Income Tax Severed Letters - 2011-03-18


2011 Ruling 2010-0390141R3 - Supplemental Ruling

Unedited CRA Tags
Article IV(7)(b), Article X of the Canada-United States Tax Convention; 20(1)(c); 84(1); 212(2)(a)

Principal Issues: Taxpayer seeking time extension and changes to Ruling 2010-035310.

Position: Extension granted. Ruling modified.

Reasons: Changes made in this supplemental do not affect the validity of the ruling given.

2011 Ruling 2010-0353931R3 - Standard split-up butterfly

Unedited CRA Tags

Principal Issues: Standard butterfly. No contentious issues.

Position: Rulings given.

Reasons: Complies with paragraph 55(3)(b).

2011 Ruling 2010-0391661R3 - Supplementary Ruling

Unedited CRA Tags

Principal Issues: Confirmation that proposed transactions (subsequent events not contemplated at the time of the Ruling) XXXXXXXXXX

Position: Agreed.

Reasons: No additional rulings requested and proposed transactions do not affect validity of Ruling.

2010 Ruling 2010-0377281R3 - Interest Deductibility

Unedited CRA Tags

Principal Issues: Will the interest paid or payable by Parentco in respect of Bank Debt A and Bank Debt B, used to advance Loan 1 to Foreignco 2 and to subscribe for shares in HoldcoUS, respectively, be deductible?

Position: Yes

Reasons: The provisions of subparagraph 20(1)(c)(i) of the Act are met.

Technical Interpretation - External

15 March 2011 External T.I. 2010-0386271E5 - Legal Fees to Collect Support Payments

Principal Issues: Whether, where the amount of otherwise deductible legal fees incurred in a particular year to obtain or establish a support amount exceed the payer's income for the same year, it is possible to create a non-capital loss using those legal fees.

Position: Yes.

Reasons: Case law. Previous positions taken.

15 March 2011 External T.I. 2010-0390011E5 - Power of Attorney Fees - METC

Unedited CRA Tags

Principal Issues: Whether fees paid pursuant to the provincially prescribed rates for power of attorney would qualify for the medical expense tax credit.

Position: No.

Reasons: Not in the list of eligible medical expenses in the Act or Regulations.

14 March 2011 External T.I. 2011-0391961E5 - METC and PHSP - Natural Health Products

Unedited CRA Tags
118.2(2)(k), 118.2(2)(n)

Principal Issues: Whether the costs of Natural Health Products are eligible for the medical expense tax credit (METC) and may be covered by a PHSP.

Position: Generally, no unless qualify under 118.2(2)(k) which allows the cost of insulin, oxygen, liver extract injectible for pernicious anaemia or vitamin B12 for pernicious anaemia as prescribed by a medical practitioner. Only drugs that can lawfully be purchased only by prescription (or only with the intervention of a medical practitioner) will qualify under 118.2(2)(n). However, it is a question of fact whether a particular drug may lawfully be acquired only by prescription (or only with the intervention of a medical practitioner). Need to look at both federal and provincial/territorial legislation and regulations in order to make that determination. If the cost of the drug would not normally have otherwise qualified for METC, then does not qualify as a medical expense covered by a PHSP.

Reasons: Wording of 118.2(2)(n) and paragraph 4 of IT-339R2

10 March 2011 External T.I. 2011-0395821E5 - Province of Residence

Unedited CRA Tags

Principal Issues: (1) Which province has the ability to tax a capital gain realized by a taxpayer?
(2) In which year must the capital gain be included in the computation of the taxpayer's income?

Position: (1) The province of residence, which is generally the one in which the taxpayer is resident as of December 31 of a particular year.
(2) Generally, the year in which the taxpayer is entitled to the proceeds of disposition of the property.

Reasons: Income Tax Act.

10 March 2011 External T.I. 2010-0388771E5 - Joint venture versus partnership

Unedited CRA Tags

Principal Issues: Whether a group of investors operating under an agreement entitled a joint-venture agreement are a joint venture or a partnership.

Position: Question of fact.

Reasons: IT-90 sets out a number of criteria to help determine whether an operation is a joint venture or a partnership, but no one factor is decisive.

9 March 2011 External T.I. 2011-0394341E5 - Disability Expenses

Unedited CRA Tags

Principal Issues: 1) Are specific disability related expenses such as education fees, gym memberships, home repairs, etc. allowed for purposes of the medical expense tax credit? 2) Can a person income split their salary with his spouse to compensate her for talk therapy treatment she provides at home to their disabled son?

Position: 1) No; 2) No

Reasons: Only expenses which are listed in subsection 118.2(2) of the Act qualify as medical expenses. Therapy expenses only qualify if the therapy is received by a person who qualifies for the disability tax credit under section 118.3 of the Act, and the therapy is provided by someone who is not the spouse or common-law partner of the person who is claiming the expense and who is 18 years of age or older, when the amounts are paid. The therapy has to be prescribed and supervised by a medical doctor, a psychologist (for a mental impairment), or an occupational therapist (for a physical impairment).

9 March 2011 External T.I. 2011-0395911E5 - Medical Expenses, travel, rent

Unedited CRA Tags
118.2(2)(g), 118.2(2)(h)

Principal Issues: Whether various travel and rent expense for transporting an individual to a location that has a sign language interpreter available in order for the individual to complete her schooling qualify as medical expenses.

Position: Travel to the school and back home do qualify as medical expenses; rent expenses and travel home for Christmas do not.

Reasons: Travel costs do not include the cost for accommodation and trips that are not for the purpose of obtaining medical services.

9 March 2011 External T.I. 2011-0397231E5 - Sleep Evaluation Study - Medical Expenses

Unedited CRA Tags
118.2(2)(a), 118.2(2)(o)

Principal Issues: Whether a sleep evaluation study paid to a private sleep clinic qualifies as medical expenses for purposes of the METC

Position: Yes

Reasons: A sleep evaluation study meets the conditions of paragraph 118.2(2)(o) which includes diagnostic procedures for maintaining health.

9 March 2011 External T.I. 2011-0393241E5 - Legal fees related to workers' board decision

Unedited CRA Tags
8(1)(v); 60(o); 60(0.1); 118.2

Principal Issues: Whether fees paid to obtain a decision under the Workplace and Safety Insurance Board would qualify as a deduction for income tax purposes or would qualify for the medical expense tax credit.

Position: No.

Reasons: There is no provision in the Act under which such fees would be deductible and the fees are not in the list of eligible medical expenses in the Act.

9 March 2011 External T.I. 2011-0396951E5 - In-vitro fertilization and travel expenses

Unedited CRA Tags
118.2(2)(a), 118.2(2)(g), 118.2(2)(h), 118.2(2)(n), 118.2(2)(o)

Principal Issues: Whether the cost of: (1) An in-vitro fertilization process performed outside Canada qualify as medical expenses, and whether (2) The related travel costs for an in-vitro fertilization performed outside Canada qualify as medical expenses.

Position: (1) Yes (2) Yes if the conditions of paragraph 118.2(2)(g)(v) are met.

Reasons: (1) Amounts paid to a medical practitioner or a licensed hospital qualify as a medical expense under paragraph 118.2(2)(a) of the Act. (2) Transportation expense to travel not less than 40 km to obtain medical services qualify under paragraph 118.2(2)(g) of the Act and other travel expenses qualify under paragraph 118.2(2)(h) of the Act if the individual travels not less than 80 km to obtain medical services and it is reasonable for the individual to have done so, the route taken was reasonably direct and substantially equivalent medical services were not available in the individual's locality.

9 March 2011 External T.I. 2011-0395121E5 - LRIP Parking/Isolation

Unedited CRA Tags
89(1), 89(8), 89(10), 185.1(1) et (2)

Principales Questions: Whether the specific anti-avoidance rule in paragraph (c) of the definition of "excessive eligible dividend designation" in subsection 89(1) would apply in three different situations involving LRIP parking or isolation.

Position Adoptée: Yes. However, if the specific anti-avoidance provision does not apply to a specific situation, the CRA would also consider the application of the general anti-avoidance provision.

Raisons: Wording of the Act.

8 March 2011 External T.I. 2010-0384201E5 - Employer Assisted Mortgage

Unedited CRA Tags
80.4(1), 80.4(4), 80.4(7), 110(1)(j), 248(1) Home Relocation Loan

Principal Issues: Does an employer assisted mortgage result in a taxable benefit where the employer pays a portion of the monthly/weekly interest or pays a lump sum at the beginning of the mortgage.

Position: Yes, if the amount of interest paid by the employee is less than the prescribed rate. General comments provided.

Reasons: Subsection 80.4(1)

8 March 2011 External T.I. 2011-0391821E5 - Paragraphs 88(1)(d.2) and (d.3) - Interaction

Unedited CRA Tags
88(1)(d.2); 88(1)(d.3); 88(1)(c); 88(1)(d)(ii)

Principal Issues: Clarification requested in respect of the interaction of paragraphs 88(1)(d.2) and (d.3) in the context of a post-mortem bump planning strategy.

Position: Clarification provided.

Reasons: In accordance with the Act and our previous positions.

7 March 2011 External T.I. 2011-0393491E5 - Transit pass tax credit

Unedited CRA Tags

Principal Issues: Clarification of the meaning of "uninterrupted period" in the definition of an eligible electronic payment card for the purposes of the pubic transit tax credit.

Position: "Uninterrupted period" means that the minimum 32 one-way trips must be taken during a period that comprises 31 consecutive days, but does not mean that a trip or trips must be made on each day during that period.

7 March 2011 External T.I. 2010-0383501E5 - Travel Reward Points

Unedited CRA Tags
6(1)(a), 15(1)

Principal Issues: Does the redemption of travel reward points result in a taxable benefit where the points were accumulated on the personal credit card of a previous employee/shareholder through business travel paid for by the corporation?

Position: No

Reasons: Provided all of the criteria listed in ITTN #40 are met, the travel reward points will not result in a taxable benefit.

4 March 2011 External T.I. 2011-0393551E5 - Rental Properties

Unedited CRA Tags
9(1); 18(1)(a); 67

Principal Issues: Whether management fees paid by the taxpayer to the corporation he owns are deductible.

Position: It is a question of fact if the management fees are reasonable and laid out to earn income from business or property.

Reasons: The management fees must meet the general criteria required for a deduction from income from a business or property.

4 March 2011 External T.I. 2009-0348481E5 - Exigibility of Interest When Losses Carried Back

Unedited CRA Tags
s. 111(1)(a), 161(7)(b)

Principal Issues: Whether interest is exigible when losses are carried back.

Position: Yes.

Reasons: S. 161(7)(b) provides that interest continues to accrue until 30 days after the request to carry back losses is made.

4 March 2011 External T.I. 2011-0393351E5 - Settlement

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

Principal Issues: Whether a settlement payment made to conclude arbitration to resolve grievances against the employer is taxable as income.

Position: The settlement as described meets the definition of a retiring allowance.

Reasons: The payment satisfies the two-prong test established by the courts for the purpose of determining whether a payment is a retiring allowance.

4 March 2011 External T.I. 2011-0393781E5 - Condominium Fees

Unedited CRA Tags
5(1); 6(1)(a)

Principal Issues: Whether the waiver of monthly condo fees in exchange for performing bookkeeping duties results in income to be reported on a T4 slip.

Position: It is a question of fact, but most likely yes.

Reasons: If the benefit to be provided in exchange for the services was known at the time the treasurer accepted the office, the amount of the condo fees waived would be income from an office.

3 March 2011 External T.I. 2010-0380751E5 F - Déduction accordée aux petites entreprises

Unedited CRA Tags
125(1); 125(2); 125(7)
general discussion of SBD referencing IT-73R6, IT-458R2

Principales Questions: La société détenue par le contribuable peut-elle réclamer la déduction accordée aux petites entreprises?

Position Adoptée: Question de fait. Nous avons fourni des commentaires généraux au contribuable.

Raisons: Loi de l'impôt sur le revenu

3 March 2011 External T.I. 2010-0381851E5 F - Ajustements salariaux rétroactifs

Unedited CRA Tags
110.2, 120.31, 12(1)c), REG 201(1)b)
retroactive pay adjustments negotiated to comply with the Quebec Pay Equity Act but not paid pursuant to it were not qualifying amounts
interest on retroactive pay awards “is” reported on T5s

Principales Questions: A) La question est de savoir si un paiement à titre d'ajustement salarial rétroactif pourrait bénéficier des règles d'étalement d'un paiement rétroactif prévues aux articles 110.2 et 120.31 de la Loi de l'impôt sur le revenu?
B) Vous désirez également savoir sur quels feuillets doivent apparaître les intérêts payés.

Position Adoptée: A) Non; B) Les intérêts versées sur un paiement rétroactif de salaire sont présentés sur des feuillets T5.

Raisons: À notre avis, les employés ne pourront bénéficier du traitement prévu à l'article 110.2 compte tenu que les conditions ne sont pas respectées. Le paiement des sommes versées dans le cas présent n'est pas un " montant admissible " aux fins du paragraphe 110.2(2) puisqu'il n'est pas reçu en exécution d'une ordonnance ou d'un jugement compétent, d'une sentence arbitrale ou d'un contrat par lequel le payeur et le particulier mettent fin à une procédure. Les ententes conclues donnant droit aux ajustements salariaux rétroactifs visées par la présente, font suite à une constatation par les parties de la nécessité de revoir la structure salariale et à des négociations. Il s'en est suivi des ententes entre l'employeur et les représentants des divers comités d'équité salariale.

3 March 2011 External T.I. 2010-0389841E5 - Legal fees for action against OHIP

Unedited CRA Tags
118.2; 60(o); 60(o.1); 118.2(2)(l.1)

Principal Issues: Whether legal fees in an action against Ontario Health Insurance Plan to obtain reimbursement of medical expense for treatment of a serious disease.

Position: No.

Reasons: The legal fees are not qualifying medical expenses for purposes of the METC nor are they otherwise deductible under the Act.

2 March 2011 External T.I. 2010-0377321E5 F - Jeux de hasard sur Internet

Unedited CRA Tags
on-line internet gambling winnings non-taxable if no business

Principales Questions: Un contribuable qui a une activité quotidienne de jouer à des jeux de hasard sur Internet, par le biais de casinos virtuels, exploite-t-il une entreprise au sens de la Loi de l'impôt sur le revenu?

Position Adoptée: Question de fait. Généralement de telles activités ne constitueront pas une source de revenus.

Raisons: Loi de l'impôt sur le revenu.

2 March 2011 External T.I. 2009-0351571E5 - Test Wind Turbine

Principal Issues: Whether certain proposed wind turbines will qualify as test wind turbines within the meaning of subsection 1219(3) of the Income Tax Regulations?

Position: Yes

Reasons: favourable opinion received from NRCan and otherwise meets criteria /compliance with the legislation

1 March 2011 External T.I. 2011-0394321E5 - Work Space in Home

Unedited CRA Tags
8(1)(i): 8(1)(i)(iii);8(13); 8(10)

Principal Issues: Whether telework meets the requirements on T2200 form - Declaration of Conditions of Employment of requiring an employee to work from home under a contract of employment.

Position: Question of fact, but in this situation probably yes

1 March 2011 External T.I. 2011-0395221E5 - Purchase and Lease of a Luxury Automobile

Unedited CRA Tags
20(1)(a) and 13(2)

Principal Issues: Whether the cost of the luxury automobile can be included in Class 10 of Schedule II of the Income Tax Regulations (the "Regulations") instead of Class 10.1.

Position: General comments provided.

Reasons: Question of fact.

28 February 2011 External T.I. 2010-0377411E5 - Capital Pool Companies

Unedited CRA Tags
89(1); 262

Principal Issues: Whether a corporation listed on the TSX Venture Exchange (Tier 2) is a public corporation

Position: Yes

Reasons: The TSX Venture Exchange (Tier 2) is a designated stock exchange.

28 February 2011 External T.I. 2011-0395281E5 - Cold Therapy Device as Medical Expenses

Unedited CRA Tags
118.2(2), Regulation 5700

Principal Issues: Whether: 1. A Cryo-Cuff cold therapy device prescribed by a doctor to control and reduce knee swelling qualifies as a medical expense and, 2. whether medical devices in general need to be new devices in order to qualify as medical expenses.

Position: 1. No and 2.No

Reasons: 1.Cold therapy devices are not provided for under subsection 118.2(2) or section 5700 of the Regulations. 2. There is no requirement that medical devices otherwise meeting the conditions of subsection 118.2(2) or section 5700 of the Regulations need to be new devices.

21 February 2011 External T.I. 2011-0394051E5 - Wind Turbines and ITCs

Unedited CRA Tags
127(5), 127(9), Schedule II, Regulations 4600(2), 1102(16.1), 1104(9)

Principal Issues: Would wind turbines qualify for Investment Tax Credits

Position: No

Reasons: Such property would not be prescribed machinery and equipment per regulation 4600(2) for the purposes of the definition "qualified property" in subsection 127(9).

18 February 2011 External T.I. 2010-0381311E5 - Non-residential buildings - late election

Unedited CRA Tags
ITA 220(2.1), (2.2), (3.2); and 248 "prescribed". ITR 600; 1100(1)(a.1), (a.2); 1101(5b.1); 1102(14); 1102(25); 1104(1); class 1

Principal Issues: 1. Whether the CRA would allow the election under subsection 1101(5b.1) of the Income Tax Regulations to be late filed. 2. Whether a taxpayer could be considered to have elected under subsection 1101(5b.1) without a letter attached to the return of income, but by simply indicating a separate class 1 in schedule 8 of the T2 return of income along with a 6% or 10% CCA rate.

Position: 1. No. 2. No.

Reasons: Legislation and case law.

18 February 2011 External T.I. 2010-0383151E5 - Partition of Property - Follow-Up on 2009-033864

Unedited CRA Tags
248(20), (21)

Principal Issues: Follow-up to our response in technical interpretation 2009-033864.

Position: The Income Tax Rulings Directorate issues advance income tax rulings and technical interpretations, but does not provide legal advice or opinions to third parties and does not issue rulings on the interpretation or application of common law, civil law or provincial legislation.

Reasons: See response.

17 February 2011 External T.I. 2011-0391861E5 - METC - Medical Device

Unedited CRA Tags
118.2(2)(m), Regulation 5700 (z.2)

Principal Issues: Whether a particular iontophoresis device that has been prescribed by a doctor for the treatment of hyperhidrosis is a qualifying device for the purposes of the medical expense tax credit.

Position: Yes.

Reasons: The particular iontophoresis device is considered a qualifying electrotherapy device under paragraph 5700(z.2) of the Regulations.

16 February 2011 External T.I. 2011-0392871E5 - medical expenses - medical device

Unedited CRA Tags
118.2(2), Regulation 5700

Principal Issues: Whether a "Water Well" qualifies as a medical device as prescribed by Regulation 5700?

Position: No.

Reasons: A Water Well is not a medical device prescribed by Regulation 5700, nor is the cost of a Water Well allowed as an eligible medical expense under subsection 118.2(2) of the ITA.

11 February 2011 External T.I. 2010-0362421E5 - HRTC - Stratas - Change in ownership

Unedited CRA Tags
Section 118.04 of the ITA; 2009 Federal Budget - Annex 5

Principal Issues: 1. Who can claim a share of the qualifying expenditures incurred for common areas of a strata where there is a change in ownership of the strata unit during the HRTC eligibility period - the previous owner or the current owner?

2. How are the qualifying expenditures allocated between the previous owner and the current owner of the unit, if a unit changes its owners during the HRTC eligibility period?

Position: 1. Both, the previous owner who sold the unit and the current owner who bought the unit, may claim their share of the qualifying expenditures incurred by the strata council while they were the owner of the strata unit, providing all of the HRTC requirements are otherwise met.
2. Generally, the qualifying expenditures incurred for common areas are allocated to strata unit owners based on the governing documents and/or special resolutions of the strata corporation.

Reasons: 2009 Federal budget statements; Section 118.04 of the ITA

11 February 2011 External T.I. 2010-0376501E5 - Ontario Property Tax Credit

Unedited CRA Tags
Ontario Taxation Act ss. 98(6), 100(1), 100(2), 100(3), 100(5), 101

Principal Issues: Whether an individual and his spouse who are cohabitants in one room in a nursing home are considered involuntarily separated and both eligible for the Ontario Senior Homeowners Property Tax Credit (the Credit).

Position: It is a question of fact whether individuals are separated or residing with their spouse. Where an individual and his/her spouse share one room in a nursing home, the individual has a qualifying spouse. The spouses are not considered living separate and apart and only one can claim the credit.

Reasons: Legislation.

11 February 2011 External T.I. 2010-0364121E5 - HRTC - Bankruptcy

Unedited CRA Tags
ITA 118.04

Principal Issues: 1. Can a bankrupt individual claim the HRTC on certain expenditures incurred in renovating a house which he owned jointly with his mother for a part of the HRTC eligible period?
2. Can an individual claim the HRTC for the home renovation work he did and the expenses he incurred?

Position: 1. Yes, if all of the requirements for the HRTC are met by the bankrupt individual.
2. Yes for the cost of building materials, fixtures, equipment rentals, and building plans and permits, but no for the value of homeowner's labour.

Reasons: 1. Generally, paragraph 128(2)(f) of the ITA permits the bankrupt individual to claim the personal tax credits available in sections 118 to 118.9 of the ITA.
2. Section 118.04

10 February 2011 External T.I. 2010-0387151E5 - Deemed Disposition of Shares by a Non-Resident

Unedited CRA Tags
84(3); 212(2); 116(4); 116(5)
potential s. 116(5) withholding not reduced by Pt XIII tax

Principal Issues: In the hypothetical fact situation provided, is the Canadian corporation's redemption of shares held by a non-resident subject to withholdings under both subsections 212(2) and 116(5) of the Act?

Position: Yes.

Reasons: There is currently no legislation in place to prevent such a result and no CRA publication addresses this specific issue. The decision to provide administrative relief in these circumstances falls under the responsibility of the CPB.

8 February 2011 External T.I. 2010-0382531E5 - Capital Gains on Principal Residence

Unedited CRA Tags
40(2)(b); 45(2); 54

Principal Issues: Client is requesting clarification on when capital gains is applicable on the sale of one of two principal residences resulting from a marriage.

Position: A question of fact

Reasons: Legislation and previous position

3 February 2011 External T.I. 2009-0333891E5 - research allowance

Unedited CRA Tags
56(1)(o), 5(1), 6(3)

Principal Issues: What are the tax consequences of a research allowance that is made available to a senior administrator at a University?

Position: It depends on the facts.

Reasons: Given the facts, that no amount is received by the faculty member other than reimbursements for expenses the University has determined to be bona fide research expenses paid to third parties, no amount would need to be reported on a T4A.

19 January 2011 External T.I. 2010-0353291E5 - Foreign Exchange/Superficial losses

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

Principal Issues: Comments on currency transactions, margin accounts and superficial loss rules

Position: Comments provided

Reasons: IT-95R, par 13

14 March 2010 External T.I. 2011-0397151E5 - Medical Expense Tax Credit - Dental Implants

Unedited CRA Tags
118.2(2)(a), 118.2(2)(o)

Principal Issues: Whether the cost of dental implants would qualify as medical expenses for purposes of the METC.

Position: Yes, provided the payment is made to a medical practitioner or dentist.

Reasons: Payments made to a "medical practitioner" or a "dentist", who is a person authorized to practice as such pursuant to the laws of the jurisdiction in which the service is rendered, would generally constitute a medical expense for purposes of paragraph 118.2(2)(a). Some of these payments may qualify as medical expenses pursuant to paragraph 118.2(2)(o), for laboratory, radiological or other diagnostic procedures, if they have been prescribed by a medical practitioner or a dentist.

Technical Interpretation - Internal

3 March 2011 Internal T.I. 2010-0387281I7 F - Déduction - personnel des Forces canadiennes

Unedited CRA Tags
member of the Canadian Forces is an officer or non-commissioned member who is a member of the Regular or Reserve Force

Principales Questions: Est-ce qu'un contribuable peut bénéficier de la déduction pour le personnel des Forces canadiennes et des forces policières en vertu du sous-alinéa 110(1)(f)(v) de la Loi de l'impôt sur le revenu?

Position Adoptée: Question de fait.

Raisons: Deux déterminations s'imposent. Premièrement, XXXXXXXXXX militaire soit considéré comme un membre des Forces canadiennes. Deuxièmement, qu'il participe, en tant que membre des Forces canadienne, à une des missions visées aux subdivisions 110(1)f)(v)(A)(I) ou (II).

24 February 2011 Internal T.I. 2010-0387901I7 - Permanent Establishment

Unedited CRA Tags
OECD Model Tax Convention
construction site PE is conclusive as to existence of PE

Principal Issues: Is paragraph 3 of Article 5 an exempting provision, a deeming provision or a stand-alone provision.

Position: A stand-alone provision.

Reasons: It is a specific rule for building sites and construction or installation projects.

22 February 2011 Internal T.I. 2010-0376841I7 - Liability for Tax of a Deceased Taxpayer

Unedited CRA Tags
s. 146.3(6), 159(2) & (3), 160.2(2) & (3)

Principal Issues: 1. How is the liability under subsection 160.2(2) calculated?
2.Whether interest can be assessed on an assessment under subsection 160.2(2).
3. Whether the executor of the estate is personally liable for distributing property without first obtaining a clearance certificate.

Position: 1. To calculate the liability, compare the annuitant's liability before the proceeds arising from the RRIFs were included in income with the annuitant's liability after the proceeds from the RRIFs were included; the difference is the liability under s. 160.2(2).
2. An assessment under s. 160.2(2) is treated as though it were an assessment under section 152. Interest is exigible on a section 152 assessment; hence interest is exigible under a s. 160.2(2) assessment.
3. Under subsection 159(3), an executor is liable to pay the liability of the estate for failure to obtain a clearance certificate before distributing property under its control.

Reasons: S. 146.3(6).
S. 160.2(2).
S. 159(3).

9 February 2011 Internal T.I. 2011-0394271I7 - Due date for subparagraph 88.1(1)(d)(ii) election.

Unedited CRA Tags
subpar. 88.1(1)(d)(ii), par. 150(1)(c), & "filing-due date" in subsection 248(1) of the Income Tax Act; and s. 204 & 205(2) of Part II of the Income Tax Regulations.

Principal Issues: Whether the filing date is 90 days from the end of the taxation year or 30 days after the discontinuance of business.

Position: 90 days from the end of the taxation year.

Reasons: The provisions of subsection 205(2) of the Regulations do not apply to the filing of a T3 return of income because Part II of the Regulations only pertains to information returns.