Income Tax Severed Letters - 2013-10-30

Ministerial Correspondence

5 July 2013 Ministerial Correspondence 2013-0489561M4 - Taxation of the Veterans Independence Program

CRA Tags

Principal Issues: Whether changes to the delivery of the Veterans Independence Program will affect the tax treatment of amounts received by eligible clients.

Position: No. The change from a contribution to a grant arrangement will not result in the taxation of payments in the hands of eligible clients.

Reasons: Pension payments, allowances or compensation that are received under or are subject to the Pension Act, are specifically excluded from income under paragraph 81(1)(d) of the ITA. These grants/prepayments are allowances which are subject to the Pension Act.

Technical Interpretation - External

9 October 2013 External T.I. 2013-0504411E5 - Apprenticeship Job Creation Tax Credit

CRA Tags
127(9), ITR 7310, 127(11.4), 127(5), 127(9)(a.4), 127(11.1)(c.4)

Principal Issues: Whether an employer qualifies for the AJCTC even though the registered apprenticeship contract is between the province and a trade union?

Position: Question of fact but it is possible.

Reasons: See analysis.

25 September 2013 External T.I. 2013-0485751E5 F - Rescinding 45(2) election by a non-resident

CRA Tags
116, 45(2)
s. 116(3) filing requirement counted from date of deemed disposition under s. 45(2)
deemed dispositin on 1st day of revocation year triggers s. 116(3) filing

Principales Questions: Whether a 116 certificate is required for a deemed disposition when an election under subsection 45(2) of ITA is rescinded?

Position Adoptée: Yes. A notice under Section 116 of ITA is required no later than 10 days following the disposition of any taxable Canadian property.

Raisons: Deemed disposition is a disposition for Section 116 of ITA; the date of the change of use is deemed to be the first day of the year when the election under subsection 45(2) of ITA is rescinded; the delay is indicated at 116(3) of ITA

25 September 2013 External T.I. 2013-0497011E5 F - OETC - Qualifying period

CRA Tags
related preparatory and sick leave periods can be included in qualifying period computation

Principal Issues: Whether the taxpayer qualifies for the OETC? Determination of a qualifying period of more than six consecutive months as required by subsection 122.3(1) of the Act.

Position: Question of fact. A qualifying period may include a period of preparatory work, a sick leave and/or a holiday period in Canada and the employee may still remain eligible for the OETC provided that, throughout such qualifying period, substantially all of the individual's employment duties (90% or more) are performed outside Canada in connection with a qualifying activity of the employer.

Reasons: Application of the Act and review of all relevant facts. The employer's contract to carry on business outside Canada, as well as the employee's duties and employment contract are all relevant to the determination of whether or not a qualifying period exists.

24 September 2013 External T.I. 2013-0489981E5 - Reimbursement of cell phone plan used for work

CRA Tags

Principal Issues: Are employees in receipt of a taxable benefit when the employer reimburses their monthly cell phone plan and the phone is required to perform their employment duties?

Position: Question of fact but probably no.

Reasons: The amount would be a reimbursement of an expense related to employment duties which is not taxable.

9 September 2013 External T.I. 2012-0464321E5 - Application of subsections 107(2) and 107(2.01)

CRA Tags
107(2), 54, 40(2), 40(7), 107(2.01), 248(1)
specified and non-specified beneficiaries
specified and non-specified beneficiaries

Principal Issues: 1) Would the election under subsection 107(2.01) become void because a property is distributed to multiple beneficiaries pursuant to subsection 107(2)?
2) Where a property, being a residence, is distributed to multiple beneficiaries, can each beneficiary claim the principal residence exemption provided for in paragraph 40(2)(b) of the Act?

Position: 1) No. 2) Question of fact.

Reasons: 1) We have ruled that subsection 107(2) is applicable in instances where a trust distributes a residence to more than one beneficiary.
2) It is a question of fact whether the property qualifies as a principal residence for each beneficiary.

6 September 2013 External T.I. 2012-0463501E5 - Reduced Interest Rate Credit Cards

CRA Tags
6(1)(a), 80.4(1), 69

Principal Issues: Whether a taxable benefit would arise where an employer offers its employees a credit card with a discounted interest rate, relative to that ordinarily charged to non-employee cardholders?

Position: Where the credit card is a loan for purposes of subsection 80.4(1), any benefit so determined by virtue of this provision is included in income under subsection 6(9). Where the provisions of subsection 80.4(1) of the Act do not apply, the value of a benefit received by an employee in respect of a reduced interest rate may be assessed pursuant to paragraph 6(1)(a) of the Act.

Reasons: Revolving credit instruments such as credit cards constitute loans for purposes of subsection 15(2) and by extension, appear to be loans for purposes of subsection 80.4(1). It is always a question of fact, however, whether such loans have been received because of an office or employment. Where the provisions of subsection 80.4(1) do not have application, a benefit may be included under paragraph 6(1)(a).

26 April 2013 External T.I. 2013-0486211E5 - Multiple Trusts

CRA Tags
104(4)(a), 104(2)

Principal Issues: Whether 104(2) applies in the given hypothetical scenario

Position: Question of fact

Reasons: See details

Technical Interpretation - Internal

20 September 2013 Internal T.I. 2013-0499211I7 - 75(2) Attribution

CRA Tags

Principal Issues: Whether 75(2) would apply to attribute the trust income to the beneficiary

Position: Most likely

Reasons: It is our view that property was transferred by the capital beneficiary to the trust and the subject share is a substituted property of the property transferred and the said share may revert to the beneficiary.