Income Tax Severed Letters - 2013-10-30

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Whether a 116 certificate is required for a deemed disposition when an election under subsection 45(2) of ITA is rescinded?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date of the change of use is deemed to be the first day of the year when the election under subsection 45(2) of ITA is rescinded; the delay is indicated at 116(3) of ITA

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.

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).