Income Tax Severed Letters - 2012-05-11


2012 Ruling 2011-0416921R3 - Loss consolidation

Unedited CRA Tags
20(1)(c); 55(3)(a); 88(1.1)

Principal Issues: Loss consolidation

Position: Favourable rulings issued.

Reasons: Meets statutory and administrative requirements.

Ministerial Correspondence

2 May 2012 Ministerial Correspondence 2012-0438981M4 - Children's Arts & Fitness Tax Credits

Unedited CRA Tags
118.03; 118.031; 9400 and 9401 of ITR

Principal Issues: Should there be splitting the receipts from adance studio where students partake in both song and dance, both being eligible activities for each of the respective tax credits?

Position: Where there are two distinct programs and each program is eligible for one of the credits based on the criteria provided above, the dance studio should be issuing two receipts or one receipt that clearly shows that the amount paid was in respect of two distinct programs.

Reasons: Regulation

Technical Interpretation - External

14 May 2012 External T.I. 2012-0444191E5 - voluntary firefighter tax credit

Unedited CRA Tags

Principal Issues: Do services performed by a volunteer firefighter at a volunteer fire department at an industrial facility qualify as eligible firefighting services for purposes of the volunteer firefighter tax credit?

Position: No.

Reasons: A fire department at an industrial facility is not a fire department for the purposes of the volunteer firefighting tax credit.

30 April 2012 External T.I. 2012-0441991E5 - Capital Cost allowance

Unedited CRA Tags
Schedule II of the Regulations

Principal Issues: What is the CCA class for moveable/removable walls?

Position: Class 3 or 6.

Reasons: The fact that the demountable partition can be removed is not by itself sufficient to exclude them as component parts of the building hence, this type of system should be included in either Class 3 or 6 of Schedule II for CCA purposes.

26 April 2012 External T.I. 2012-0439811E5 - tuition tax credit

Unedited CRA Tags

Principal Issues: Can fees paid to the University of Toronto for enrolment in the National Committee on Accreditation (NCA) Challenge Examination Review Program by a foreign trained lawyer that is a NCA candidate qualify for the tuition tax credit?

Position: No.

Reasons: Subparagraph 118.5(1)(a.ii) of the Act requires that courses for which the fees are paid must be at the post-secondary school level. The fee paid for the Program is not for an examination that is required to obtain professional status that allows the individual to practice their profession in Canada and therefore does not qualify under subparagraph 118.5(1)(d) of the Act.

20 April 2012 External T.I. 2012-0438361E5 - Farm Income

Unedited CRA Tags
31; 18(1)(h); 248(1) “farming”; 9

Principal Issues: Whether the activities of breeding high end sport horses and running an equine quarantine facility are considered to generate farming income.

Position: It is a question of fact.

Reasons: The raising or breeding of livestock such as horses would normally be considered as farming under the Act. However, an activity involving the provision of a service such as a quarantine service or dressage training would generally not be considered to be farming unless the service is incidental to an activity that otherwise qualifies as farming and the income generated by the service is not material in relation to the taxpayer’s farming income. Finally it is a question of fact whether a particular activity or activities represent a source of income that is from a business, such as a farming business, or is merely a personal hobby.

19 April 2012 External T.I. 2012-0437011E5 - Online courses taught by non-residents

Unedited CRA Tags
153, ITR 102, ITR 104, ITR 105

Principal Issues: A university is proposing to recruit non-resident individuals to teach online courses outside of Canada. Are these non-resident individuals considered employees or independent contractors? What are the responsibilities of the University with respect to withholding taxes, if any?

Position: 1. Employee/Self Employed issue is a question of fact. 2. Question of fact but likely no withholdings required.

Reasons: 1.N/A 2. Withholding may be required if amounts are a) paid to a non-resident employee performing services abroad who was previously a resident of Canada or b) paid to an independent contractor in respect of services rendered in Canada.

17 April 2012 External T.I. 2011-0415941E5 - Taxation of Damages

Unedited CRA Tags
6(1)(a); 8(1)(b); 56(1)(a)(ii);56(1)(l.1); 60(o.1); 248(1) "retiring allowance"

Principal Issues: 1. Whether damages received in connection with a settlement agreement are taxable. 2. Where legal costs are reimbursed as part of a settlement, are the receipts non-taxable?

Position: 1. & 2. Question of fact.

Reasons: 1. General damages received in respect of personal injuries sustained before or after the loss of employment (i.e., in situations of harassment during employment or defamation after dismissal) will be viewed as unrelated to the loss of employment and therefore are non-taxable. In most other cases, taxable as a retiring allowance. 2. Where settlement amounts received are taxable as employment income or a retiring allowance, any reimbursement of legal costs related to such an award would also be included in income but may qualify for deduction to the extent provided by paragraphs 8(1)(b) and 60(o.1) of the Act.

30 March 2012 External T.I. 2011-0428741E5 F - Allocations pour frais de déplacement

Unedited CRA Tags
travel allowance for additional travel to and from work might be taxable even where employer fault

Principales Questions: Est-ce que certaines allocations pour frais de déplacement sont imposables ?

Position Adoptée: Question de fait.

Raisons: Commentaires généraux.

28 March 2012 External T.I. 2011-0422531E5 F - Revenu fractionné

Unedited CRA Tags
120.4(1) "revenu fractionné"

Principales Questions: Comment applique-t-on l’alinéa c)(ii) de la définition de
« revenu fractionné » au paragraphe 120.4(1) lorsque, dans une année d’imposition particulière, une
partie du montant inclus dans le revenu d’un bénéficiaire d’une fiducie en vertu du paragraphe
104(13) respecte les conditions d’application de la subdivision (C) de cet alinéa alors que l’autre
partie ne les respecte pas?

Position Adoptée: Commentaires généraux.

Raisons: Positions antérieures.

27 March 2012 External T.I. 2010-0374911E5 - Commission Income on Personal Insurance Policies

Unedited CRA Tags
5(1), 9(1)

Principal Issues: Whether CRA’s administrative policy, as described in
paragraph 27 of IT-470R, applies to commissions income earned by an insurance salesperson on
his/her own property/liability insurance policies on his/her personal home and/or automobile?

Position: No.

Reasons: This CRA’s administrative policy does not apply to
commissions received on insurance policies acquired for personal use other than life insurance,
such as home or automobile insurance.

23 January 2012 External T.I. 2011-0424671E5 F - Avantage imposable - Stationnement

Unedited CRA Tags
generally no benefit from free parking if employee must use car 3 days a week in duties

Principales Questions: Dans une situation particulière, est-ce qu’un stationnement
fourni par l'employeur est un avantage imposable?

Position Adoptée: Commentaires généraux.

Raisons: Situation réelle sur laquelle nous ne pouvons que donner des
commentaires généraux sur l’application de la Loi.

Technical Interpretation - Internal

24 April 2012 Internal T.I. 2012-0440711I7 F - Indemnité de repas; remboursement pour déplacement

Unedited CRA Tags
5(1); 6(1)a); 6(1)b); 118.02(1); 118.02(2)
policy re subsidized meals does not extend to meal allowances or vouchers

Principales Questions: 1. Les indemnités de repas payées aux employés pourraient-elles bénéficier du même statut non-imposable que celui des repas subventionnés ? 2. Les indemnités de repas ci-haut mentionnées seraient-elles traitées de la même façon si elles étaient versées sous forme de chèque-repas pouvant être utilisés dans les épiceries ou les restaurants ? 3. Les employés auraient-ils droit au crédit d'impôt pour le coût des laissez-passer de transport en commun entre leur domicile et leur lieu de travail habituel ? 4. La partie des montants payés par les employés pour le transport en commun, qui n’est pas remboursée par l’employeur, devrait-elle être exclue de la case 84 du feuillet T4, et ce, que ce montant soit prélevé ou non à la source ?

Position Adoptée: 1. Non; 2. Oui, dans le sens qu’elles seraient également imposables); 3. Non; 4. Oui.

Raisons: 1. La pratique administrative relativement aux repas subventionnés s'applique uniquement aux employeurs qui offrent « des repas subventionnés à leurs employés, comme dans les salles à manger et les cafétérias qui leur sont destinées ». 2. Les chèques-repas sont considérés des articles en quasi-espèces, le montant desquels devrait être inclus dans le calcul du revenu d'un employé tiré d'une charge ou d'un emploi. 3. Pour qu’il soit admissible, un laissez-passer de transport en commun doit être délivré par un organisme de transport canadien admissible ou pour son compte, au sens du paragraphe 118.02(1). 4. Seuls les montants prélevés à la source pour un laissez-passer de transport en commun admissible, tel que visé au paragraphe 118.02(1), doivent être inscrits à la case 84 du feuillet T4.

16 April 2012 Internal T.I. 2011-0404271I7 - Restitution of property looted during WWII

Unedited CRA Tags
3; 69(1)(c); 40(1); “ACB” 54

Principal Issues: In the particular situation, whether the appreciation of value
of the looted property prior to the date on which the taxpayer obtained the restitution of the
property might be considered a non-taxable windfall.

Position: No.

Reasons: Question of fact.