Income Tax Severed Letters - 2011-05-06

Ruling

2010 Ruling 2010-0380841R3 - Is transfer of Partnership Interest a disposition?

Unedited CRA Tags
248(1) "Disposition", "Taxable Canadian Property"

Principal Issues: Will the transfer of the Partnership Interest to another Partnership result in a disposition for tax purposes?

Position: No

Reasons: In this case, there is no change in the beneficial ownership of the partnership interest transferred.

Ministerial Correspondence

21 April 2011 Ministerial Correspondence 2011-0399551M4 - Vow of Perpetual Poverty

Unedited CRA Tags
110(2)

Principal Issues: Request that subsection 110(2) be amended to include Buddhist monks, who (according to the correspondent) do not qualify for the deduction.

Position: Forward the request to the Minister of Finance.

Reasons: Question of tax policy and would require a change to the legislation.

19 April 2011 Ministerial Correspondence 2011-0398851M4 - class 43.1- straw as feedstock for co-gen

Unedited CRA Tags
regulation 1104(13); regulation 1100 - sch 2

Principal Issues: Whether equipment used in a co-gen system that uses straw as feedstock would qualify for inclusion in class 43.1

Position: Provided the straw is first converted to bio-oil which is then used primarily for the purpose of generating electricity

Reasons: see paragraph (d)(xi) of Class 43.1....the straw is "plant residue", confirmed informally with NRCan

Technical Interpretation - External

29 April 2011 External T.I. 2010-0382221E5 F - Crédit personne à charge et montant pour enfant

Unedited CRA Tags
118(1)b); 118(1)b.1); 118(5); 252(1)
payment of support for one month before obtaining custody ousted credit
foster child could qualify as “child” of individual having charge of foster family, but not as wholly dependent

Principales Questions: (1) Est-ce qu'un contribuable peut réclamer le crédit prévu à 118(1)b) s'il verse une pension alimentaire pour ses enfants? (2) Est-ce que le responsable d'une famille d'accueil peut réclamer le crédit prévu à 11

8(1)b.1)? (3) Est-ce qu'un contribuable peut réclamer le crédit prévu à 118(1)b) pour l'année où il obtient la garde de son enfant s'il a payé un mois de pension alimentaire pour cet enfant dans l'année en question?

Position Adoptée: (1) Non (2) Probablement que non. (3) Non.

Raisons: (1) et (3) Le paragraphe 118(5) prévoit que le parent qui est tenu de verser une pension alimentaire pour un enfant au cours d'une année d'imposition ne peut réclamer le crédit prévu à 118(1)b) à l'égard de cet enfant pour cette année d'imposition. (2) L'enfant résidant en famille d'accueil ne serait pas considéré l'" enfant " du responsable de la famille d'accueil pour les fins du crédit prévu à 118(1)b.1) lorsque le responsable de la famille d'accueil reçoit des prestations d'assistance sociale versées pour les besoins et les soins de l'enfant.

21 April 2011 External T.I. 2011-0396841E5 - Class 43.2 - Specified energy property

Unedited CRA Tags
Class 43.2, Class 43.1, 1100(24), 1100(25)

Principal Issues: The taxpayer requested clarification of the CCA implications relating to the acquisition of solar photovoltaic (PV) equipment under the Ontario microFIT Program. Specifically, the taxpayer requested clarification as to whether the equipment would be subject to any restrictions with respect to CCA.

Position: General comments provided with respect to CCA availability. Where a taxpayer who operates a farming business acquires a Class 43.2 property (such as solar PV equipment) and participates in the microFIT program and the amount of electricity consumed in carrying on the farming business exceeds 50% of the electricity generated by the property, the taxpayer would normally be entitled to deduct CCA on the property against his/her income. On the other hand, if the amount of electricity consumed in carrying on the farming business does not exceed 50% of the electricity generated by the solar PV equipment, the CCA on the property cannot be deducted to the extent that it would create or increase a loss from the property.

Reasons: Consistent with the income tax policy intent to encourage investments in clean energy and energy conservation equipment.

11 April 2011 External T.I. 2010-0382181E5 F - Emploi chantier particulier - propriétaire

Unedited CRA Tags
6(6)
employee can still qualify if lives in a secondary home near the work site

Principales Questions: Quel est le traitement fiscal à accorder à une allocation se rapportant aux frais pour la pension et le logement sur un chantier particulier ou un endroit éloigné lorsque le contribuable est propriétaire d'une deuxième résidence sur le chantier particulier?

Position Adoptée: Question de fait

Raisons: Application du paragraphe 6(6)

14 March 2011 External T.I. 2010-0382091E5 F - Revenu d'entreprise exploitée activement

Unedited CRA Tags
9(1)
provision of fully-furnished units together with cleaning services generated property rather than business income

Principales Questions: Les activités de location de la Contribuable donnent-elles lieu à un revenu provenant d'un bien ou d'une entreprise exploitée activement?

Position Adoptée: Question de fait. En l'espèce, il s'agit probablement d'un revenu de bien en raison de la nature des services qui sont fournis.

Raisons: Loi de l'impôt sur le revenu

25 February 2011 External T.I. 2010-0387991E5 F - RAP, intention, lieu principal de résidence

Unedited CRA Tags
146.01(1) "montant admissible principal"; 146.01(1) "solde RAP"; 146.01(3)
test is one of intention at withdrawal time and not whether closing actually occurred
timing of HBP balance reduction

Principal Issues: Est-ce qu'un contribuable a respecté les critères d'admissibilité au RAP lorsqu'il avait l'intention de commencer à utiliser une habitation admissible comme lieu principal de résidence au plus tard un an après son acquisition mais qu'après avoir acquis l'habitation, il se trouve dans l'impossibilité de l'habiter?

Position: Question de fait.

Reasons: Il s'agit d'un test d'intention qui doit être effectué au moment où les sommes sont retirées du REER. Le contribuable doit être en mesure de prouver son intention.

13 April 2010 External T.I. 2010-0382791E5 F - Logement offert gratuitement à un pasteur

Unedited CRA Tags
9(1); 8(1)c)
occupation of free housing after ceased to be pastor not taxable if not in exchange for services

Principales Questions: Quel est le traitement fiscal associé à un logement qui est fourni gratuitement à un pasteur d'une congrégation? Est-ce que la valeur d'un tel logement devra être incluse dans le montant de la rémunération assurable et dans les gains ouvrant droit à pension du pasteur?

Position Adoptée: Question de fait. Nous avons référé le contribuable à l'interprétation 2009-0350821E5 qui semble répondre à toutes ses questions.

Raisons: Loi de l'impôt sur le revenu.

Technical Interpretation - Internal

8 April 2011 Internal T.I. 2010-0359311I7 - Distribution of property by an estate

Unedited CRA Tags
248(1)-"disposition"; 107(2.001), 107(2.1); 251.1(3); 40(3.3)

Principal Issues:
1) Do subsections 40(3.3) and 40(3.4) apply to deny the capital loss incurred by the Estate which would arise from the application of paragraph 107(2.1)(a)?
2) Whether the Property was distributed by the Estate to the Trusts on XXXXXXXXXX ?

Position:
1) No
2) No

Reasons:
1) The 3 children are not affiliated persons within the meaning of section 251.1. Also the 3 Trusts are not affiliated with the Estate as they are not respectively a majority interest beneficiary of the Estate.
2) No legal document has been provided that would have the effect to transfer the legal title of the Property to the beneficiaries. No document was registered under article 20 of the Land Title Act. Therefore the Trusts did not hold full title to the Property. Accordingly there was no distribution of the Property by the Estate on XXXXXXXXXX .

2 March 2011 Internal T.I. 2011-0392001I7 - Qualifying Period - OETC - 122.3(1)

Unedited CRA Tags
ITA: 122.3(1)

Principal Issues: Scenarios 1 & 2:
What is the number of days of eligibility for the OETC?
Scenario 3:Would the calculation of the OETC include the period that involved the sea-trials?
Scenario 4:Would the employee onboard Vessel A qualify for the OETC by virtue of the fact that his employer was carrying on qualifying activity for greater than 6 months even though the vessel he worked on board was not specifically engaged in a qualifying activity for 6 months?

Position: Scenario 1:The qualifying period would exclude the first period of the contract when the employee was off. Thus the qualifying period should be 166 days, thereby denying the employee to be eligible for the OETC.
Scenario 2:The qualifying period would cover the entire term of the contract, and therefore include all the time-off periods during the contract term.
Scenario 3:No. The sea trials should not be included as part of the qualifying period.
Scenario 4:No. The employee would not qualify for the OETC.

Reasons: Scenario 1:
The employee did not actually start working on the foreign contract yet during the first period of the contract term, and accordingly that period is not attributable to the offshore contract.
Scenario 2:A period of absence from a work location outside of Canada will generally not interrupt the eligibility for the OETC, provided that throughout the qualifying period, substantially all of the employment duties as provided for in 122.3(1)(b)(i) are performed outside Canada.
Scenario 3:Notwithstanding the fact that the successful completion of the contract may be necessary before the 3rd-party charterer agrees to contract the vessel, the sea trials are too remotely connected to the "purpose of obtaining, on behalf of the specified employer a contract" to undertake any of the activities listed in 122.3(1)(b)(i). This is because the sea trials would have to be conducted regardless of whether or not the contract was entered into with the 3rd-party charterer.
Scenario 4:The employee was not outside of Canada for more than 6 months. After the project for Vessel A was completed, he was not assigned to the project involving Vessel B, nor was he assigned to any other foreign project. Since the qualifying period is less than 6 months and the criteria under subsection 122.3(1)(b)(i) is not met, the qualifying period for the employee should not be increased to include the time period covered by the contract with Vessel B.