Income Tax Severed Letters - 2014-07-16

Ruling

2014 Ruling 2013-0513431R3 - Application of section 115.2

CRA Tags
115.2
Summary Under
Tax Topics - Income Tax Act - Section 115.2 - Subsection 115.2(1) - Designated investment service
two-tier LP structure investing in original issue illiquid debt
Summary Under
Tax Topics - Income Tax Act - Section 115.2 - Subsection 115.2(2) - Paragraph 115.2(2)(c)
two-tier LP structure

Principal Issues: Whether the provision of services by a Canadian service provider to partnerships with non-resident members, will, in and by itself, cause such non-resident members to be considered to be carrying on business in Canada for purposes of subsections 115(1) and 150(1) and Part XIV.

Position: No

Reasons: The services provided by the Canadian service provider to the partnerships will satisfy the requirements of subsection 115.2(2) of the Act and will not otherwise cause the non-resident members of the partnerships to be considered to be carrying on business in Canada.

Ministerial Correspondence

2 July 2014 Ministerial Correspondence 2014-0537231M4 - Local Exchange Trading System

CRA Tags
9, 3
Summary Under
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit
participation in local bartering network

Principal Issues: Taxation of a local exchange trading system (i.e. bartering)

Position: Barter transaction rules apply.

Reasons: See below.

Technical Interpretation - External

2 July 2014 External T.I. 2013-0485651E5 - Non-resident estate

CRA Tags
94(1), 94(3), 94(4), 104(7.01), 164(6), 248(1)
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(1) - Resident Contributor
deceased cannot be a resident contributor to the estate

Principal Issues: 1) Is Part XIII tax required to be withheld on a payment of a deemed dividend to an estate that is deemed to be a non-resident trust pursuant to subsection 94(3) of the Act?
2) Is the estate required to obtain a certificate of compliance on the disposition of shares of a Canadian corporation?

Position: 1) Yes. 2) Generally, yes.

Reasons: 1) Pursuant to paragraph 94(4)(c) of the Act, the deeming provisions of paragraph 94(3)(a) are not applicable with respect to determining the liability of a person (other than the trust) that would arise under section 215.
2) A trust is deemed to be resident for certain purposes of the Act and is not deemed to be resident for the purpose of section 116 of the Act. Where the non-resident trust or the deemed resident trust has disposed of taxable Canadian property, the provisions of section 116 are generally applicable.

27 June 2014 External T.I. 2014-0527341E5 F - Sociétés publiques aux fins de SPCC

CRA Tags
89(1), 125(7)
Summary Under
Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Public Corporation
Crown corporations not deemed to be public corporations

Principales Questions: Est-ce que les sociétés d'État non mentionnées aux règlements 6700 et 7100 de la Loi sont considérées comme des sociétés publiques aux fins de la définition de société privée sous contrôle canadien (« SPCC »)? / Are crown corporations not prescribed in Regulations 6700 and 7100 of the Act, considered public corporations for the purpose of the definition of Canadian controlled private corporation ("CCPC")?

Position Adoptée: Question de fait / Question of fact

Raisons: Les sociétés d'État, qui ne sont pas prescrites, ne sont pas des sociétés publiques si elles ne répondent pas aux exigences de l'expression société publique au paragraphe 89(1). / Crown corporations, that are not prescribed, are not public corporations if they do not meet the requirement of the definition of public corporation in paragraph 89(1).

27 June 2014 External T.I. 2014-0526931E5 F - Vente d'une liste de clients par un employé

CRA Tags
63, 6(3.1), 14(5), 56.4(4)
Summary Under
Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Eligible Capital Expenditure
payment to departing employee for customer list was on capital account
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(3) - Paragraph 6(3)(e)
payment to departing employee for customer list was deemed income under s. 6(3)

Principales Questions: 1) Quel est le traitement fiscal d'une somme d'argent payé par un employeur à un employé pour l'acquisition de sa liste de clients? a) est-ce que l'employé a reçu un produit de disposition pour une immobilisation? b) est-ce que l'employeur a acquis un bien en immobilisation admissible? 2) Est-ce que la réponse est différente si le contrat d'achat-vente de la liste de clients inclus également une clause de non-concurrence? 3) Est-ce que la réponse est différente si les autres employés n'ont pas la même entente dans le cadre de leur emploi? / 1) What is the tax treatment of an amount paid by the employer to an employee to acquire his/her clients' list? a) does the employee receive a proceeds of disposition for a capital property? b) does the employer acquire an eligible capital property? 2) Would the response be different if the purchase and sale agreement also include a non-compete agreement? 3) Would the response be different if the other employees do not have such arrangement?

Position Adoptée: 1) Question de fait a) non car il est possible que 6(3) s'appliquerait b) possiblement 2) La réponse serait probablement la même 3) Question de fait / 1) Question of fact a) no since it is possible that 6(3) would apply b) possibly 2) The answer would probably be the same 3) Question of fact

Raisons: La Loi. La détermination peut seulement se faire avec un examen des contrats et une analyse de tous les faits pertinents à cette situation. / The Law. The determination can only be made with an examination of the contracts and an analysis of all the relevant facts.

26 June 2014 External T.I. 2014-0521201E5 - School board trustee mileage

CRA Tags
6(1)(a), 81(3)

Principal Issues: Whether payment to a School Board Trustee for mileage travelled to and from the division's central office to attend regular scheduled board meetings should be included in the trustee's income and in the determination of the trustee's expense allowance under subsection 81(3) of the Act.

Position: Question of fact.

Reasons: Reimbursements for personal expenses are generally taxable as a benefit under paragraph 6(1)(a) of the Act. If an amount is a reimbursement of a personal expenditure, it is included in the determination of the trustee's expense allowance that is exempt under subsection 81(3) of the Act. If the expense was incurred in the performance of the trustee's duties, the reimbursement is not taxable and thus excluded in the determination of the municipal trustee's expense allowance under subsection 81(3) of the Act. Travel between a trustee's home and a regular place of employment (RPE) is personal travel. It is always a question of fact whether a location is a RPE for a trustee.

26 June 2014 External T.I. 2014-0523871E5 F - Revenu d'entreprise agricole

CRA Tags
12(10.2), 12(1)(p), 248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Farming
legume germination production as farming
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(10.2)
government contributions and accrued interest in AgriInvest and Agri-Québec accounts are taxable when withdrawn
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(p)
withdrawals from the AgriStability account are taxable as farm business income

Principales Questions: 1) La production de germination de légumineuses est-elle une activité agricole? / Is germination of legumes a farming activity? 2) Les revenus de soutien Agri-investissement et Agri-stabilité sont-ils des revenus d'entreprise agricole ou un autre type de revenu? / Are the income support from AgriStability and AgriInvest farming income or are they another type of income?

Position Adoptée: 1) Question de faits / Question of facts; 2) Les deux / Both

Raisons: 1) Définition d'agriculture au paragraphe 248(1) / Definition of farming at subsection 248(1); 2) La Loi/ The Act

26 June 2014 External T.I. 2013-0514771E5 - Residence of a trust

CRA Tags
94(2)(g), 94(1), 94(3), 94(2)(n), 248(1)
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(2) - Paragraph 94(2)(g)
Canadian residence of estate taints non-resident trust beneficiary
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(2) - Paragraph 94(2)(n)
Canadian residence of estate taints non-resident trust beneficiary
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(3)
deceased individual is not a "resident" contributor

Principal Issues: Is the estate of a Canadian resident considered to be a ‘contributor' to a child's trust created in a foreign jurisdiction?

Position: Yes.

Reasons: Pursuant to the definitions of 'contributor' and 'contribution' in subsection 94(1) and the application of paragraph 94(2)(g) of the Act.

25 June 2014 External T.I. 2014-0521301E5 - PHSP - employee-shareholder

CRA Tags
6(1)(a), 248(1), 18(1)(a), 56(2)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Private Health Services Plan
cost-plus plan

Principal Issues: Does a cost-plus health plan for a sole employee-shareholder qualify as a PHSP?

Position: No.

Reasons: See response

25 June 2014 External T.I. 2014-0520401E5 - Attendant care payments

CRA Tags
81(1)(g.1), 3, 110.2, 56(1), 9

Principal Issues: Whether a parent must include in taxable income amounts received (i.e., lump-sum payment and periodic payments) in respect of a court order, for care provided to their disabled child?

Position: In this case, most likely no.

Reasons: See response below.

23 June 2014 External T.I. 2014-0528271E5 F - Terrain « adjacent » à la résidence principale

CRA Tags
40(2)(b), 54 "principal residence" (e)
Summary Under
Tax Topics - Income Tax Act - Section 54 - Principal Residence
meaning of immediately contiguous lands

Principales Questions: Aux fins de la définition de "résidence principale" à l'alinéa 54 e), est-ce que le fonds de terre "adjacent" doit toucher au fonds de terre sous-jacent du logement pour remplir ce critère? For the purposes of the "principal residence" definition under paragraph 54 e), is the "adjacent" land required to touch the housing unit's subjacent land to meet that criterion?

Position Adoptée: Oui. Yes.

Raisons: Bien que le terme "adjacent" signifie "toucher" ou "être situé auprès", la version anglaise utilise l'expression "immediately contiguous", qui se traduit par "contigu" et signifie "toucher". Although the term "adjacent" means "to touch" or "to lie near", the English version uses the expression "immediately contiguous", which translates by "contigu" and means "to touch".

29 May 2014 External T.I. 2014-0518901E5 - Municipal officer-travel and meal reimbursement

CRA Tags
6(1)(a), 81(3)

Principal Issues: Whether the reimbursement of travel and meals to officers to attend meetings outside of his or her municipal district should be included in the officer's income and the determination of the officer's expense allowance under subsection 81(3) of the Act.

Position: Question of Fact.

Reasons: Reimbursements for personal expenses are generally taxable as a benefit under paragraph 6(1)(a) of the Act. If an amount is a reimbursement of a personal expenditure, it is included in the determination of the municipal officer's expense allowance that is exempt under subsection 81(3) of the Act. If the expense was incurred in the performance of the officer's duties, the reimbursement is generally not taxable and thus excluded in the determination of the municipal officer's expense allowance that is exempt under subsection 81(3) of the Act. Travel between an officer's home and a regular place of employment (RPE) is personal travel. It is always a question of fact whether a location is a RPE for an officer.