Income Tax Severed Letters - 2011-08-05

Ministerial Correspondence

20 July 2011 Ministerial Correspondence 2011-0413711M4 - CMHC Qualification and Northern Residents

Unedited CRA Tags
6(1)(a); ITR 7303.1.

Principal Issues: Why does the CHMC not recognize a housing allowance as income if the CRA includes such an allowance in a taxpayer's taxable income under the Income Tax Act?

Position: General comments provided.

Reasons: Suggested the taxpayer contact the CMHC directly for more information on the CMHC's policies.

20 July 2011 Ministerial Correspondence 2011-0413681M4 - Teaching Income of Scholars/Authors/

Principal Issues: The taxpayer proposes an amendment that would allow some portion of the employment income of scholars, authors, and artists that arises from teaching to be treated as business income for income tax purposes.

Position: Such an amendment would require a change to legislation which would be the responsibility of the Department of Finance. Therefore the taxpayer's correspondence will be forwarded to Finance.

18 July 2011 Ministerial Correspondence 2011-0411231M4 - WSIB Compensation Payments

Unedited CRA Tags
56(1)(v); 110(1)(f)(ii); ITR 232(1)

Principal Issues: 1. Is compensation received from an employer pursuant to an agreement made under section 63 of the Workplace Safety and Insurance Act taxable under the provisions of the Income Tax Act? 2. Does the employer withhold tax on such payments?

Position: 1. No. A payment or payments received "under an employees' or workers' compensation law of Canada or a province in respect of an injury, a disability or death" is included in a taxpayer's income pursuant to paragraph 56(1)(v) of the Act. The taxpayer is entitled to a deduction from income for the amount so included pursuant to subparagraph 110(1)(f)(ii) of the Act. The compensation payment or payments may be received either from a compensation board or from the employer or former employer of the person, as the case may be. 2. No, such compensation is not considered salary, wages or other remuneration and subsection 153(1) of the Act does not require any withholding from compensation paid pursuant to a workers' compensation law. The employer must issue a T5007 information slip to the recipient pursuant to subsection 232(1) of the Regulations.

Reasons: IT-202R2 and the applicable legislation.

Technical Interpretation - External

26 July 2011 External T.I. 2011-0399271E5 - Obligation of Employer to Complete Form T2200

Unedited CRA Tags

Principal Issues: 1. Whether an employee is considered a long haul truck driver. 2. Whether an employee is entitled to deduct an expense for meals incurred while performing work duties using the employer's vehicle. 3. Whether an employer is required to complete Form T2200 for an employee.

Position: 1. Question of fact. 2. & 3. In this case, no.

Reasons: 1. It is a question of fact whether an employee would be considered a long haul truck driver. An employee would have to meet the conditions of subsection 67.1(5) of the Act. 2. An employee is not entitled to deduct an expense for meals incurred while performing work duties using the employer's vehicle unless all the conditions of paragraph 8(1)(h) and subsection 8(4) of the Act are met. 3. An employer is not required to complete Form T2200 for an employee if he/she does not qualify for the expense deduction under paragraph 8(1)(h) of the Act. However, while the signing of Form T2200 by the employer is a prerequisite in order for an employee to be able to claim this deduction, a signed Form T2200 does not provide an employee with any assurance that any expenses incurred are deductible since the employee must be able to demonstrate that the requirements of the specific provision of the Act have in fact been met.

25 July 2011 External T.I. 2011-0400091E5 - Benevolent Fund

Unedited CRA Tags
3; 6(1); 8(1); 8(5)

Principal Issues: Whether amounts paid to a union by its members, to establish a benevolent fund for injured workers, are deductible by the members for income tax purposes.

Position: No

Reasons: Amounts paid to a union that are not made to maintain membership in a trade union or association (i.e., not directly related to the ordinary operating expenses of the trade union) are not deductible for income tax purposes, in accordance with subsection 8(5) of the ITA.

25 July 2011 External T.I. 2011-0409111E5 - 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).

25 July 2011 External T.I. 2010-0389611E5 - SR&ED - partnerships

Unedited CRA Tags
37(1), (2); 96(1)(e.1), (g); 248(1); 9(1)

Principal Issues: 1. Where subsections 37(11) and (12) apply to expenditures, whether the expenditures that would otherwise be deductible under subsection 37(1) may instead be deducted under subsection 9(1) such that paragraph 96(1)(e.1) and subparagraph 96(1)(g)(ii) would then not be applicable in respect of losses attributable to such expenditures. 2. Whether there is an option for expenditures made on SR&ED carried on outside Canada that would be deductible under subsection 37(2) to be instead deducted under subsection 9(1) such that paragraph 96(1)(e.1) and subparagraph 96(1)(g)(ii) would not apply in respect of losses attributable to such expenditures.

Position: See comments

Reasons: See comments

20 July 2011 External T.I. 2011-0410881E5 - Indian - employment income

Unedited CRA Tags

Principal Issues: Tax treatment of employment income or self-employed income of an Indian working on XXXXXXXXXX that is partly on a reserve.

Position: General information.

Reasons: Guidelines likely apply to employment income. Connecting factor analysis required for self-employment income.

18 July 2011 External T.I. 2011-0403841E5 - Triple net leases and ATR 2000-0002543

Unedited CRA Tags

Principal Issues: Has the CRA's position in 2000-0002543 changed?

Position: No. As stated in 2000-0002543, whether a private foundation entering into a triple net lease is carrying on a business is a factual determination. General comments provided.

Reasons: A determination can be made only after a review of the relevant facts, including the terms and conditions of the particular lease.

14 July 2011 External T.I. 2011-0411931E5 - Income or Capital Gain

Unedited CRA Tags

Principal Issues: Whether in a particular situation a gain or loss from a sale of real property should be treated as being on account of income or capital.

Position: It is a question of fact, but probably in this case it is on account of income.

Reasons: IT-218R and jurisprudence.

23 June 2011 External T.I. 2011-0408401E5 - Gift to U.S. charity

Unedited CRA Tags
118.1(5), 248(31)

Principal Issues: Whether an amount paid to a U.S. charity is a gift to a qualified donee in a particular situation.

Position: Factual determination. General comments provided.

Reasons: 248(31), 118.1(1)


3 May 2011 Roundtable, 2011-0401431C6 - ICAA Roundtable Q.7 CDA and Life Insurance

Unedited CRA Tags

Principal Issues: Whether the CRA has accepted the decision in The Queen v. Innovative Installation Inc (2010 FCA 285)

Position: Yes, with limited application

Technical Interpretation - Internal

28 July 2011 Internal T.I. 2011-0394981I7 - Cooperative Housing and 149(1)(l)

Unedited CRA Tags

Principal Issues: Can a cooperative housing corporation that participates in the XXXXXXXXXX qualify for the exemption provided by paragraph 149(1)(l) of the Act?

Position: No.

Reasons: The program requires that any surplus earned by the cooperative be returned to its occupants, which will include members.