Income Tax Severed Letters - 2014-01-29

Ruling

2013 Ruling 2013-0511631R3 - XXXXXXXXXX paid by NPO

CRA Tags
15(1), 248(1), 138(1), 149(1)(l)

Principal Issues: Will an organization lose its tax exempt status under 149(1)(l) if it makes payments to its members under a XXXXXXXXXX program?

Position: Not in this situation.

Reasons: The organization has organized its program so that no income is being paid to members. Eligible members are receiving a return of contributions only.

Technical Interpretation - External

14 January 2014 External T.I. 2012-0453871E5 F - Pension Real Estate Corporation

CRA Tags
149(1)(o.2)(ii)(B)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(o.2) - Subparagraph 149(1)(o.2)(ii)
ancillary non-real estate investments by an (o.2)(ii) corporation are permitted

Principales Questions: Has a corporation limited its activities to those mentioned in clause 149(1)(o.2)(ii)(A) if the corporation makes investments that are not in real property or an interest in real property or immovable or a real right in immovable?

Position Adoptée: Question of fact. It might be possible in limited circumstances and as long as the corporation has limited its investments to those described in clause 149(1)(o.2)(ii)(B).

Raisons: Wording of the Act.

13 January 2014 External T.I. 2013-0512581E5 - Sale of shares of Brazilian corporation

CRA Tags
Treaties Article XIII, 126, Treaties Article XXIV
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 24
"income" includes taxable capital gains
Words and Phrases
income

Principal Issues: Whether a taxable capital gain from the sale of shares of a company resident in Brazil is "income" for the purposes of paragraph 2 of Article 22 of the Canada-Brazil Income Tax Convention?

Position: Yes

Reasons: The CRA considers the term "income" in paragraph 2 of Article 22 of the Canada-Brazil Income Tax Convention to include taxable capital gains realized on the sale of shares of a Brazilian company.

17 December 2013 External T.I. 2013-0510371E5 F - MCIA / CEC

CRA Tags
54, 14(5)
Summary Under
Tax Topics - Income Tax Act - Section 24 - Subsection 24(1)
fmv reduction of eligible capital property to nil does not trigger loss if business still carried on

Principales Questions: Quelle est la conséquence fiscale sur le solde du MCIA au sens du paragraphe 14(5) lorsque l'immobilisation admissible à l'origine de ce MCIA perd sa valeur? / What is the tax consequence on the balance of the CEC within the meaning of subsection 14(5), when the eligible capital property relating to this CEC loses its value?

Position Adoptée: Le seul fait que la valeur d'une immobilisation admissible diminue, partiellement ou totalement, n'engendre pas en soi de conséquence au niveau fiscal. / The mere fact that the value of an eligible capital property decreases, whether partially or totally, does not, in and of itself, have a consequence from an income tax perspective.

Raisons: La Loi / The Act

4 November 2013 External T.I. 2012-0465231E5 F - Revenu d'emploi d'un Indien

CRA Tags
81(1)(a), Indian Act - 87
Summary Under
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87
location of actual direction and administration of the employer on the reserve, as well as main place of employees’ abode there are important connecting factors

Principales Questions: Le revenu d'emploi d'un Indien est-il exonéré de l'impôt en vertu de l'alinéa 81(1)a) dans une situation particulière? [TRANSLATION]: Is an Indian's employment income exempt from income tax under paragraph 81(1)(a) in a particular situation?

Position Adoptée: Aucune. Commentaires généraux [TRANSLATION]: None. General comments.

Raisons: Question de fait. [TRANSLATION]: Question of fact.

3 October 2013 External T.I. 2013-0501051E5 F - Conjoint de fait - Common-Law Partner

CRA Tags
248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Common-Law Partner
not living under the same roof for some time not decisive as to a “conjugal relationship”
Words and Phrases
conjugal relationship

Principales Questions: Est-ce que deux personnes qui ne vivent pas ensemble tout au long d'une période d'un an peuvent être des « conjoints de fait » aux fins de la Loi. / Can two individuals who have not cohabited for a continuous period of at least one year be considered common-law partners for purposes of the Act?

Position Adoptée: Question de fait; le seul fait que deux personnes ne vivent pas ensemble ne les empêche pas, en soi, de vivre une relation conjugale. / Question of fact; the fact that two individuals don't live together would not, in and by itself, preclude finding that they are in a conjugal relationship.

Raisons: La Loi; The Act

27 September 2013 External T.I. 2012-0472981E5 F - Chantier part. - nature temporaire

CRA Tags
6(6)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(6) - Paragraph 6(6)(a)
application of 2-year posting test to determining whether "duties … of a temporary nature"
Words and Phrases
temporary nature

Principales Questions: Un contribuable demande s'il est considéré effectuer un travail de nature temporaire aux fins du paragraphe 6(6) dans sa situation?
A taxpayer is asking if he is considered to be performing duties of a temporary nature for the purpose of subsection 6(6) in his situation?

Position Adoptée: Commentaires généraux. General comments.

Raisons: Question de fait. Questions of fact.

31 July 2013 External T.I. 2012-0452591E5 F - Matériel lié à un programme d'études

CRA Tags
56(3)(a), 118.6(2), 56(3.1)(b), 56(1)(n)
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(3.1) - Paragraph 56(3.1)(b)
meaning of “materials related to the program”

Principales Questions: Quelle est l'interprétation de l'expression « matériel lié au programme » à l'alinéa 56(3.1)b) aux fins de l'exemption pour bourse d'études pour étudiants à temps partiel? [TRANSLATION] What is the meaning of the phrase "the materials related to the program" in paragraph 56(3.1)(b) for purposes of the scholarship exemption for part-time students?

Position Adoptée: L'explication donnée à cette expression au numéro 3.94 du nouveau folio S1-F2-C3. [TRANSLATION] The explanation given to this phrase in the new folio S1-F2-C3.

Raisons: Position antérieure. [TRANSLATION] Previous position.

17 July 2013 External T.I. 2012-0473261E5 F - Actif d'impôts futurs / Future income tax assets

CRA Tags
248(1) small business corporation, 110.6(1) "qualified small business corporation share"
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Qualified Small Business Corporation Share
future (or deferred) income tax asset is not an asset until it becomes receivable, whereupon it may be attributable to active business
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation
tax receivable arising from carryback of NCL is active business asset cf. future tax asset

Principales Questions: L'actif d'impôt futur peut-il être considéré comme un élément d'actif utilisé dans l'exploitation active d'une entreprise au fin de la définition d'« action admissible de petite entreprise » (« AAPE ») prévue au paragraphe 110.6(1) et de la définition d'une « société exploitant une petite entreprise » (« SEPE ») prévue au paragraphe 248(1). / Is the future income tax asset an asset that is used principally in an active business carried on in Canada for the purpose of the definition of "qualified small business corporation share" ("QSBCS") in subsection 110.6(1) and for the purpose of the definition of "small business corporation" ("SBC") in subsection 248(1)?

Position Adoptée: Nous sommes d'avis qu'un actif d'impôt futur n'est pas un actif aux fins de la définition d'AAPE et de la définition de SEPE. In our view, a future income tax asset is not an asset for the purpose of the definition of SBC and the purpose of the definition of QSBCS.

Raisons: La Loi; The Act

13 January 2014 External T.I. 2013-0474431E5 - Application of 95(2)(b)(ii)

CRA Tags
95(2)(b)(ii)
Summary Under
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(b)
seconding of employees to CFA
Summary Under
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(b)
"full" reimbursement for seconded employee costs does not engage s. 95(2)(b)(ii)

Principal Issues: 1. If Canco seconds employees to a foreign affiliate of Canco in consideration for a fee equal to its cost (i.e. the employees' remuneration) plus a 25% mark-up, will the service business income of the foreign affiliate be recharacterized as FAPI pursuant to subparagraph 95(2)(b)(ii) of the Act as a result of the services provided by the seconded employees from Canco?
2. If Canco does not charge a 25% mark-up on the seconded employees' salaries, would the result be different?

Position: 1. Yes but only to the extent the services are performed by Canco. 2. Yes

Reasons: 1. Due to the wording of subparagraph 95(2)(b)(ii) of the Act, the phrase "to the extent that" limits the recharacterization to only the portion of the foreign affiliate's income that is attributable to the services provided on behalf of the foreign affiliate by Canco's employees.
2. Where no mark-up is charged on the seconded employees' salaries, Canco would not be seen as providing services to the foreign affiliate. Rather, the seconded employees would be seen as providing services on behalf of the foreign affiliate as opposed to Canco.

Conference

11 October 2013 Roundtable, 2013-0495591C6 F - Déplacement entre résidence et chantier

CRA Tags
8(1)(h.1)
Summary Under
Tax Topics - Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(h.1)
employer-requested travel to and from employee’s residence and a non-usual place of work is non-personal

Principales Questions: Dans certaines situations, est-ce que les déplacements d'un employé entre sa résidence et certains chantiers de construction peuvent être considérés effectués dans l'accomplissement des fonctions de sa charge ou de son un emploi?
In certain situations, whether travel of an employee between his/her home and some construction sites can be considered made in the performance of the duties of his/her office or employment.

Position Adoptée: Aucune. Question de fait. None. Question of fact.

Raisons: Les déplacements qu'un employé a effectués pour se rendre de sa résidence à son lieu habituel de travail ne sont pas considérés comme des déplacements effectués dans l'accomplissement des fonctions de sa charge ou de son emploi.
La détermination du ou des lieux habituels de travail d'un employé est une question de fait qui ne peut être résolue qu'après avoir considéré tous les faits entourant sa situation spécifique.
Travels that an employee did from home to his/her ordinary place of work are not considered made in the performance of the duties of his/her office or employment.
The determination of the ordinary place of work or ordinaries places of work of an employee is a question of fact that can be determined only after a review of all facts of his specific situation.

11 October 2013 Roundtable, 2013-0495701C6 F - Financement participatif

CRA Tags
9
Summary Under
Tax Topics - Income Tax Act - Section 9 - Nature of Income
crowdfunding amounts received by an entrepreneur are prima facie business income

Principales Questions: Quel est le traitement fiscal applicable à un financement participatif dans une situation donnée?
What is the tax treatment of a crowdfunding in a given situation?

Position Adoptée: Question de fait, mais dans la situation donnée, nous sommes d'avis que ce financement pourrait constituer un revenu d'entreprise.
Question of fact, but in the given situation, we are of the view that this crowdfunding could be business income.

Raisons: Voir ci-dessous. See below.

10 June 2013 STEP Roundtable, 2013-0480261C6 - 2013 STEP Roundtable Question 1

CRA Tags
120.4
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(4)
crystallizations; elected dividends

Principal Issues: Kiddie Tax

Position: Various questions

Reasons: General comments provided

11 October 2013 APFF Roundtable, 2013-0495651C6 F - Revenu fractionné

CRA Tags
120.4
Summary Under
Tax Topics - Income Tax Act - Section 120.4 - Subsection 120.4(1) - Split Income - Paragraph (c)
streaming of non-split income to child discretionary beneficiary and split income to mother
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(13)
streaming of split and non-split income between trust beneficiaries

Principales Questions: Aux fins de la subdivision c)(ii)(C) de la définition de «revenu fractionné » au paragraphe 120.4(1), est-ce qu'il est possible pour une fiducie d'attribuer à un bénéficiaire la partie du revenu provenant d'une source qui respecte les conditions d'application de la subdivision (C) de cet alinéa alors que l'autre partie, qui ne les respecte pas, serait attribuée à un autre bénéficiaire?
For the purpose of clause (c)(ii)(C) of the definition of « split income » of subsection 120.4(1), whether it is possible for a trust to pay to one beneficiary the part of the income from one source which respect clause (C) of that paragraph and the other part, which does not respect it, would be paid to another beneficiary.

Position Adoptée: Oui, lorsque l'acte de fiducie permet une telle attribution. Yes, when the trust indenture allows such attribution.

Raisons: La Loi. The Act.

Technical Interpretation - Internal

10 January 2014 Internal T.I. 2013-0505911I7 - Meaning of "assembly project" in Brazil Convention

CRA Tags
Treaties Article V
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 5
"assembly" and "installation" project
Words and Phrases
incur to incur assembly installation

Principal Issues: (1) Whether the terms "installation project" and "assembly project" have a similar meaning such that any position previously taken by the Directorate with respect to an "installation project" can apply to an "assembly project", as provided in the Convention. (2) Whether installation and assembly projects extend beyond construction and manufacturing industries.

Position: (1) In the context provided, the better view is to consider the terms "assembly" and "installation" as having a similar meaning. Consequently, any position previously taken by the Directorate with respect to an "installation project" would generally be relevant in determining if an "assembly project" exists for the purposes of the Canada-Brazil Income Tax Convention. (2) It is our view that installation and assembly projects are not limited to construction or manufacturing-type activities.

Reasons: Based on our interpretation of the Canada-Brazil Income Tax Convention and consistent with our positions in previous technical interpretations.

11 October 2013 Internal T.I. 2013-0475761I7 - Deadline for filing a waiver of tax credit – ORDTC

CRA Tags
150(1)(a) & 127(9)(m) of the ITA, 43(1) and 38(1), 2, 2007, & (3) of the Taxation Act
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4)
waiver of credit after return due date

Principal Issues: Can a corporation file a waiver of tax credit under subsection 43(1) of the Taxation Act, 2007 (TA) to waive all or part of its ORDTC after the deadline for the filing of its income tax return for the year?

Position: Yes. Generally, a corporation can file a waiver of tax credit under subsection 43(1) of the TA to waive all or part of its ORDTC for a taxation year until the expiration of the normal reassessment period for that taxation year.

Reasons: Subsection 43(1) of the TA.

5 June 2013 Internal T.I. 2013-0490941I7 F - Expenses for food 67.1(1)

CRA Tags
67.1(1)
Summary Under
Tax Topics - Income Tax Act - Section 67.1 - Subsection 67.1(1)
AD-98-24 (respecting allocation of construction-worker living allowances to food) still in effect

Principales Questions: Does the agreement outlined in Communiqué AD-98-24 still apply?

Position Adoptée: Yes

Raisons: As confirmed by Business Audit Division