Income Tax Severed Letters - 2012-03-02

Technical Interpretation - External

22 February 2012 External T.I. 2012-0437331E5 - medical expenses - travel

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

Principal Issues: Whether an individual can claim travel expenses as eligible medical expenses for purposes of the medical expense tax credit?

Position: Question of fact.

Reasons: Wording of paragraphs118.2(2)(g) and (h) as long as the requirements of those provisions are met.

22 February 2012 External T.I. 2012-0437351E5 - medical expenses - moist wipes

Unedited CRA Tags
118.2(2)(i.1)

Principal Issues: Whether the cost of moist wipes qualifies as a medical expense?

Position: No.

Reasons: The reference to "other products" in paragraph 118.2(2)(i.1) of the ITA is restricted to the same class of products such as diapers, disposable briefs, etc. See 2010-0356391.

21 February 2012 External T.I. 2012-0432251E5 - Online Poker

Unedited CRA Tags
3(1)(a), 40(2)(f)

Principal Issues: Whether the income from playing online poker is taxable

Position: Question of fact - additional information required

Reasons: Factors used to determine whether it is a business or hobby are outlined in IT-334R2

21 February 2012 External T.I. 2011-0417471E5 F - Changement d'usage - paragraphe 45(3)

Unedited CRA Tags
45(1)a); 45(3); 45(4)
Summary Under
Tax Topics - Income Tax Act - Section 45 - Subsection 45(3)
s. 45(3) election not available where 2nd unit in taxpayer-owned duplex changed from rental to personal use
Summary Under
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c)
s. 45(1)(c) applies where 2nd unit in taxpayer-owned duplex changed from rental to personal use
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property
immovable (including a duplex used 2 different ways) is considered a single property unless subdivided

Principales Questions: Est-ce qu'un contribuable peut faire le choix prévu au paragraphe 45(3) lorsque ce dernier habite à titre de résidence principale un logement (" Logement A ") d'un duplex dont il est le propriétaire et y intègre, par le biais de rénovations majeures, l'autre logement (" Logement B ") du duplex qui était, avant ces rénovations majeures, loué à des tiers?

Position Adoptée: Un contribuable dans une telle situation ne peut pas faire le choix prévu au paragraphe 45(3).

Raisons: Le changement d'usage du duplex dans la situation soumise est un changement d'usage partiel au sens de l'alinéa 45(1)c). Un contribuable ne peut pas faire le choix prévu au paragraphe 45(3) lors d'un changement d'usage partiel.

21 February 2012 External T.I. 2012-0437281E5 - medical expenses - travel

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

Principal Issues: Whether an individual can claim the cost of back surgery at a hospital outside the country and related travel expenses as eligible medical expenses for purposes of the medical expense tax credit?

Position: Question of fact.

Reasons: Wording of paragraph 118.2(2)(a) and (g) and (h) as long as the requirements of those provisions are met.

20 February 2012 External T.I. 2012-0435931E5 - medical expenses - travel

Unedited CRA Tags
118.2(2)(h)

Principal Issues: Whether an individual can claim travel expenses as eligible medical expenses for purposes of the medical expense tax credit?

Position: Question of fact.

Reasons: Wording of paragraph 118.2(2)(h).

20 February 2012 External T.I. 2012-0436991E5 - medical expense - undergarments

Unedited CRA Tags
118.2(2), Regulation 5700(j)

Principal Issues: Whether the cost of undergarments used to hold a breast prosthesis in place after a mastectomy qualify as medical expenses for purposes of the medical expense tax credit?

Position: No.

Reasons: Regulation 5700(j) prescribes an external breast prosthesis that is required because of a mastectomy but there is no provision to allow the cost of undergarments to hold an external breast prosthesis in place.

20 February 2012 External T.I. 2012-0436431E5 - medical expenses - residential treatment center

Unedited CRA Tags
118.2(2)(e) 118.2(2)(g) 118.2(2)(h) 118(6)

Principal Issues: Whether amounts paid to a residential treatment center in the United States would be considered to be a medical expense?

Position: General comments given outlining the requirements of the Income Tax Act.

Reasons: The law

16 February 2012 External T.I. 2011-0427431E5 - Private Health Services Plan

Unedited CRA Tags
s. 248(1); subparagraph 6(1)(a)(i);subparagraph 6(1)(g)(iv); paragraph 118.2(2)(a); paragraph 118.2(2)(j); paragraph 118.4(2)(a)

Principal Issues: 1) Whether a particular vision care plan qualifies as a PHSP. 2) Whether amounts reimbursed by the employer to its employees through payroll for vision care-related expenses they incurred should be non taxable.

Position: 1) Question of fact. 2) Yes, provided the plan in question is a PHSP.

16 February 2012 External T.I. 2011-0430031E5 - Transfer of Farm Property

Unedited CRA Tags
73(1), 73(3), 73(3.1), 70(9.8), 70(10)

Principal Issues: Whether certain farm property can be transferred on a tax deferral basis per subsection 73(3) and (3.1) in a situation where a parent transfers farm property to an adult child and the parent is leasing the farm property to a corporation of which the adult child is the shareholder?

Position: Yes the transfer can be made on a tax deferral basis provided that the conditions in the definition of "share of the capital stock of a family farm corporation" in subsection 70(10) and the deeming conditions in subsection 70(9.8) of the Act are met.

Reasons: 70(9.8) and 70(10)

15 February 2012 External T.I. 2011-0426531E5 - Exchange of Gold Bullion for ETR

Unedited CRA Tags
14(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition
exchange of gold certificate for gold likely not a disposition

Principal Issues: Is exchange of gold bullion for Exchange Traded Receipts (ETR), or vice versa, considered a disposition for tax purposes?

Position: Depends on the facts of the case.

Reasons: Depending on the facts of the case, there may not be a disposition at the time of exchange to result in any tax consequences to the holder of the ETR. However, when the ETRs are redeemed for cash, there is likely to be a disposition.

14 February 2012 External T.I. 2011-0407051E5 - Small Business Deduction

Unedited CRA Tags
125(1), 125(7), 129(4), 129(6)

Principal Issues: Does rental income qualify for the SBD in 5 separate scenarios

Position: General comments provided

Reasons: General comments provided

14 February 2012 External T.I. 2011-0428531E5 - Art. VIII, 6 Canada-US Tax Convention

Unedited CRA Tags
Art. VIII, 6 Canada-US Tax Convention
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 8

Principal Issues: Are determinations under paragraph VIII, 6 made on a property-by-property basis or as an aggregated class?

Position: property-by-property basis

Reasons: Language of the Convention, treatment of similar provisions under the Income Tax Act.

10 February 2012 External T.I. 2010-0385861E5 F - Actions de remplacement

Unedited CRA Tags
44.1(1); 44.1(2)
Summary Under
Tax Topics - Income Tax Act - Section 44.1 - Subsection 44.1(1) - Replacement Share
application to IPO of CCPC
Summary Under
Tax Topics - Income Tax Act - Section 44.1 - Subsection 44.1(1) - Qualifying Disposition
elements of qualifying disposition definition

Principales Questions: Dans la situation présentée, est-ce que la disposition des Actions souscrites représente une disposition admissible? Est-ce que les Actions souscrites pourraient également constituer des actions de remplacement?

Position Adoptée: Questions de fait. En l'espèce oui.

Raisons: Loi de l'impôt sur le revenu

8 February 2012 External T.I. 2011-0424091E5 - Filing Requirements of a strata corporation

Unedited CRA Tags
150(1)(a); 149(1)(l)

Principal Issues: 1) Whether a strata corporation is required to file a T2 return of income and a T1044 for each section of the strata corporation? 2) Whether each section of a strata corporation requires a separate business number?

Position: 1) No. 2) No.

Reasons: 1) A strata corporation, together with any sections of the corporation, is one legal entity, and as such is required to file a return of income pursuant to paragraph 150(1)(a) of the Act. The individual sections of a strata corporation are not legal entities and therefore do not have a separate requirement to file a return of income under the Act. Similarly, if the requirements under 149(1)(l) are met a strata corporation would be required to file a single T1044 with its T2 return. 2) Only one business number is assigned to a corporation, therefore a section of a strata corporation would not be assigned a separate business number.

Conference

3 June 2011 Roundtable, 2011-0401821C6 - 2011 STEP Conference-Q1 - Post Wind Up Obligations

Unedited CRA Tags
5(2) Interpretation Act, 152(3), 152(4), 152(7), 159(2), 160(1) and 248(1) Income Tax Act, 226(2)(b) Canada Business Corporations Act

Principal Issues: What obligations would there be on the directors, shareholders, trustees, or beneficiaries (as the case may be), who received part of all of the distribution in the event that the proposed legislation was to be enacted and proclaimed into law, where the corporation or trust had not filed income tax returns on the basis of that law?

Position: It is the CRA's longstanding practice to ask tax payers to file on the basis of proposed legislation, but it is noted that legislation only becomes binding and capable of producing legal effects upon commencement. We have given general comments in relation to trusts and corporations below.

Reasons: Legislation and case law

3 June 2011 STEPs Roundtable Q. 10, 2011-0401871C6 F - Personal use property of an estate

Unedited CRA Tags
54; 40(2)(g)(iii)
Summary Under
Tax Topics - Income Tax Act - Section 54 - Personal-Use Property

Principal Issues: a) Where an individual dies holding personal use property which becomes property of the estate, does the property retain its nature as personal use property?
b) Does the answer depend on the use which is made of the property by a beneficiary of the estate?

Position: Question of fact. In this situation, the property would be capital property to the estate which would not qualify as personal-use property.

Reasons: The property is not used by the beneficiaries of the estate or or any person related to the beneficiaries.

Technical Interpretation - Internal

20 February 2012 Internal T.I. 2011-0422731I7 - Application of 156 and 156.1 to a SIFT Partnership

Unedited CRA Tags
156, 156.1, 197(6), 197(7)

Principal Issues: Whether SIFT partnerships are required to make quarterly instalments in accordance with sections 156 and 156.1 of the Act in respect of the tax payable under section 197 of the Act.

Position: Yes.

Reasons: With respect to the tax payable by a SIFT partnership under section 197 of the Act, subsection 197(6) provides that the provisions of section 156 and 156.1 are applicable. Therefore the SIFT partnership is required to remit tax in accordance with sections 156 and 156.1 of the Act.

1 February 2012 Internal T.I. 2011-0422581I7 - Withholding of Refunds Where Outstanding Returns

Unedited CRA Tags
ss.128(2)(d), 150(1)(d) & (1.1), 164(2.01)

Principal Issues: Whether the prohibition on issuing refunds under subsection 164(2.01) applies to a bankrupt's trustee in bankruptcy.

Position: Yes.

Reasons: Subsection 150(3) requires the trustee to file all outstanding returns of the bankrupt. If the returns are not filed, subsection 164(2.01) applies.