Income Tax Severed Letters - 2010-04-02

Ruling

2010 Ruling 2009-0311171R3 - Paragraph 149(1)(c) determination

Unedited CRA Tags
149(1)(c)

Principal Issues: Is the First Nation a public body performing a function of government?

Position: Yes.

Reasons: The members of the First Nation are governed by an elected chief and council. The First Nation has passed by-laws under section 81 of the Indian Act and performs several functions of government.

Ministerial Correspondence

24 March 2010 Ministerial Correspondence 2009-0352661M4 - Indian Employment Income--Head Office on Reserve

Unedited CRA Tags
81(1)(a)

Principal Issues: If the head office of an employer is located on a reserve, will the employment income earned by Indian employees be exempt from tax?

Position: Maybe exempt.

Reasons: Guideline 4 may apply in this situation.

Technical Interpretation - External

25 March 2010 External T.I. 2009-0308851E5 F - Transactions de valeurs mobilières

Unedited CRA Tags
39(4)
Summary Under
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Shares
weighing of factors in IT-479R, para. 11 re the presence of a trading business

Principales Questions: 1) Le choix prévu au paragraphe 39(4) peut-il s'appliquer à des titres américains? 2) Comment déterminer si un contribuable exploite une entreprise lorsqu'il transige des valeurs mobilières? 3) Un contribuable peut-il choisir entre la comptabilité d'exercice et la comptabilité de caisse dans l'établissement de la comptabilité des transactions de valeurs mobilières?

Position Adoptée: 1) Non. 2) Commentaires généraux. 3) La comptabilité d'exercice est généralement celle qui permet d'obtenir une image fidèle du revenu d'entreprise.

Raisons: 1) Libellé du paragraphe 39(4). 2) Question de fait. 3) Selon la jurisprudence, il faut adopter une méthode de calcul qui soit conforme à la Loi, aux autres règles de droit établies et aux principes bien reconnus de la pratique courante des affaires, et qui donne une image fidèle du revenu du contribuable pour l'année d'imposition en question.

24 March 2010 External T.I. 2009-0348151E5 - Meal Allowances

Unedited CRA Tags
6(1)(a), 6(1)(b)

Principal Issues: Whether certain employer provided amounts for meals fit within the CCRA administrative policy for employer-provided meals or allowances as described in ITTN #40

Position: Question of fact

Reasons: Must be determined based on facts
JURISPRUDENCE: SCC Shell Canada Ltd v The Queen, 99 DTC 5669

24 March 2010 External T.I. 2009-0348971E5 - Holocaust Restitution Payments

Unedited CRA Tags
ITA: 81(1)(g), 110(1)(f)(i), 180.2; Canada-Germany Income Tax Convention

Principal Issues: 1. Are Holocaust Restitution Payments received Taxable?
2. Will the Holocaust Restitution Payments impact the Old Age Security benefits?

Position: Question of Fact

Reasons: If amounts received meet the criteria laid out under 81(1)(g) or represent personal injury awards or general damages in respect of human rights violations, then such amounts are excluded from income and taxation thereof. Furthermore, there will be no impact to the OAS benefits.
Should the amounts received not meet the two options above, but can be excluded from Canadian taxation under the Canada-Germany Income Tax Convention ("Treaty"), then there is no income taxation impact, however there will be an impact to OAS benefits.

2009-034897
XXXXXXXXXX Henry Leung
613-957-9232
March 24, 2010

23 March 2010 External T.I. 2010-0355591E5 - Regulation 105

Unedited CRA Tags
ITA 153(1)(g); ITR 105(1), 108(1)

Principal Issues: Whether an amount is required to be withheld under Regulation 105

Position: Yes

Reasons: Regulation 105 applies to payments in respect of services rendered or to be rendered

2010-035559
XXXXXXXXXX Henry Leung
613-957-9232
March 23, 2010

23 March 2010 External T.I. 2009-0348521E5 - HRTC - Qualifying expenditure - Goods acquired

Unedited CRA Tags
Subsection 118.04(1) of the ITA

Principal Issues: When are goods "acquired" for the purposes of the HRTC?

Position: The determination of when goods are acquired is a question of law and the facts in each particular case.

Reasons: The word "acquired" is not defined in the ITA.

XXXXXXXXXX 2009-034852
A. Mahendran
March 23, 2010

Dear XXXXXXXXXX :

23 March 2010 External T.I. 2010-0356621E5 - Costa Rican Withholding Tax

Unedited CRA Tags
s. 126(4)

Principal Issues: Whether withholding taxes exigible under Costa Rican laws constitute an income or profits tax for the purposes of section 126.

Position: No.

Reasons: The Costa Rican withholding taxes are not imposed if a credit is not available to the person in the residence state. Therefore, the withholding taxes are not an income or profits tax pursuant to subsection 126(4).

Technical Interpretation - Internal

23 March 2010 Internal T.I. 2009-0336431I7 - Source Deductions Liability: Limited Partnership

Unedited CRA Tags
s. 153(1)(a), 227(4), (4.1) ITA; s. 81, 85 BIA.

Principal Issues: Whether source deductions are recoverable from a bankrupt limited partnership.

Position: Yes, with priority given to the deemed trust portion.

Reasons: On the bankruptcy of a general partner of a limited partnership, section 85 of the BIA provides that the property of the limited partnership vests in the trustee. Subsections 227(4) of the ITA creates a deemed trust in respect of source deductions, while subsection (4.1) extends the trust to operate notwithstanding the bankruptcy of the general partner, providing the Crown with a beneficial ownership in the property, and according the deemed trust priority to the proceeds of such property when liquidated.

23 March 2010 Internal T.I. 2009-0332521I7 - Respecting Distributions from Non-Resident Trusts

Unedited CRA Tags
s. 108(1), 116, 159, 162(7), 233.6(1)

Principal Issues: 1.Whether a resident Canadian taxpayer is liable under s. 162(7) for filing Form T1142 late.

Position: Yes; unless distributions are made from the estate.

Reasons: S. 233.6(1) only exempts distributions from the estate.

11 March 2010 Internal T.I. 2009-0352551I7 - Foreign exchange losses

Unedited CRA Tags
ITA 39(2), 40(2)(g)(i)

Principal Issues: Whether transfers of funds, as described below, give rise to a foreign exchange loss under subsection 39(2) of the Act.

Position: Yes

Reasons: The transfers would constitute a "purchase or payment" as described in paragraph 13(b) of Interpretation Bulletin IT-95R and hence transactions pursuant to which a taxpayer can be said to have "sustained a loss".

XXXXXXXXXX HEADQUARTERS
Tax Auditor S. Sivarulrasa
XXXXXXXXXX Tax Services Office (613) 957-2104
Canada Revenue Agency
XXXXXXXXXX

2009-035255

14 January 2010 Internal T.I. 2008-0289861I7 - Tuition tax credits- foreign institution

Unedited CRA Tags
118.5

Principal Issues: 1. Are students who attend classes at a Canadian campus of a foreign institution "enrolled at an educational institution in Canada" for purposes of 118.5(1)(a) of the Act?
2. Do students who are taking distance education courses (internet) from a foreign university with a Canadian campus rely on 118.5(1)(a) or 118.5(1)(b) for the tuition tax credit?

Position: 1. Question of fact, but possibly yes.
2. Question of fact - depends on connection between student's courses and the Canadian campus.

Reasons: 1. If the foreign institution has a permanent location in Canada, has complied with the relevant provincial legislation, and is recognized and authorized to offer degrees or courses at the post-secondary school level, then the Canadian campus may be considered to be an educational institution in Canada for the purposes of 118.5(1)(a).
2. In our view, there should be some indication that the student is taking courses through the Canadian branch and not merely with the foreign institution.