Income Tax Severed Letters - 2012-04-27

Ministerial Correspondence

16 April 2012 Ministerial Correspondence 2012-0437491M4 F - CIAAE

Unedited CRA Tags
118.031

Principales Questions: Comment doit-on calculer le montant admissible au crédit d'impôt pour les activités artistiques des enfants et si le montant inclut les taxes?

Position Adoptée: Commentaires généraux sur le calcul du crédit. Le montant admissible inclut les taxes.

Raisons: Application de la loi.

11 April 2012 Ministerial Correspondence 2012-0438041M4 - children's arts tax credit

Unedited CRA Tags
118.031

Principal Issues: Are fees paid to attend a 10 week program for photography lessons or a 5 consecutive day photography camp eligible for the children's arts tax credit?

Position: If all of the other criteria are met, the fees paid for photography programs qualify as eligible expenses for the CATC.

Reasons: The CATC includes fees paid for artistic or cultural activities. An artistic or cultural activity includes an activity that is intended to contribute to a child's ability to develop creative skills or expertise, acquire and apply knowledge, or improve dexterity or coordination in a discipline such as visual arts. Visual arts would include any art meant to be appreciated mainly or exclusively through sight such as drawing, painting, sculpturing and photography.

5 April 2012 Ministerial Correspondence 2012-0437311M4 - Children's Arts Tax Credit

Unedited CRA Tags
118.03; 118.031; 9401 of ITR

Principal Issues: 1. Does being enrolled in Beavers [Scouts Canada] qualify for this tax credit?
2. Does a martial arts program qualify for this tax credit?

Position: 1.Although the CRA administers the CATC; it does not determine the general eligibility of a particular activity. Based on the specifics of the program, the person or organization offering the program can determine if it meets the requirements of the legislation. The child participating in the activity must be under 16 at the beginning of the tax year for the fees paid to qualify for the CATC. If all the requirements are satisfied, the fees paid for the Beaver program under Scouts Canada may be eligible for the CATC.
2. No.

Reasons: Legislation

6 March 2012 Ministerial Correspondence 2012-0433441M4 - Tax exempt allowance for municipal officers

Unedited CRA Tags
81(3)

Principal Issues: Whether municipal officers who receive a portion of their remuneration as a tax exempt allowance can be reimbursed by the municipality for expenses incurred?

Position: The CRA distinguishes between an allowance and a reimbursement of an expense in determining whether an amount is taxable or not. It is the municipality that determines whether or not to reimburse an officer for expenses incurred. If an amount is a reimbursement of a personal expenditure, it would be included in income. If the expense was incurred in the performance of the officer's employment duties, the reimbursement is not taxable

Reasons: The law

Technical Interpretation - External

17 April 2012 External T.I. 2012-0441591E5 - Allowable Business Investment Loss

Unedited CRA Tags
38(c), 39(1)(c), 248(1)

Principal Issues: Whether the loss incurred on corporation shares due to insolvency is an allowable business investment loss.

Position: Question of fact.

Reasons: General comments provided.

17 April 2012 External T.I. 2011-0427411E5 F - Bien de remplacement-immobilisation admissible

Unedited CRA Tags
14(6), 14(7), 14(5) "dépense en capital admissible" et "montant cumulatif des immobilisations admissibles", 54 " immobilisation admissible" , 248(1) immobilisation admissible
Summary Under
Tax Topics - Income Tax Act - Section 14 - Subsection 14(7)
shares cannot be replacement property
Principales Questions: Est-ce que des actions peuvent se qualifier de bien de remplacement à une immobilisation admissible au sens des paragraphes 14(6) et 14(7) de la Loi de l'impôt sur le revenu ?

Position Adoptée: Non.

Raisons: Application de la Loi et commentaires de la jurisprudence.

17 April 2012 External T.I. 2012-0440931E5 F - Crédit d'impôt pour frais médicaux

Unedited CRA Tags
118.2(2)m); 5700 i)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 5700 - Section 5700 - Paragraph 5700(i)
motorized stationary bicycle did not qualify

Principales Questions: Est-ce qu'une dépense effectuée au titre d'un vélo stationnaire à moteur Theracycle 200 peut donner droit au crédit d'impôt pour frais médicaux prévu à l'article 118.2 de la Loi de l'impôt sur le revenu?

Position Adoptée: Non.

Raisons: Loi de l'impôt sur le revenu. Voir les motifs ci-dessous.

13 April 2012 External T.I. 2012-0441381E5 - Tax treatment of pension lump-sum payment

Unedited CRA Tags
56(1)(a)(i); 70(2)

Principal Issues: Can the executor choose to have the lump-sum amount that was paid to the designated beneficiary in respect of the deceased member of an RPP reported as income on the final return of the deceased?

Position: No. It is not a right or thing.

Reasons: It is clearly brought into income of the recipient pursuant to 56(1)(a)(i).

11 April 2012 External T.I. 2011-0423981E5 - Employee Awards

Unedited CRA Tags
6(1)

Principal Issues: Whether certificates offered only to arm's length employees are required to be included in the employee's income as an employee benefit subject to tax.

Position: Yes

Reasons: CRA's administrative position as outlined in ITTN #40 does not exempt awards for employment or performance-related activities from tax. Therefore, award certificates provided to arm's length employees by an employer, by virtue of, or in the course of, an office or employment would be a taxable benefit under paragraph 6(1)(a) of the ITA.

28 March 2012 External T.I. 2011-0423631E5 - Tax treatment of meal allowance

Unedited CRA Tags
ITA 6(1)(b), 8(1)(h)

Principal Issues: What is the tax treatment of a per diem meal allowance that an employer pays to its employees when attending a conference or seminar for more than one day?

Position: Reasonable meal allowances provided to employees while travelling for employment are generally not taxable. It is a question of fact whether a particular allowance is reasonable.

Reasons: The law and our current administrative position.

29 February 2012 External T.I. 2012-0435151E5 - Installation of Solar Panels

Unedited CRA Tags
ITR 1100; Schedule II of the ITR's --Class 43.1; Class 43.2
Summary Under
Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a)
Words and Phrases
incidental
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 43.2

Principal Issues: 1. Can a business that installs solar panels on its roof include income earned from the sale of the electricity generated from the solar panels as part of its income? 2. Which class under Schedule II of the ITR are solar panels included in?

Position: 1. Maybe 2. Likely Class 43.2

Reasons: 1. Depends on the facts whether the income earned is from a separate business. 2. Schedule II of the ITRs.

Technical Interpretation - Internal

14 December 2011 Internal T.I. 2011-0424221I7 - copyright music

Unedited CRA Tags
212(1)(d)(vii); 212(5)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(5)
copyrighted music incorporated into film

Principal Issues: Whether a royalty fee paid by a Canadian resident to a non-resident in respect of copyright music that has been incorporated into a video and used in connection with television in Canada is subject to Part XIII tax?

Position: No.

Reasons: The payment is for the use of the copyrighted music and not on account or in lieu of payment of, or in satisfaction of, payment for a right in or to the use of a motion picture film, or a film, video tape or other means of reproduction for use in connection with television.