Income Tax Severed Letters - 2013-04-03

Technical Interpretation - External

15 March 2013 External T.I. 2012-0443471E5 - Taxable Preferred Shares

CRA Tags
248(1) "taxable preferred share"
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxable Preferred Share

Principal Issues: Whether a share which has a dividend entitlement equal to 75% of the profit resulting from an adventure in the nature of trade would be considered to be a taxable preferred share.

Position: Yes – in the situation described.

Reasons: A formula fixes the amount of the dividends and limits the dividends to a maximum.

7 March 2013 External T.I. 2012-0467151E5 - Mortgage held in RRSP

CRA Tags
207.01(1), ITR 4900(1)(j.1), 207.05, 207.04, ITR 5000., 146(1)

Principal Issues: Whether tax under Part XI.01 pursuant to sections 207.04 or 207.05 of the Income Tax Act applies after March 22, 2011, to an individual who holds a mortgage investment in his/her Registered Retirement Savings Plan.

Position: Question of Fact

Reasons: Part XI.01 tax pursuant to sections 207.04 or 207.05 will not generally apply where a mortgage is a prescribed excluded property and the controlling individual has not used the investment to avoid tax.

5 March 2013 External T.I. 2011-0409121E5 - Australian Pension Fund

CRA Tags
56(1)(a), 60(j)

Principal Issues: (1) The tax implications to a Canadian resident regarding receipt of pension payments from an unregistered foreign pension plan. (2) The tax implications if a lump-sum payment made out of an Australian pension fund is to be transferred to an RRSP on a tax-deferred basis.

Position: (1) The determination of whether a foreign pension plan is a superannuation or pension plan for Canadian tax purposes is a question of fact. In general, a Canadian resident must include the gross payments in income under subparagraph 56(1)(a)(i) of the Act. (2) A lump-sum payment in respect of non-resident services may be transferred to an RRSP on a tax deferred basis if certain criteria are met.

Reasons: 56(1)(a)(i); 60(j)(i)

18 February 2013 External T.I. 2012-0471911E5 - Lump-sum payments re: disability insurance

CRA Tags
6(1)(f)

Principal Issues: Is a lump-sum payment in lieu of future monthly disability payments from an insurance company taxable?

Position: No

Reasons: Paragraph 6(1)(f) taxes long term disability payments received on a periodic basis. According to jurisprudence, lump-sum amounts paid for future benefits are not taxable under section 6.

13 February 2013 External T.I. 2012-0443811E5 - Special Work Sites

CRA Tags
6(1)(a), 6(6)

Principal Issues: 1. Whether a city can be considered a special work site? 2. Whether travel between a temporary place of residence and a special work site is considered personal travel?

Position: 1. No. 2. Yes.

Reasons: 1. Consistent with case law, the location at which an employee performs duties of a temporary nature is intended to be a specific place. 2. Employer-provided transportation between an employee's temporary residence and RPE at a special work site would be considered personal in nature, would give rise to a taxable benefit under paragraph 6(1)(a) of the Act, and would not be exempt under paragraph 6(6) of the Act.

5 February 2013 External T.I. 2012-0447881E5 - Clergy Residence Deduction

CRA Tags
8(1)(c)

Principal Issues: 1) Whether a member of the clergy who performs occasional liturgical services would satisfy the function test of ministering to a congregation, diocese or parish on a part-time or assistant basis.

Position: 1) No.

Reasons: 1) With respect to the function test, the ministering activities performed by a member of the clergy must be an integral part of his or her employment responsibilities, regardless whether they are employed on a full-time or part-time basis.

11 January 2013 External T.I. 2012-0466951E5 - T5013 filing due date

CRA Tags
248(1) "person", 248(1) "individual", 229(5)

Principal Issues: Due date for filing the partnership information return for a tiered partnership where the partnership has an established fiscal period ending December 31st and the members of the partnership (including end members) are a combination of corporations and a First Nation band.

Position: Paragraph 229(5)(c) of the Regulations applies and thus the filing due date would be on or before the earlier of (i) the day that is five months after the end of the fiscal period of the partnership, and (ii) the last day of March of the following calendar year. As the partnership has an established fiscal period ending December 31st, the filing due date would be on or before March 31st of the following calendar year.

Reasons: Wording of subsection 229(5) of the Regulations.

Technical Interpretation - Internal

21 February 2013 Internal T.I. 2012-0455081I7 - Regulation 1102(5)

CRA Tags
Schedule II Class 1, ITR 1100(1), 18(1)(b), ITR 1102(4), ITR 1102(5), Schedule III Class 13

Principal Issues: Would the tenant be required to capitalize construction costs relating to the new building pursuant to Regulation 1102(5) of the Act?

Position: Yes.

Reasons: Question of fact.