Income Tax Severed Letters - 2011-06-17

Principal Issues: 1. Is a monthly allowance paid to an employee for the use of a cellular phone service a taxable benefit? 2. Is a reimbursement paid to an employee for the cost of a cellular phone a taxable benefit if it is used primarily to perform duties of employment?

Position: 1. Question of fact. 2. Yes

Reasons: 1. In accordance with CRA's administrative policy, when an employee receives a reimbursement of the cost of a basic cellular phone plan and the primary purpose is to perform duties of employment, the reimbursement would generally not be considered a taxable benefit as long as all of the following conditions are met: the plan's cost is reasonable; the plan is a basic plan with a fixed cost; and the employee's personal use of the service does not result in additional charges over the basic plan cost. 2. When a reimbursement by an employer relates to an asset purchased and owned by an employee, the employee benefits from the assistance and is generally required to include the amount of the reimbursement in income in accordance with paragraph 6(1)(a) of the Act.

Principal Issues: Is the CRA of the view that a pharmacist is a medical practitioner?

Position: Yes

Reasons: The term "medical practitioner" can include individuals such as a pharmacist provided that he or she is authorized to practice in the profession according to the laws of the jurisdiction in which the service is rendered.

Principal Issues: Whether employees seconded to work in Canada on a project for two to four years are considered to be performing duties of a temporary nature for the purpose of subsection 6(6) of the ITA.

Position: Yes

Reasons: Even though the period in which the employees may be at the work location is beyond the two-year period noted in the general guidelines of paragraphs 5 and 6 in IT-91R4, the facts of this situation are such that the duties of employment are considered of a temporary nature for purposes of subsection 6(6) of the Act.

Principal Issues: Does the plan qualify as a DSLP?

Position: Question of fact.

Reasons: If it meets the required conditions set out in Regulation 6801(a).

Principal Issues: Is there a disposition where all the property in respect of an employee is transferred from one employer's EPSP to another employer's EPSP?

Position: No, as long as all the conditions in paragraph (f) of the definition of disposition under s.248(1) are met.

Reasons: Wording of the Act.

Principal Issues: Whether foreign currency trading is permitted in a trust governed by a tax-free savings account.

Position: General comments provided.

Reasons: Application of the provisions of the Act.

Principal Issues: Whether an individual who owns a home but does not reside there is considered a first-time homebuyer with respect to the purchase of a new home intended to be inhabited as the individual's principal place of residence.

Position: No.

Reasons: Based on the facts presented, the individual had an owner-occupied home in the relevant period.