Income Tax Severed Letters - 2011-08-19

Technical Interpretation - External

15 August 2011 External T.I. 2011-0410871E5 - CGE - Qualified Small Business Corporation Shares

Unedited CRA Tags
110.6(1), 110.6(2.1) and 248(1)

Principal Issues: Whether certain shares would be "qualified small business corporation shares" such that a CGE under subsection 110.6(2.1) could be claimed.

Position: Question of fact, general comments only.

Reasons: See above.

11 August 2011 External T.I. 2011-0406061E5 F - Dommages reçus suite à la perte d'un emploi

Unedited CRA Tags
5(1); 56(1)a)(ii); 248(1) définition " d'allocation de retraite "
compensation received for renouncing rights of reinstatement is a retiring allowance

Principales Questions: Est-ce qu'une indemnité de renoncement à la réintégration à l'emploi versé par un employeur à son employé est imposable?

Position Adoptée: Nous sommes d'avis qu'une indemnité de renoncement à la réintégration à l'emploi est généralement imposable à titre d'allocation de retraite conformément au paragraphe 56(1)a)(ii)

Raisons: La définition de l'expression "allocation de retraite" prévue au paragraphe 248(1) vise un montant reçu par un employé suite à la perte de son emploi.

10 August 2011 External T.I. 2011-0398651E5 - Settlement amount

Unedited CRA Tags
ITA 6(1)(a); 56(1)(a)(ii); 56(1)(v); 81(1)(i); 110(1)(f)(ii)

Principal Issues: Whether a lump-sum settlement amount received by an employee upon his discharge from employment is exempt from income tax

Position: Question of fact.

Reasons: The settlement amount in question is not a RCMP pension or compensation amount under paragraph 81(1)(i) or workers compensation payment under paragraph 56(1)(v) / subparagraph 110(1)(f)(ii) of the Act. The settlement amount is likely an employment benefit taxable under paragraph 6(1)(a) or a retiring allowance taxable under subparagraph 56(1)(a)(ii) of the Act. There is insufficient information to support that the amount is non-taxable damages described in IT-337R4.

9 August 2011 External T.I. 2011-0404361E5 - Flexible Benefit Plans - Conversion of Salary

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

Principal Issues: Whether the conversion of salary and/or vacation entitlements to flex credits after the initial commencement of a flexible employee benefits program would give rise to an income inclusion.

Position: Yes.

Reasons: As noted in IT-529, taxable employee entitlements such as vacation, salary, or the right to a salary increase may not be converted to non taxable benefits. Where a plan permits an employee to convert an amount of salary, wages or other taxable employee entitlement to something of value, the employee will be taxed on that conversion up to the amount of the cash received or the market value of the benefit received at the time of conversion in accordance with subsection 5(1) of the Act and IT-529.

9 August 2011 External T.I. 2011-0392741E5 - Meaning of Farming - Marijuana Growing

Unedited CRA Tags
9, 248

Principal Issues: Due to a recent Supreme Court of BC ruling, a number of marijuana growers want to report their income. Are individuals that cultivate medical marijuana in their homes (the "suppliers") to supply to compassion clubs engaged in farming? (Note that compassion clubs are not legal in Canada. They are not part of the federal medical cannabis program, and as such, their suppliers are breaking the law.)

Position: Depends, question of fact.

Reasons: Not enough information provided.