Income Tax Severed Letters - 2013-11-06


2013 Ruling 2011-0395091R3 - MFC to MFT Conversion

CRA Tags
107.4(1), 107(2), 107.4(3), 245(2), 20(1)(c), 132.2

Principal Issues: Whether section 132.2 would apply to the conversion of an MFC that used to be a TCC to an MFT

Position: Yes

Reasons: See details

2012 Ruling 2011-0431221R3 - Paragraph 56(1)(v) ITA

CRA Tags

Principal Issues: Whether compensation is received by a worker, under the meaning set in paragraph 56(1)(v) of the Income Tax Act, at the time that accumulated annuity funds are transferred to an external financial services provider. Whether the Board is required to produce information returns under 232(1) of the Income Tax Regulations when this transfer takes place.

Position: No. No.

Reasons: In our view, constructive receipt has not occurred on the transfer of the annuity funds.

Technical Interpretation - External

4 October 2013 External T.I. 2013-0504531E5 - Capital loss on personal cottage

CRA Tags
54, 39, 38, 40(2)(g)(iii)

Principal Issues: Whether the taxpayer can claim a capital loss on a cottage destroyed by flood.

Position: No.

Reasons: No loss may be claimed on personal-use property.

1 October 2013 External T.I. 2013-0491571E5 - Partial disposition of partnership interest - ACB

CRA Tags
53(2)(d), 53(1)(e)(i), 40(1)(a), 43(1)
disposition of some partnership units a part disposition
all units are single property/entire gain allocated to remaining units

Principal Issues: In a scenario involving a partial disposition of a partnership interest, will the partner's share of the income of the partnership for the fiscal period be added to the ACB of the remaining partnership interest?

Position: Yes.

Reasons: As the partner still has a partnership interest after a partial disposition, the partner's share of the income of the partnership for the fiscal period will be added to the ACB of the remaining partnership interest pursuant to subparagraph 53(1)(e)(i).

30 September 2013 External T.I. 2013-0505151E5 F - Biens de remplacement

CRA Tags
44, 44(5), 44(5)(b)
rollover unavailable where replacement property leased for use in a different business of Opco lessee

Principales Questions: Lorsqu'un bien vise à remplacer un ancien bien d'entreprise et que le bien de remplacement est utilisé dans le cadre de l'exploitation d'une entreprise par un tiers non lié au propriétaire du bien, est-ce que les règles prévues à l'article 44 sont applicables? When property seeks to replace former business property but that property is used in a business carried on by unrelated third party, do the replacement property rules at section 44 apply?

Position Adoptée: Non. Le bien doit être utilisé par le contribuable ou une personne qui lui est liée et ce, dans le cadre de la même entreprise ou d'une entreprise semblable. No. The property must be used by the taxpayer or a related person in the same business or a similar business.

Raisons: Interprétation de l'article 44 de la Loi de l'impôt sur le revenu. Interpretation of section 44 of the Income Tax Act.

26 September 2013 External T.I. 2013-0497101E5 F - Avantage imposable consenti par un actionnaire

CRA Tags
gift made by shareholder-manager to corporate employee “not received … on a purely personal basis”

Principal Issues: Un cadeau qui n'est pas visé par les exemptions prévues aux sous-alinéas 6(1)a)(i) à 6(1)a)(v) et qui est offert par un actionnaire de l'employeur à un employé est-il un avantage imposable visé à 6(1)a)? Should a gift be considered a taxable benefit under paragraph 6(1)a) in a situation where the gift is not included in the exceptions listed in subparagraphs 6(1)a)(i) to 6(1)a)(v) of the ACT and is offered by a shareholder of the employer to an employee ?

Position: À notre avis, le cadeau est un avantage imposable selon l'alinéa 6(1)a). In our view, the gift is a taxable benefit under paragraph 6(1)a).

Reasons: L'alinéa 6(1)a) a une portée très large: il suffit qu'il y ait un lien quelconque entre le cadeau reçu et l'emploi ou la charge du contribuable. There need only be a connection between a benefit received and the employment in order to trigger the application of paragraph 6(1)a).

19 September 2013 External T.I. 2013-0498331E5 F - Catégories 29 et 50

CRA Tags
ITR Schedule II
post-February 2011 computer equipment includible in Class 50

Principales Questions: Est-ce que le matériel informatique qui est acquis après le mois de février 2011 est compris dans la catégorie 29 ou 50 aux fins de la déduction pour amortissement?/ Does computer equipment which is acquired after February 2011 is included in class 29 or 50 for the purpose of capital cost allowance?

Position Adoptée: Catégorie 50./ Class 50

Raisons: Conditions des différentes catégories./ Conditions of the specific classes.

25 March 2013 External T.I. 2012-0462251E5 - Indian Employment Income - Pilot

CRA Tags

Principal Issues: Is the employment income of an Indian who is a pilot exempt under the guidelines where duties of employment involve the delivery of XXXXXXXXXX to remote First Nation Reserves.

Position: Question of fact, general comments provided

Reasons: Guideline 1 will likely apply to prorate the income for the duties performed on a reserve.

Technical Interpretation - Internal

7 October 2013 Internal T.I. 2013-0504081I7 F - Interaction between 55(2) and 40(1)(a)(iii)

CRA Tags
55(2), 40(1)(a)(iii)
reserve available for s. 55(2) gain on purchase for cancellation of shares where redemption proceeds payable on an earnout basis
s. 40(1)(a)(iii) reserve available where redemption proceeds payable on earnout basis
distinction between promissory note as conditional or absolute payment

Principal Issues: (1) Whether the position in document 1999-000929 is still valid. (2) Whether the position in document 1999-000929 may apply to a situation involving a balance of sale price instead of a promissory note. (3) Whether a balance of sale price, with clauses stipulating that the annual payment will be based on annual corporate profits in future years and that the debtor has the right to pay off the balance of sale price prior to the due date, may preclude the vendor from claiming a reserve under subparagraph 40(1)(a)(iii).

Position: (1) Yes. (2) Yes. (3) No.

Reasons: (1) The law and previous positions. (2) The law. (3) The law. The balance of sale price is not due before the end of the year.