Income Tax Severed Letters - 2009-12-04

Ruling

2009 Ruling 2008-0297571R3 - Loss

Unedited CRA Tags
20(1)(c), 84(4), 53(2)(a)(ii), 112, 12(1)(c), 12(1)(x), 55(3)(a), 245

Principal Issues: Is loss consolidation scheme acceptable?

Position: Yes

Reasons: Within established procedures.

2009 Ruling 2009-0344711R3 - Canada-U.S. Tax Treaty - Limitation on Benefits

Principal Issues: Would a taxable capital gain realized by the taxpayer (a resident of the United States) on the sale of the shares of a Canadian corporation be eligible for Treaty benefits under Article XXIX A(3) of the Treaty?

Position: Yes

Reasons: Requirements of Article XXIX A(3) are met

Ministerial Correspondence

27 November 2009 Ministerial Correspondence 2009-0309571M4 - Home renovation tax credit

Unedited CRA Tags
draft 118.04

Principal Issues: Does each project need to exceed $1,000 or can the expenditures for more than one project be grouped together to exceed the $1,000?

Position: The expenditures of the family can be pooled together to exceed the base amount of $1,000.

Reasons: The expenditures must be in respect of a renovation or alteration of an eligible dwelling. There is no requirement that each project, where there are several projects, exceed the base amount of $1000.

27 November 2009 Ministerial Correspondence 2009-0340881M4 F - Crédit d'impôt pour la rénovation domiciliaire

Unedited CRA Tags
118.04 proposé

Principales Questions:
Est-ce que seulement les travaux de rénovation ou de modification effectués par un entrepreneur peuvent être admissibles au CIRD?

Position Adoptée:
Dans la mesure où toutes les conditions d'admissibilité sont respectées et que les travaux de rénovation ou de modification sont appuyés de pièces justificatives, les travaux de rénovation ou de modification effectués par une personne qui n'est pas entrepreneur, au même titre que les travaux de rénovation ou de modification effectués par un entrepreneur, peuvent être admissibles au CIRD.

Raisons:
Analyse législative.

27 November 2009 Ministerial Correspondence 2009-0340891M4 - Home renovation tax credit

Unedited CRA Tags
draft 118.04

Principal Issues: Are expenditures for renovating a late (deceased) brother's house eligible for the home renovation tax credit (HRTC)?

Position: Whether or not expenditures qualify for the HRTC must be resolved on the basis of the facts in each particular situation.

Reasons: The house must be an eligible dwelling of the individual incurring the expenditures at the time of the renovation. The expenditures must be enduring and integral to the dwelling.

26 November 2009 Ministerial Correspondence 2009-0311641M4 - HRTC- "do it yourself"

Unedited CRA Tags
draft 118.04

Principal Issues: Do expenditures for projects done by the homeowner qualify for the home renovation tax credit (HRTC)?

Position: Yes, the expenditures qualify for the HRTC, provided all other conditions are met. However, qualifying expenditures would not include the value of the homeowner's labour.

Reasons: Eligible expenditures include goods that are acquired after January 27, 2009, and before February 1, 2010 that are directly attributable to a renovation or alteration that is of an enduring nature and integral to the eligible dwelling.

26 November 2009 Ministerial Correspondence 2009-0342521M4 - HRTC - Eligibility of Private Care Homes

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

Principal Issues: Are owners of private care homes allowed to claim the HRTC?

Position: It depends on whether the private care homes are eligible dwellings or not, and whether the renovation work is carried out in the personal-use areas, business-use areas, or common areas.

Reasons: If the private care homes are not eligible dwellings, renovations made to the homes will not qualify for the HRTC. If the private care homes are eligible dwellings, the full amount of the qualifying expenditures made for the personal-use areas of the homes will qualify for the HRTC. Renovation work carried out exclusively in the business-use areas of the homes will not qualify for the HRTC.

24 November 2009 Ministerial Correspondence 2009-0318021M4 - Children's Fitness Tax Credit

Unedited CRA Tags
118.03, Regulation 9400

Principal Issues:
Whether XXXXXXXXXX are eligible for the children's fitness tax credit?

Position:
If all conditions are met, it could be eligible.

Reasons:
The law.

20 November 2009 Ministerial Correspondence 2009-0311651M4 - Home renovation tax credit - do it yourself

Unedited CRA Tags
draft 118.04

Principal Issues: Do building materials that you purchase and pick up for a project that you do yourself qualify for the home renovation tax credit (HRTC)?

Position: Yes, providing all other conditions are met.

Reasons: If the expenditures for the building materials are otherwise eligible expenditures and are supported by acceptable supporting documentation they will qualify for the HRTC. If you do not have a delivery slip since you are picking up the material yourself, this fact alone will not disqualify the expenditures from qualifying for the HRTC. The value of your labour is not an eligible expense.

20 November 2009 Ministerial Correspondence 2009-0315461M4 - Home Renovation Tax Credit custom window covering

Unedited CRA Tags
Bill C-51 (2009)/Draft section 118.04 of the ITA

Principal Issues:
Are custom window coverings eligible for the proposed home renovation tax credit?

Position:
Custom draperies may qualify in some circumstances.

Reasons:
Custom draperies, including blinds, shutters and shades, that is directly attached to the window frame and whose removal would alter the nature of the dwelling, would be a qualifying expenditure.

19 November 2009 Ministerial Correspondence 2009-0340871M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Can a single person (a recent widower) claim the HRTC? Does a deck installed on a new house qualify as an eligible expenditure?

Position: Generally, yes. Maybe

Reasons: An individual is eligible for the HRTC. If the individual's non-refundable credits, including the HRTC, total more than their federal income tax, CRA will not refund the excess as a rebate. The HRTC can be claimed for the cost of the installation of a deck at the rear of your eligible dwelling, provided the cost is not part of the purchase price of the new dwelling.

19 November 2009 Ministerial Correspondence 2009-0342681M4 F - Crédit d'impôt pour la rénovation domiciliaire

Unedited CRA Tags
projet de loi C-51; 118.04 proposé

Principales Questions:
Quelles sont les dépenses admissibles au CIRD dans la situation où un contrat de rénovation ou de modification est signé avec un entrepreneur dans la période d'admissibilité, mais que les travaux de rénovation ou de modification se rapportant à ce contrat ne sont effectués qu'après la période d'admissibilité?

Position Adoptée:
Les dépenses engagées dans la période d'admissibilité pour des biens acquis dans cette période seront des dépenses admissibles au CIRD, même si les travaux de rénovation ou de rénovation se rapportant à ces biens ne seront effectués qu'après la période d'admissibilité.
Toutefois, les dépenses engagées dans la période d'admissibilité pour des services à n'être rendus qu'après la période d'admissibilité ne seront pas admissibles au CIRD.

Raisons:
Analyse législative.

18 November 2009 Ministerial Correspondence 2009-0310561M4 - HRTC - Eligible expenditures

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

Principal Issues: What expenditures qualify for the HRTC?

Position: Eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009, and before February 1, 2010, for agreements entered into after January 27, 2009 will qualify for the HRTC.

Reasons: Expenditures will qualify if they are directly attributable to a renovation or an alteration of an eligible dwelling, including land that forms part of the eligible dwelling, and if the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures will include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.

12 November 2009 Ministerial Correspondence 2009-0335721M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Does the costs for the building of a retaining wall at your residence qualifiy as an eligible expenditure for the HRTC?

Position: Yes

Reasons: Draft legislation

12 November 2009 Ministerial Correspondence 2009-0331241M4 - HRTC- Seasonal Trailer

Unedited CRA Tags
Bill C51

Principal Issues: Does the addition of a deck or room to a non-mobile trailer sited at a seasonal campground qualify for the HRTC?

Position: Provided the trailer is your eligible dwelling, renovations will qualify for the HRTC provided all legislative requirements are met.

Reasons: The HRTC is available to all types of eligible dwellings.

12 November 2009 Ministerial Correspondence 2009-0336271M4 - HRTC- Rental Property

Unedited CRA Tags
Bill C51

Principal Issues: Are renovation expenses incurred at a rental property eligible for the HRTC?

Position: No. Expenses undertaken at a rental property are not qualifying expenditures.

Reasons: A rental property will not likely be an eligible dwelling as it would not likely be ordinarily inhabited by a taxpayer or his/her family.

12 November 2009 Ministerial Correspondence 2009-0331251M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Does the building of a shed qualify as an eligible expenditure for the HRTC?

Position: Generally, yes

Reasons: Draft legislation

12 November 2009 Ministerial Correspondence 2009-0327431M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Does the cost of repaving a driveway and of insulating an unfinished basement qualify for the HRTC?

Position: Yes

Reasons: Draft legislation

12 November 2009 Ministerial Correspondence 2009-0332441M4 - HRTC- Geothermal Heating System

Unedited CRA Tags
Bill C51

Principal Issues: Does the installation of a geothermal heating system qualify for the HRTC?

Position: Yes. The installation of a geothermal heating system in an eligible dwelling will qualify for the HRTC.

Reasons: Installation of heating systems generally qualifies for the HRTC. Furnaces and boilers are listed as specific examples of heating systems on the CRA website.

12 November 2009 Ministerial Correspondence 2009-0331141M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: What is the documentation/process to support a claim for renovations to the common areas of the strata corporation or to the individual strata lots?

Does landscaping costs, specifically tree trimming qualify for the HRTC?

Are the maximum allowable expenditures for a building dispersed equally among all owners?

Position: Each strata lot owner will need documentation from the corporation or the board of directors that identifies the amounts incurred for the renovation work. For work performed on common areas, the documentation should clearly identify the strata lot owner's portion of these expenses. Supporting documentation should include the name of the contractor and, if applicable, the goods and services tax/harmonized sales tax (GST/HST) registration number, a description of the work performed, and the dates when the work or services were performed. Documentation can be in the form of a letter from the corporation signed by an authorized individual, and it can include copies of agreements, invoices, or receipts.

Pruning or trimming of trees to maintain their health are considered maintenance services and are not eligible expenses for the HRTC.

The maximum eligible expenditure for the HRTC is family-based. Family members will be subject to a single limit based on their pooled eligible expenditures.

Reasons: Draft legislation

12 November 2009 Ministerial Correspondence 2009-0332701M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Do the costs incurred to re-build and re-shingle a shed roof qualify as eligible expenditures for the HRTC?

Position: Generally, yes

Reasons: The re-building and re-shingling of a shed's roof will qualify for the HRTC, where the shed is permanently attached to land that forms part of your eligible dwelling,

12 November 2009 Ministerial Correspondence 2009-0331201M4 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Is a permanent generator an eligible expenditure for the HRTC?

Position: Generally, yes

Reasons: A permanent generator is generally connected to both the eligible dwelling's heating fuel supply and main electrical panel. Portable generators will not qualify for the HRTC.

12 November 2009 Ministerial Correspondence 2009-0334471M4 - HRTC- Salt Water Chlorination System

Unedited CRA Tags
Bill C51

Principal Issues: Does the installation of a salt water chlorination system for an in-ground pool qualify for the HRTC?

Position: Yes. To qualify, the chlorination system must be permanently connected to the pool infrastructure and permanently wired to electrical circuits.

Reasons: The alteration to the pool infrastructure is permanent in nature

12 November 2009 Ministerial Correspondence 2009-0331221M4 - HRTC- Installation of Weeping Tiles

Unedited CRA Tags
Bill C51

Principal Issues: Does the installation of weeping tiles and the repair of foundation cracks qualify for the HRTC?

Position: Yes, the installation of weeping tiles and the repair of foundation cracks to an eligible dwelling will qualify for the HRTC.

Reasons: The renovation is not in the nature of a repair that would be undertaken annually.

12 November 2009 Ministerial Correspondence 2009-0317481M4 - HRTC - custom window coverings

Unedited CRA Tags
draft release of 118.04

Principal Issues: Are expenditures for custom window coverings eligible for the home renovation tax credit (HRTC)?

Position: Window coverings, such as blinds, shutters, and shades, that are directly attached to the window frame and whose removal would alter the nature of the dwelling are generally considered to be fixtures - items that have become part of the home, - and therefore qualify for the HRTC. Draperies and curtains may qualify for the HRTC if they would not keep their value or usefulness if installed in another dwelling. If this criterion is not met, it is likely that draperies and curtains would not qualify for the HRTC.

Reasons: Window coverings, such as blinds, shutters, and shades, that are directly attached to the window frame and whose removal would alter the nature of the dwelling are generally of an enduring nature and integral to the eligible dwelling.

12 November 2009 Ministerial Correspondence 2009-0335591M4 - HRTC- Eligible Period

Unedited CRA Tags
Bill C51

Principal Issues: Are projects completed pursuant to contracts entered into before January 27,2009 eligible for the HRTC where delivery occurs after that date?

Position: No. The eligible period commences on January 28, 2009. Goods and services delivered after that date which were contracted before January 29, 2009 are not eligible for the HRTC.

Reasons: The eligible period is specified by legislation.

12 November 2009 Ministerial Correspondence 2009-0331231M4 - Home Renovation Tax Credit

Unedited CRA Tags
draft 118.04

Principal Issues: Do expenditures to renovate a bathroom to install a seat bidet or hand-held bidet qualify for the home renovation tax credit (HRTC)?

Position: Yes, if they are permanent.

Reasons: The installation of a permanent seat bidet or a permanent hand-held bidet in an eligible dwelling will qualify for the HRTC as they are enduring and integral to the dwelling. A seat bidet or hand-held bidet will be considered to be permanent if it is connected to the dwelling's water supply and attached to the dwelling's permanent bathroom fixtures. Portable seat bidets and portable hand-held bidets will not qualify for the HRTC.

29 October 2009 Ministerial Correspondence 2009-0325271M4 - HRTC - Eligibility - Renovations to a youth centre

Unedited CRA Tags
Draft section 118.04 of the ITA

Principal Issues: Will renovations to a youth centre qualify for the HRTC?

Position: No.

Reasons: Renovations to a youth centre will not qualify for the HRTC because a youth centre is not an eligible dwelling.

Technical Interpretation - External

1 December 2009 External T.I. 2009-0323331E5 - Volunteer Compensation

Unedited CRA Tags
5(1)

Principal Issues: Whether consideration received by a volunteer is taxable under the Income Tax Act.

Position: It is a question of fact, but probably not.

Reasons: When consideration is nominal and unlikely to ensure the provision of services, and does not represent the FMV of the services, there may be no tax implications. It is generally reasonable to consider that a golf marshal who receives free rounds as compensation is a volunteer. This determination may be affected if the value of the compensation can no longer reasonably be considered to be nominal

1 December 2009 External T.I. 2009-0324901E5 - Investment expenses

Unedited CRA Tags
18(1)(h); 18(1)(u)

Principal Issues: (A) Whether travel expenses such as motor vehicle expenses, meals, hotels would be deductible in computing investment income. (B) Whether initial and annual fees for registered accounts would be deductible in computing income.

Position: A) No.
B) No.

Reasons:
A) Paragraph 18(1)(h) applies. The expenses are personal or living expenses that were not incurred in the course of a business.
B) Paragraph 18(1)(u) applies.

27 November 2009 External T.I. 2009-0335681E5 F - Placement non admissible, acquisition action

Unedited CRA Tags
146(10)

Principales Questions: À quel moment une fiducie régie par un REER acquiert un placement non admissible lorsque ce placement est une action souscrite par la fiducie mais non payée.

Position Adoptée: Il faut se référer au droit applicable aux relations contractuelles entre les parties. Le fait que l'action soit souscrite et non payée n'affecte pas le moment de l'acquisition.

Raisons: Il n'y a pas de définition de l'expression acquisition dans la LIR.

26 November 2009 External T.I. 2009-0323581E5 - Lifelong Learning Plan (LLP) - Part-Time Student

Unedited CRA Tags
146.02(1)

Principal Issues: Whether a student is eligible for the LLP when enrolled part-time in a Master degree program that will require more than 10 hours of class and work per week.

Position: Question of fact

Reasons: The student must be enrolled in a qualifying educational program at a designated educational institution as a full-time student. Even if the student is enrolled in a program that requires spending ten hours or more per week, the student would not be eligible for the LLP if the institution considers the student to be a part-time student.

25 November 2009 External T.I. 2009-0336061E5 - Overtime Meals Allowances

Unedited CRA Tags
6(1)(a)

Principal Issues: Does the CRA require proof that a meal was actually consumed by the employee where the employee receives an overtime meal allowance that meets the three requirements for being non-taxable as described in ITTN #40.

Position: No.

Reasons: Position confirmed by Trust Accounts Division. Moreover, to do so would defeat the purpose of reducing the administrative reporting burden.

25 November 2009 External T.I. 2009-0343571E5 - Wage Loss Replacement Plans

Unedited CRA Tags
6(1)(a)(i); 6(1)(f)

Principal Issues: Taxability of a wage loss replacement plan where a portion of the premiums are paid by the employer.

Position: Where an employer pays all or a portion of the cost of the premiums for such a plan, the amount is not included in the employee's income as a benefit, pursuant to a specific exception in the Act. Should the employee receive periodic payments under the plan because of a disability, they are taxable as employment income in the year received. However, the employee can deduct all of the contributions he or she made to the plan in that year and in previous tax years if they have not already been deducted from benefits previously received.

Reasons: Paragraph 6(1)(f) of the Act and IT-428

23 November 2009 External T.I. 2009-0311631E5 - Commutation payment from pension plan

Unedited CRA Tags
ITA 56(1); 248(1)

Principal Issues: Is a commutation payment received from a foreign pension plan subject to tax in Canada?

Position: Provided general comments.

Reasons: Based on the limited information provided, the commutation payment is likely a pension benefit taxable under paragraph 56(1)(a).

20 November 2009 External T.I. 2009-0335321E5 - Interest on Late-Filing Form T106

Unedited CRA Tags
161(11)(a)(ii), 162(7), 233.1(2) S. 280 ETA

Principal Issues: 1. When interest should cease to be charged when T106 is filed late.
2. Objections are filed and relief under the fairness provision sought in instances when such interest is charged.

Position: 1. Interest is charged to the day that the penalty is paid.
2. A due diligence defence may apply in respect of such a penalty.

Reasons: 1. S. 161(11)(a)(ii).
2. Case law

18 November 2009 External T.I. 2009-0345611E5 - Settlement payment for a human rights violation

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

Principal Issues: Whether an amount paid by an individual's former employer under a settlement agreement and described as general damages for an alleged human rights violation are taxable? Can the portion of the amount paid under the settlement agreement and described as a retiring allowance be transferred to the individual's RRSP under paragraph 60(j.1) of the Act? What are the withholding and reporting requirements and other related tax consequences?

Position: A portion of the settlement payment in respect of the alleged human rights violation is likely non-taxable. However, the determination of the non-taxable amount remains a question of fact. We have provided a general discussion of rules under paragraph 60(j.1) of the Act and the reporting and withholding requirements for any amount described as a retiring allowance. A brief discussion of the rules concerning deductibility of legal fees for establishing a right to a retiring allowance under paragraph 60(0.1) of the Act has also been provided.

Reasons: See above.

17 November 2009 External T.I. 2009-0321781E5 - Dependent and Wholly Dependant Tax Credits

Unedited CRA Tags
118(1)(b)

Principal Issues: Whether a divorced/separated parent can claim a tax credit pursuant to paragraph 118(1)(b) or paragraph 118(1)(d) of the Act for an adult child who attends university.

Position: General comments given because we are missing many important facts. However, if the adult child is not dependent on the particular parent solely because of mental or physical infirmity then the answer is no. Some very general comments on the taxation of child support have also been provided.

Reasons: The law.

Technical Interpretation - Internal

20 November 2009 Internal T.I. 2009-0344491I7 - Disposition of a Pre-Insolvency GST Refund

Unedited CRA Tags
s. 11.7 CCAA s. 18.6 CCAA

Principal Issues: Whether the GST pre insolvency refund should be remitted to the monitor.

Position: No.

Reasons: The assets of a corporation, in protection under the CCAA, do not vest in the monitor.

16 November 2009 Internal T.I. 2009-0343511I7 - Indian Proprietor - Business and Employment Income

Unedited CRA Tags
81(1)(a)

Principal Issues: (1) Is employment income earned from guiding tax exempt? (2) Is business income earned from guiding tax exempt?

Position: (1) Likely. (2)Not likely.

Reasons: (1) Guideline 2, appears the employees are resident on the reserve and the employer is likely resident on the reserve. (2) The revenue-generating activities appear to be earned off-reserve

13 November 2009 Internal T.I. 2009-0345831I7 - Disposition of Refunds from Multiple Bankruptcies

Unedited CRA Tags
s. 164(2)

Principal Issues: Whether refunds from two distinct estates, related to the same taxpayer, should be remitted to the trustee of the later bankrupt estate.

Position: No; the refund vests in the trustee of record of the particular estate.

Reasons: Subsection 71(2) of the Bankruptcy and Insolvency Act provides that, at bankruptcy, the bankrupt's property vests in the trustee of the bankrupt estate. An income tax refund for a pre-bankruptcy taxation year is the property of the bankrupt; hence, it vests in the trustee of record for a particular bankruptcy.

18 August 2009 Internal T.I. 2008-0289321I7 - Tax Recovery and Amalgamations

Unedited CRA Tags
s. 160 s. 227(4) s. 227(4.1) s. 227.1(4)

Principal Issues: 1. Who is responsible to pay the debts of the amalgamating corporations?
2. Would the CRA raise a directors' liability assessment on the directors of the amalgamating (Company A), or does the new amalgamated company (Company B) assume the debt of the amalgamating companies?
3. If the assets are transferred assets to Company B from Company A, does the deemed trust exist?
4. If the assets are transferred to Company B from Company A, what collection avenues are there?
5. Can a writ of seizure and sale be requested and assets seized and sold?
6. Can Revenue Collections assess the amalgamated company on the basis of a non-arm's length transfer of property?
7. If the directors resigned from Company A and the two-year limitation for assessing has expired, could Company A be revived?

Position: 1. The amalgamating corporations and the amalgamated corporation are responsible for paying.
2.The amalgamated company (Company B) assumes the debt of the amalgamating company (Company A), and the CRA may collect the debt from either Company A or B. Directors' liability is available against the directors of Company A.
3. Yes. Her Majesty beneficially owns the assets, to the extent of the amount owing.
4. Normal collection action would be available.
5. The CRA may enforce collection by obtaining a writ of seizure and sale to seize and sell the assets.
6. No. Section 160 of the Act does not apply in an amalgamation.
7. Where companies had already amalgamated at the time of the involuntary dissolution, and the amalgamated company was revived, that revival also restores the amalgamating companies. But the restoration is only effective from the date of the amalgamation.

Reasons: 1. S. 87(1)(b) ITA.
2. S. 87(1)(b) ITA.
3. S. 227(4) and (4.1) ITA.
4. S. 87(1)(b) ITA.
5. S. 223(3), (5),(7), and (9) ITA.
6. S. 160 ITA; s. 325 ETA
7. S. 227.1(4) ITA; s. 323(5) ETA.