch, brakes, emergency lights, and is not attached permanently to a foundation. If, on the other hand, a mobile home is affixed to the land, it would be treated as a building. For example, a mobile home would be considered a building if the wheels, the trailer hitch, brakes and emergency lights are removed and the unit is affixed to cement pads on the ground and services, such as hydro and water, are installed. A mobile home that qualifies as a building is included in class 1. However, if the mobile home was acquired before 1988, or before 1990 if certain grandfathering conditions were met, it falls into class 3.

29 October 2009 Ministerial Correspondence 2009-0340161M4 - HRTC- New Homes

Unedited CRA Tags
Bill C51 2009 Budget Documents

Principal Issues: Are payments to a new home builder for the costs of upgrades to a new home eligible for the HRTC?

Position: No. The upgrades were made by the builder before title passed to the purchaser.

Reasons: At the time the upgrades were completed, the house was not an eligible dwelling of the purchaser.

28 October 2009 Ministerial Correspondence 2009-0339561M4 - HRTC - Condominium - Eligible Expenditures

Unedited CRA Tags
January 27, 2009 Federal Budget - Annex 5 Bill C51 (2009)/Draft section 118.04 of the ITA

Principal Issues: 1. How to calculate each owner's share of the eligible expenditures for the common areas?
2. If a condominium's balcony railings are replaced, would the replacement costs be divided among just those who own the units with balconies?
3. What is the maximum amount of eligible expenditures that each condominium unit owner can claim for the HRTC?
4. Can a condominium corporation claim the HRTC on its own?

Position:
1. Generally, the expenses incurred for common areas are allocated among unit owners based on the condominium corporation's governing documents.
2. It depends. If balconies are part of the common areas, the replacement costs of balcony railings should be divided among individual owners according to the corporation's governing documents. However, if balconies are not part of the common areas, the replacement costs of those railings can be divided among the specific unit owners.
3. The maximum eligible expenditure that a family can claim is $10,000. The expenditure limit for the HRTC applies to a family's total expenditures for all of their eligible dwellings and not to each dwelling.
4. No.

Reasons:
1 & 2. Each condominium corporation is governed by its own unique rules, regulations and bylaws.
3. Draft section 118.04 of the Income Tax Act
4. Generally, for purposes of the Income Tax Act, the definition of individual does not include a corporation. Therefore, a condominium corporation is not considered to be an eligible individual for purposes of the HRTC and will not be permitted to claim or receive the HRTC on behalf of the unit owners.

7 October 2009 Ministerial Correspondence 2009-0323861M4 - HRTC - Eligible Expenditures

Unedited CRA Tags
Bill C51 (2009)/Draft section 118.04 of the ITA

Principal Issues:
1. Are the costs of renovating a kitchen or bathroom and painting the interior or exterior of a house eligible expenditures for the HRTC?
2. Are the costs of replacing window coverings eligible expenditures for the HRTC?

Position:
1. Yes.
2. Generally, the costs of replacing window coverings, such as blinds and shutters, that are directly attached to the window frame will qualify for the HRTC.

Reasons:
2009 federal budget

29 September 2009 Ministerial Correspondence 2009-0333701M4 F - Programme d'écologisation des pâtes et papiers

Principales Questions: Quel est le traitement fiscal des crédits obtenus en vertu du programme?

Position Adoptée: Commentaires généraux. À moins que la législation mettant en vigueur le programme ne prévoit des mesures contraires, il semble que les crédits obtenus en vertu du programme ne représentent qu'un montant maximum qu'une entreprise admissible donnée pourra éventuellement recevoir dans le cadre du programme, si celle-ci participe au programme et réalise subséquemment des dépenses d'investissement admissibles. De ce point de vue, le montant des crédits attribuables à une entreprise donnée ne lui est pas acquis, ni en totalité, ni en partie, de telle sorte qu'il ne pourrait constituer un revenu imposable. Par ailleurs, le montant d'aide gouvernementale éventuellement reçu par une entreprise dans le cadre du programme pourrait généralement être porté en réduction du coût des dépenses en capital ou des dépenses courantes pour lesquelles cette aide gouvernementale a été versée.

Raisons: Notre compréhension du programme, et les termes de la Loi

Technical Interpretation - External

20 November 2009 External T.I. 2009-0331771E5 - Taxability of Pension Benefits

Unedited CRA Tags
56(1)(a)(i)

Principal Issues: Is share of ex-husband's retirement taxable to the ex-wife when she is entitled to receive half of the benefits as a result of the equalization of family assets upon divorce?

Position: If ex-wife has a proprietary interest in the pension benefits and is legally entitled to the pension income, the pension benefit will be included in her income under subparagraph 56(1)(a)(i).

Reasons: Legal entitlement to the pension income as stated in paragraph 11 of Interpretation Bulletin IT-499R.

20 November 2009 External T.I. 2009-0332351E5 F - Crédit d'impôt pour la rénovation domiciliaire

Unedited CRA Tags
118.04, Budget fédéral 2009 - Annexe 5

Principales Questions:
(a) Est-ce que la TPS et la TVQ font partie des dépenses admissibles donnant droit au CIRD? (b) Est-ce que les propriétaires doivent débourser la totalité du montant des dépenses de rénovation dans l'année ou est-ce que le fonds de prévoyance peut être utilisé afin de payer une partie de ces dépenses? (c) Quels formulaires doivent être remplis et produits afin de réclamer le CIRD? (d) Quels sont les documents que le syndicat de copropriétaires doivent fournir aux copropriétaires afin que chacun d'eux puisse réclamer le CIRD?

Position Adoptée:
(a) Oui. (b) Peu importe que les sommes servant à payer les dépenses de rénovation proviennent du fonds de prévoyance ou d'une cotisation spéciale, les dépenses engagées par le syndicat de copropriétaires pourront donner droit au CIRD. (c) Une nouvelle annexe et une nouvelle ligne seront ajoutées dans la déclaration d'impôt sur le revenu personnel de 2009 permettant de demander le crédit. (d) Au support d'une réclamation du CIRD à l'égard d'une dépense de rénovation ou de modification des aires communes de l'immeuble engagée par le syndicat de copropriétaires, l'ARC prévoit que les copropriétaires devront fournir un document du syndicat de copropriétaires identifiant clairement certaines informations.

Raisons:
(a) La grille de calcul du CIRD publiée sur le site internet de l'ARC spécifie que le montant des taxes payées pour des dépenses de rénovation fait partie du montant de dépenses admissibles donnant droit au CIRD. (b) Analyse législative. (c) Selon les informations présentement disponibles sur le site internet de l'ARC. (d) Selon les informations présentement disponibles.

19 November 2009 External T.I. 2009-0312021E5 F - Prime d'assurance et donation

Unedited CRA Tags
148(1), 118.1, 248(31)

Principales Questions: (1) Quelle est la valeur d'un don lié à une police d'assurance-vie? (2) Les montants reçus de l'assureur suite au décès de l'assuré sont-ils imposables pour les bénéficiaires?

Position Adoptée: (1) Nous ne sommes pas en mesure d'établir le montant admissible du don. (2) Habituellement non.

Raisons: (1) La juste valeur marchande est une question de fait. (2) Le paragraphe 148(1) vise le titulaire et non le bénéficiaire.

18 November 2009 External T.I. 2006-0188131E5 - Canada-U.S. Tax Treaty - Articles XII and XXII

Unedited CRA Tags
212(1)(d); 212(13.1); 215; Articles XII and XXII of the Treaty

Principal Issues: Does the Treaty preclude Canada from imposing Part XIII withholding tax on royalties paid by a resident of Canada to a non-resident if those royalties are deemed, by Article XII(6) of the Treaty, not to arise in Canada?

Position: The Treaty precludes Canada from imposing withholding tax if the royalties are income of a resident of the United States

Reasons: See below

17 November 2009 External T.I. 2009-0331661E5 - Deductibility of damage costs

Unedited CRA Tags
6(1)(a); 6(9); 6(15) 8(1)(f); 80.4(1)

Principal Issues: Income Tax treatment of damage costs and a related forgivable loan

Position: General comments provided

16 November 2009 External T.I. 2009-0313081E5 F - Classification d'un chemin de fer avant 1958

Unedited CRA Tags
Catégorie 1 Règlement Catégorie 4 Règlement 13(21)b) 20(1)a)

Principales Questions: Dans quelle catégorie se classe un réseau de chemin de fer acquis avant 1958?

Position Adoptée: Un réseau de chemin de fer d'un voiturier public acquis avant 1958 se classe à l'alinéa a) de la catégorie 4 de l'annexe II du Règlement de l'impôt sur le revenu.

Raisons: Historique et contexte global des dispositions réglementaires traitant de la déduction pour amortissement des biens de l'industrie ferroviaire.

12 November 2009 External T.I. 2009-0333721E5 - Farming Activity

Unedited CRA Tags
28(1) 248(1) "farming" 9(1)

Principal Issues: Is horse boarding, the rental of farm land, and the production and sale of exotic animal by-products considered farming for purposes of the Act?

Position: Likely no unless the activities are incidental to other farming income.

Reasons: Horse boarding, in and of itself, is either rental or business income. The rental of farm land and manufacturing and processing activities are generally not considered farming.

6 November 2009 External T.I. 2009-0330961E5 - HRTC- Eligibility Period

Unedited CRA Tags
Draft s.118.04 (Bill C-51)

Principal Issues: Can individual condominium unit owners claim a home renovation tax credit (HRTC) on their portion of a 'special assessment' which they were notified of in February 2009. The Board of Directors of the condominium corporation signed a contract on November 14, 2008 to have the condominium's roof replaced.

Position: It is a question of fact whether expenditures are incurred pursuant to a particular contract. The stated contract date for the roof restoration project is November 14, 2008; as such, any expenditure incurred under this contract is not eligible for the HRTC.

Reasons: Proposed legislation states that qualifying expenditures do not include outlays or expenses made or incurred under the terms of an agreement entered into before the eligible period. The eligible period is the period that begins on January 28, 2009, and ends on January 31, 2010.

XXXXXXXXXX 2009-033096
W. King
November 6, 2009

5 November 2009 External T.I. 2009-0307931E5 - Asset used principally in an active business

Unedited CRA Tags
110.6(1)(c) 248(1)

Principal Issues: Is a building used principally in an active business if it is partially used to earn rental income?

Position: Question of fact. General comments provided.

Reasons: The "used principally" test is applied on a property by property basis.

30 October 2009 External T.I. 2009-0314881E5 - HRTC- Eligibility Period

Unedited CRA Tags
Draft s.118.04 (Bill C-51)

Principal Issues: Clarification of the statement, "Expenditures incurred pursuant to an agreement that was entered into before January 28, 2009, will not be eligible for the credit." In essence, at what point, in time, are expenditures incurred? Will the kitchen renovation project qualify for the home renovation tax credit (HRTC)?

Position: It is a question of fact whether expenditures are incurred pursuant to a particular contract. The stated contract date for the kitchen renovation project is December 2008; as such, any expenditure incurred under this contract is not eligible for the HRTC.

Reasons: Proposed legislation states that qualifying expenditures do not include outlays or expenses made or incurred under the terms of an agreement entered into before the eligible period. The eligible period is the period that begins on January 28, 2009, and ends on January 31, 2010.

XXXXXXXXXX 2009-031488
W. King
October 30, 2009

27 October 2009 External T.I. 2009-0326651E5 - Home Renovation Tax Credit - Condominium

Unedited CRA Tags
January 27, 2009 federal budget; Bill C51 - s. 118.04

Principal Issues: 1. What is the process for individual condominium owners to claim the HRTC? 2. Will upgrading the condominium's siding qualify as an eligible expenditure for the HRTC?

Position: 1. Generally, supporting documentation may be in the form of a letter from the corporation and signed by an authorized individual and can include copies of agreements, invoices or receipts. The individual condominium owners can claim eligible expenditures for their unit and their share of eligible common area expenses. 2. Yes

Reasons: 2009 Budget statements; proposed section 118.04.

XXXXXXXXXX 2009-032665
George A. Robertson, CMA
October 27, 2009

22 October 2009 External T.I. 2009-0321481E5 - Principal residence exemption - Bed and Breakfast

Unedited CRA Tags
18(12) 40(2)(b) 45(1)(c)

Principal Issues: Does the operation of a bed and breakfast disqualify the house from the principal residence exemption?

Position: Question of fact. General comments provided.

Reasons: IT-120R6

Technical Interpretation - Internal

16 November 2009 Internal T.I. 2009-0342571I7 F - Catégorie 1, alinéa 1100(1)a.1) du Règlement

Unedited CRA Tags
1100(1)a.1); 1101(5b.1); 1104

Principales Questions: Qui du locateur ou du locataire peut se prévaloir de la déduction pour amortissement pour un bâtiment non résidentiel admissible?

Position Adoptée: Le locateur s'il rencontre tous les autres critères par ailleurs.

Raisons: Le Règlement 1104 stipule que le bien doit être acquis par le contribuable mais que son utilisation peut être faite par le contribuable ou son preneur.