Income Tax Severed Letters - 2012-05-04

Ruling

2012 Ruling 2010-0367401R3 - Variation of trust

Unedited CRA Tags
73(1), 107(2), 108(1)

Principal Issues: Would a variation of trust terms to allow capital
encroachment to a spouse and a disclaimer of a child beneficiary's capital interest in a spousal trust result in (1) a resettlement of the trust, (2) a disposition of the remaining beneficiaries’ interest in the trust, (3) the application of subsection 107(2) on the distribution to the spouse, and
(4) the application of subsection 73(1) on the subsequent transfer of the funds by the spouse to a new trust?

Position: (1) no (2) no (3) yes (4) yes

Reasons: The amendments to the terms of the trust are not material so
as to result in a disposition of an interest - previous rulings on this similar issue. Technical provisions of the Act are satisfied.

2012 Ruling 2012-0435131R3 F - Post Mortem Planning

Unedited CRA Tags
84.1(1); 84(2); 245(2)

Principales Questions: Post Mortem Planning - Pipeline

Position Adoptée: Favourable rulings provided.

Raisons: Meets the requirements of the law and in accordance with previous positions.

2012 Ruling 2011-0401811R3 - Post-Mortem Planning

Unedited CRA Tags
84.1; 84(2); 245(2)

Principal Issues: Post-Mortem pipeline planning.

Position: Favourable rulings provided.

Reasons: In accordance with the provisions of the Act and our previous

Ministerial Correspondence

5 April 2012 Ministerial Correspondence 2012-0436941M4 - VFTC - on call and training

Unedited CRA Tags
ITA 118.06

Principal Issues: 1. How to determine the number of hours of eligible volunteer firefighting services that are classified as training or on call?
2. Eligibility for the VFTC of other emergency calls such as medical emergencies or vehicle accidents.
3. Whether time spent on medical first responder training or related training qualifies as eligible volunteer firefighting services.

Position: 1. The Canada Revenue Agency (CRA) expects that each fire department will examine its on-call procedures to certify the number of hours of eligible volunteer firefighting services. When certifying volunteer firefighters’ eligible hours, it is the CRA’s view that a fire department should assess each volunteer’s on-call availability for response in accordance with its own departmental expectations, operational requirements, and applicable policies and procedures.
2. Generally, when volunteers devote time in their capacity as volunteer firefighters for other related emergency calls, the time devoted to these calls qualifies as eligible volunteer firefighting services and can be included when counting the number of hours of eligible services.
3. If the training required of a volunteer firefighter according to the policies and procedures of a fire department related to the prevention or suppression of fires includes certain medical training, the time spent on this medical training will qualify as eligible volunteer firefighting services for purposes of the VFTC.

Reasons: 1, 2, & 3: See response

Technical Interpretation - External

23 April 2012 External T.I. 2012-0444341E5 - medical expenses - residential treatment center

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

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

Position: Question of fact. General comments provided.

Reasons: The law.

19 April 2012 External T.I. 2012-0439781E5 - Specified employee for SRED credits

Unedited CRA Tags
37(1), 37(9), 37(9.1), 96(1), 127(8)(a), 127(9), 248(1), 251, 251.1, 256
sole shareholder of majority interest partner not at arm's length with partnership?

Principal Issues: Whether the shareholder of the majority partner would be specified employee for SRED tax incentives if employed by the partnership.

Position: May be.

Reasons: Question of fact and law

2 April 2012 External T.I. 2012-0436101E5 - Clergy Residence Deduction

Unedited CRA Tags
8(1)(c)

Principal Issues: Does an Executive Pastor qualify for a clergy residence
deduction pursuant to paragraph 8(1)(c) of the Act?

Position: No.

Reasons: The individual satisfies the status test but not the function test. To qualify for the
clergy residence deduction under 8(1)(c), an individual must satisfy both the status and function
tests.

28 March 2012 External T.I. 2011-0415191E5 - Spousal Support payments

Unedited CRA Tags
56(1)(b); 60(b); 56.1(3); 56.1(4); 60.1(3)

Principal Issues: (1) Is a court determined retroactive fixed monthly quantum
plus a percentage of annual bonuses payable as spousal support payment considered a periodic
payment? (2) Are the payer and recipient required to amend their prior years' individual income
tax returns to report retroactive support payments? (3) Should top up payment be considered a
non-deductible lump sum?

Position: (1) It is a question of fact and law as determined by
provincial family law as to the legal consequences of a specific order or judgement. Where a
lump sum payment is required upon judgement to give effect to a previous order(s), the lump sum
payment must first meet the requirement of being a support amount to be deductible; (2) No need
to file amended returns; (3) Depending on the wording of the initial orders, the payment of a lump
sum to comply with arrears could qualify as a support amount; however, the lump sum pertaining
to a prior year’s bonus would not meet the definition of a support amount.

Reasons: CRA policy as outlined in IT-530R, P102 and documents 2000-005864 & 2010-
037556.

20 February 2012 External T.I. 2011-0429531E5 - Approved foreign educational institution

Unedited CRA Tags
118.5

Principal Issues: Is the specific foreign educational institution an approved
institution for education tax credits?

Position: A question of fact

Reasons: Although the noted institution may be on an internal listing,
the onus is on the institution to issue a TL11A where the institution has been or feels that it
qualifies.

Technical Interpretation - Internal

23 April 2012 Internal T.I. 2011-0426601I7 - Part XIV tax - non-resident insurer

Unedited CRA Tags
219; 152

Principal Issues: The TSO has requested our views on the expiry of the normal
reassessment period with respect to Part XIV of the Act. In the situation described, a non-resident insurer
ceased to carry on an insurance business in Canada. It transferred the business to a qualified related
corporation, and elected under subsection 219(5.2) of the Act.

Position: In the situation described, it is our view that the normal reassessment
period for Part XIV will expire within the limits described in subsection 152(3.1) of the Act. The
Minister may not reassess after the expiry of the normal reassessment period unless the exceptions
described in paragraphs 152(4)(a) to (d) of the Act apply.

Reasons: Legislation.