Income Tax Severed Letters - 2012-09-21

Technical Interpretation - External

28 August 2012 External T.I. 2012-0454811E5 - Multi-tiered joint ventures

Unedited CRA Tags
9(1), 34.2(11), 34.2(12)

Principal Issues: Whether the CRA's revised administrative policy for JVs allows transitional relief for the additional income from multi-tiered joint ventures.

Position: In the circumstances described in the submission, likely yes; subject to certain conditions and computational rules.

Reasons: CRA's revised administrative policy for joint ventures.

27 August 2012 External T.I. 2012-0438741E5 - Deductibility of Lease Payments

Unedited CRA Tags
9, 49, 18(9), 18(1)(b), Reg. 1100(1.1), 16.1, 13(5.2), 13(1), Reg. 1101(5g)

Principal Issues: Whether all the payments in a 5 year lease with an initial payment of $XXXXXXXXXX, 59 payments of $XXXXXXXXXX and a BPO of $XXXXXXXXXX are deductible for tax purposes.

Position: Question of fact.

Reasons: Whether an agreement between two parties constitutes a lease or some other form of financing is a question of fact, which can only be determined by reviewing the terms of the agreement between the parties.

27 August 2012 External T.I. 2011-0423021E5 - QTI Reserve - 34.2(13)(c)(i) restriction

Unedited CRA Tags

Principal Issues: Whether the QTI reserve would be restricted in various scenarios as a result of the restriction in subparagraph 34.2(13)(c)(i), which applies if, in computing a corporate partner’s income for a taxation year in respect of a partnership, the year ends immediately before another taxation year “at the beginning of which the partnership no longer principally carries on the activities to which the reserve relates”

Position: General comments only.

Reasons: Question of fact

13 August 2012 External T.I. 2012-0432671E5 - Employee Travel Expenses

Unedited CRA Tags
6(1)(a); 6(1)(b); 8(1)(h); 8(4)

Principal Issues: 1. Whether a taxable benefit would arise where an employer provides an automobile allowance to and reimburses certain meals and lodging expenses of employees that agree to work at a different work location.

Position: 1. Question of fact.

Reasons: 1. Travel between an employee's home and a regular place of employment (RPE) is personal travel. It is always a question of fact whether a particular location is a RPE for an employee. Employer-paid amounts or allowances for personal expenses are generally taxable as a benefit under either paragraph 6(1)(a) or 6(1)(b) of the Act.

26 July 2012 External T.I. 2011-0430971E5 - Employee Discount Program

Unedited CRA Tags
ITA 6(1)(a)

Principal Issues: (1) What the CRA’s views are on employee discount program extended to employee’s family members? (2) Are groceries items excluded from "merchandise"?

Position: (1) If the primary beneficiary is the employer and the discount extended is not considered extra remuneration, it would likely be non-taxable to the employee. (2) No.

Reasons: 1. The law and previously published positions. 2. Dictionary definitions.

26 July 2012 External T.I. 2011-0431681E5 - Taxable Benefits – Recreational Facilities

Unedited CRA Tags

Principal Issues: 1. Whether a taxable benefit would arise to employees where an employer provides an in-house fitness facility.

Position: 1. Question of fact, but likely yes.

Reasons: 1. A taxable benefit will generally arise where the use of an in-house recreational facility is not made available to all employees.

22 June 2012 External T.I. 2012-0434491E5 - Board Member Fees

Unedited CRA Tags
5(1); 6(1)(c); 248(1) "Office"

Principal Issues: Whether fees paid to an appointed member of a board should be reported on a T4 or T4A slip.

Position: A legal entitlement to a per diem rate of remuneration established in advance is sufficiently fixed or ascertainable to meet the definition of office. Such fees or honoraria are reported on a T4 slip.

Technical Interpretation - Internal

26 June 2012 Internal T.I. 2012-0435301I7 - Excluded Income - Stipend

Unedited CRA Tags
6(1)(b), 6(1)(b)(iii), 250(1)(d); Reg. 3400

Principal Issues: Whether a stipend received by an intern to cover all living and travel expenses while working abroad is excluded as income under paragraph 6(1)(a) or 6(1)(b) or subsection 6(6) or 6(16).

Position: A question of fact, but likely yes in this particular situation.

Reasons: Subparagraph 6(1)(b)(iii) excludes the stipend because it is considered a "representation or other special allowance" and was funded by the Canadian International Development Agency under its International Youth Internship Program.

23 April 2012 Internal T.I. 2012-0436921I7 - Capital Losses

Unedited CRA Tags
40(3.6); 39(1); 39(2);
s. 40(3.6) denied s. 39(2) loss on share redemption

Principal Issues: Whether the taxpayer is entitled to claim a "foreign exchange" loss on its subsidiary's redemption of the shares held by the taxpayer

Position: No.

Reasons: Since subsection 40(3.6) of the Act applies, the taxpayer is not considered to have sustained a loss for the purposes of subsection 39(1) or 39(2) of the Act