Income Tax Severed Letters - 2010-01-01

Ruling

2009 Ruling 2009-0337641R3 F - Montant forfaitaire - Prestation de retraite

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

Principales Questions: Les montants forfaitaires sont-ils imposables conformément au sous-alinéa 56(1)a)(i)?

Position Adoptée: Oui, les montants sont imposables en vertu du sous-alinéa 56(1)a)(i).

Raisons: Selon les faits, les montants forfaitaires constituent des paiements au titre d'une prestation de retraite ou de pension

Ministerial Correspondence

23 December 2009 Ministerial Correspondence 2009-0311831M4 - HRTC - Eligible dwelling

Unedited CRA Tags
Draft section 118.04 of the ITA

Principal Issues: Will the HRTC apply to every dwelling that a Canadian individual owns?

Position: No.

Reasons: If an individual owns and uses his or her home and cottage personally, eligible expenditures incurred for both properties will normally qualify for the HRTC. However, if an individual uses his or her entire property for earning business or rental income, expenditures incurred for this property will not qualify for the HRTC. Also, renovations to a housing unit located outside of Canada will not qualify for the HRTC.

18 December 2009 Ministerial Correspondence 2009-0343111M4 - HRTC-Do It Yourself project

Unedited CRA Tags
118.01 ITA

Principal Issues: If a homeowner performs the work, will the renovation or alteration qualify for the HRTC?

Position: Providing all other conditions are met, the costs of the renovation or alteration will qualify for the HRTC. The homeowner can do the work himself/herself; however, he/she cannot claim the value of his/her labour.

Reasons: Generally, under common law, a person cannot contract with oneself.

15 December 2009 Ministerial Correspondence 2009-0347051M4 - HRTC - Eligible expenditures

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

Principal Issues: Does the installation of a home lawn sprinkler irrigation system qualify for the HRTC?

Position: Providing all other conditions are met, the costs of the installation of a permanent irrigation system on land forming part of the eligible dwelling will qualify for the HRTC.

Reasons: The permanent irrigation system is of an enduring nature and integral to the eligible dwelling. Generally, land of one-half hectare or less will form part of an eligible dwelling.

15 December 2009 Ministerial Correspondence 2009-0346271M4 - HRTC - Rental property expenditures

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

Principal Issues: Can the HRTC be claimed on the costs associated with the installation of a new furnace, door, and doorframe for a rental home?

Position: No.

Reasons: Although the costs associated with the installation of a new furnace, door, and doorframe will generally qualify for the HRTC, renovation or alterations made to a property you own and use entirely for earning rental income are not eligible for the HRTC.

14 December 2009 Ministerial Correspondence 2009-0326681M4 F - Entreprise de prestation de services personnels

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

Principales Questions: Quel est le traitement fiscal réservé aux sociétés qui exploitent une entreprise de prestation de services personnels?

Position Adoptée: Commentaires généraux fournis.

Raisons: Loi de l'impôt sur le revenu.

10 December 2009 Ministerial Correspondence 2009-0311731M4 - HRTC - "do it for me" or "do it yourself"

Unedited CRA Tags
draft 118.04

Principal Issues: Do expenditures for 'do it for me' and 'do it yourself' projects 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: 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 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.

10 December 2009 Ministerial Correspondence 2009-0331261M4 - HRTC - furnace and financing costs

Unedited CRA Tags
draft 118.04

Principal Issues: Is an expenditure for a new furnace purchased from a contractor on December 1, 2009, for $5,000, and financed over the next five years, eligible for the HRTC ?

Position: An expenditure for a new furnace that is installed in an eligible dwelling before February 1, 2010, will qualify for the HRTC, however, no part of the financing costs associated with the purchase of the new furnace qualifies for the HRTC.

Reasons: 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 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.

1 December 2009 Ministerial Correspondence 2009-0342291M4 - medical expenses - hot tub

Unedited CRA Tags
118.2(2)

Principal Issues: 1. Whether the cost of a hot tub would qualify for the medical expense tax credit? 2. Whether the cost of a hot tub would qualify for the Home Renovation Tax Credit?

Position: 1. No. 2. Maybe.

Reasons: 1. There is no provision in the Act which would allow the cost of a hot tub to be claimed as a medical expense for purposes of the medical expense tax credit. 2. If the hot tub is permanent (hardwired to the house), it may qualify for the home renovation tax credit if certain conditions are met.

Technical Interpretation - External

18 December 2009 External T.I. 2009-0320531E5 - Reasonable Allowances

Unedited CRA Tags
6(1)(b)(v), 6(1)(b)(x)

Principal Issues: Are weekly allowances paid by an employer "reasonable allowances" for the purposes of subparagraph 6(1)(b)(v) of the Act?

Position: Question of fact, but in this case it appears that the allowances are not reasonable.

Reasons: Allowances are not computed solely by reference to kilometres travelled for employment related purposes.

17 December 2009 External T.I. 2009-0316421E5 - Income of Contractors

Unedited CRA Tags
9; 12(1)(b) of the Act; Regulation 238

Principal Issues: (A) Whether "the construction of a building, road, dam, bridge or similar structure", as described in paragraph 1 of IT-92R2 can be considered to include the demolition of a building or a factory to be entitled to use the completed contract method.
(B) Whether a non-resident company operating through a Canadian branch, is entitled to use the completed contract method.

Position: (A) Yes; (B) Yes, the taxable income earned in Canada, could be calculated using the completed contract method as indicated in the IT-92R2 provided that all the necessary preconditions are met.

Reasons: (A) "construction" is a very general term that can include demolition for the purpose of the IT-92R2. (B) The Act

17 December 2009 External T.I. 2009-0351781E5 F - MAP - Fauteuil roulant

Unedited CRA Tags
118.2(2)i)

Principales Questions: Est-ce que le XXXXXXXXXX est visé à l'alinéa 118.2(2)i) en tant que dispositif donnant droit au crédit d'impôt pour frais médicaux?

Position Adoptée: Question de fait. Il semble qu'un XXXXXXXXXX soit visé par l'alinéa 118.2(2)i).

Raisons: Libellé de la loi.

17 December 2009 External T.I. 2009-0338491E5 - HRTC- Housing Co-op

Unedited CRA Tags
Draft 118.04

Principal Issues: 1. Can members of a co-operative housing corporation claim the HRTC for renovations to the housing unit they reside in for expenditures incurred either directly by the member or by the co-operative housing corporation?
2. What is the maximum HRTC claim per household?

Position: 1.Members who own shares in a co-operative housing corporation can claim the HRTC for expenditures they incur for the unit they reside in if the housing unit is their eligible dwelling.
2. The HRTC is family based. The maximum eligible expenditures per family is $10,000 and may be split among eligible family members. Maximum eligible expenditures include the total of expenses allocated to the member by the co-operative housing unit and the expenses incurred directly by the member.

Reasons: 1.Draft 118.04-Eligible dwelling.

16 December 2009 External T.I. 2009-0349031E5 F - Allocation de retraite, congés de maladie

Unedited CRA Tags
248(1) "allocation de retraite"

Principales Questions: Est-ce que le paiement des congés de maladie peut être considéré comme une allocation de retraite si le paiement est reçu 5 mois avant la retraite de l'employé?

Position Adoptée: Non

Raisons: La somme n'est pas reçue par le contribuable au moment où il prend sa retraite d'une charge ou d'un emploi ou par la suite.

15 December 2009 External T.I. 2009-0332221E5 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Does the repair of a crack in a wall and replacement of a water damaged wall qualify as an eligible expenditure for the HRTC?

Position: Yes

Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. The repair of a crack on a side of a house and replacement of a water damaged wall of the eligible dwelling is enduring in nature and integral to the eligible dwelling (including land) and qualifies for the HRTC.

XXXXXXXXXX 2009-033222
George A. Robertson, CMA
December 15, 2009

15 December 2009 External T.I. 2009-0348621E5 - Condominium Corporations and 149(1)(l)

Unedited CRA Tags
149(1)(l)

Principal Issues: 1. Can a condominium corporation rent a suite for an amount in excess of its costs of operating and maintaining the suite and still qualify for the exemption from tax provided by paragraph 149(1)(l) of the ITA? 2. If the rental profits are used to reduce members' fees, does this affect the tax exemption?

Position: 1. No; 2. Yes

Reasons: 1. The condominium corporation appears to have a profit purpose. 2. Aside from point 1, this is making income available for the personal benefit of a member.

15 December 2009 External T.I. 2009-0320011E5 - Deductibility of Meal Expenses - Employees

Unedited CRA Tags
8(1)(g), 8(1)(h) and 67.1

Principal Issues: Whether an employee who travels away from the municipality during a work shift but returns home each day is entitled to claim a deduction for meals under paragraph 8(1)(g).

Position: The meals are not deductible under paragraph 8(1)(g). However, and while ultimately a question of fact, it appears that the meals may be deductible under paragraph 8(1)(h).

Reasons: No amounts are disbursed by the employee for any lodging and the employee returns home at the end of each work shift.

8 December 2009 External T.I. 2009-0335481E5 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Does the purchase and installation of a propane generator qualify as an eligible expenditure for the HRTC?

Position: Depends

Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. The purchase and installation of a stationary propane powered generator that is connected to the main electrical panel of the eligible dwelling is enduring in nature and integral to the eligible dwelling (including land) and qualifies for the HRTC.

7 December 2009 External T.I. 2009-0337741E5 - Home renovation tax credit

Unedited CRA Tags
draft 118.04

Principal Issues: Is the home renovation tax credit applicable to individuals who own a leasehold interest in RV lots and/or condominiums?

Position: No.

Reasons: An eligible dwelling, for purposes of the HRTC, does not include a leasehold interest in a housing unit. A leasehold interest in a RV lot is not considered to be owned by the individual. As a result, the lots will not form part of the individual's eligible dwelling and any renovations made to the lots will not qualify for the HRTC.

3 December 2009 External T.I. 2009-0347131E5 F - Prestation consécutive au décès

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

Principales Questions: Est-ce qu'une somme peut être versée en tant que prestation consécutive au décès si, entre autres choses, l'employé décédé occupait, au moment de son décès, la charge d'administrateur de société?

Position Adoptée: Oui.

Raisons: Loi de l'impôt sur le revenu. Position de l'ARC

3 December 2009 External T.I. 2009-0311921E5 F - ESOP-US

Unedited CRA Tags
7

Principales Questions: Est-ce que l'article 7 s'applique dans une situation où une fiducie créée dans le cadre d'un " Employee Stock Ownership Plan " (Régime) se porte acquéreur de la totalité des actions de la société USCO et que chaque année le Régime crédite dans un compte notionnel de chaque Participant (incluant des Participants résident du Canada et employés de CANCO) une quote-part des actions ainsi acquises?.

Position Adoptée: Oui. La demande de décisions a été retirée par le représentant.

Raisons: Lorsque les actions sont créditées dans le compte notionnel d'un Participant donné, le paragraphe 7(2) s'applique puisqu'un fiduciaire détient un titre, en fiducie ou autrement, conditionnellement ou non, pour un employé.

3 December 2009 External T.I. 2009-0342261E5 - Eligible expenditures- home renovation tax credit

Unedited CRA Tags
Draft legislation 118.04

Principal Issues: Does the purchase and installation of a dock at a cottage qualify as an eligible expenditure for the HRTC?

Position: Depends

Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. The purchase and installation of a permanent dock attached to land that forms part of the eligible dwelling qualifies for the HRTC. A dock which is not permanently attached [portable] to land does not qualify for the HRTC.

XXXXXXXXXX 2009-034226
George A. Robertson, CMA
December 3, 2009

3 December 2009 External T.I. 2009-0327401E5 - HRTC-Strata Corporations-Common Area Expenditures

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

Principal Issues: Are expenditures incurred for common property renovations eligible for the HRTC if the amounts are paid from a contingency reserve fund?

Position: Yes, providing the renovations are integral to the strata corporation's common property and are enduring in nature.

Reasons: Expenditures that are integral to the eligible dwelling and enduring in nature will qualify for the HRTC.

30 November 2009 External T.I. 2009-0328801E5 - HRTC- condominium landscaping costs

Unedited CRA Tags
2009 Federal Budget Document

Principal Issues: 1.Allocation of eligible costs and required documentation where HRTC renovations are undertaken by a condominium corporation on behalf of the unit owners.
2. Are landscaping costs incurred by a condominium complex for new plantings, retaining walls and professional fees eligible for the HRTC?

Position: Expenditures incurred for common areas are allocated to unit owners based on the governing documents of the corporation. The condominium corporation must notify each unit owner in writing of their share of the common area expenses. The costs of new plantings, retaining walls and professional fees are eligible expenditures provided they are installed at an eligible dwelling.

Reasons: 1.The actual allocation of common area expenses is determined by the governing documents of the condominium corporation.
2. Annex 5 2009 federal budget documents. Bill C51.

23 November 2009 External T.I. 2009-0346431E5 - Nursing Home

Unedited CRA Tags
118.2(2)(b)

Principal Issues: Whether the facility qualifies as a nursing home.

Position: Likely yes.

Reasons: The facility appears to provide a sufficient level of care and attendance by qualified medical personnel.

14 April 2009 External T.I. 2007-0238221E5 F - Rights of musician-Transfer

Unedited CRA Tags
85(1.1)

Principal Issues: 1) Whether subsection 56(4) or 56(2) would apply following the transfer of rights by a musician in favour of a corporation. 2) Whether rights of a musician are "eligible property" under subsection 85(1.1). 3) Whether the income generated by such rights is active business income for the corporation.

Position: Insufficient facts to conclude. General comments provided.

Reasons: These matters involve questions of fact.

Technical Interpretation - Internal

4 December 2009 Internal T.I. 2009-0342421I7 - medical expense kidney dialysis

Unedited CRA Tags
118.2(2)(i)

Principal Issues: Whether the cost of storage space (climate controlled) for boxes of supplies for a home dialysis machine would qualify a medical expense for purposes of the medical expense tax credit?

Position: Yes

Reasons: The broad wording of paragraph 118.2(2)(i) of the Act

27 October 2009 Internal T.I. 2009-0325111I7 - HRTC- Condominium Corporations

Unedited CRA Tags
2009 budget documents - Annex 5 Bill C51

Principal Issues: 1. Allocation of eligible costs and required documentation where HRTC renovations are undertaken by a condominium corporation on behalf of the unit owners.
2. Eligibility of renovations contracted for or commenced prior to January 28, 2009.
3. Eligibility of renovations not completed before February 1, 2010.
4. Payment of renovation costs from a condominium special purpose fund.
5. Allocation of eligible costs to condominium owners where changes in ownership occur during the period between January 28, 2009 and February 1, 2010.

Position: 1. Expenditures incurred for common areas are allocated to unit owners based on the governing documents of the corporation. The condominium corporation must issue a letter to each unit owner detailing the renovation work in respect of the common areas and each unit owner's share.
2. Goods and services contracted for or commenced prior to January 28, 2009 are not eligible for the HRTC.
3. Only costs pertaining to work performed or goods acquired after January 27, 2009 and before February 1, 2010 are eligible.
4. Eligible expenditures paid for from a special purpose fund administered by the condominium corporation will qualify for the HRTC provided all other requirements are met.
5. Where a unit changes owners during the period between January 28, 2009 and February 1, 2010, the expenditures are allocated to owners based on the governing documents or special resolutions of the corporation and purchase and sale agreements.

Reasons: Annex 5 of the 2009 federal budget documents. Notice of Ways and Means motion released September 14, 2009.