Income Tax Severed Letters - 2014-07-30

Ministerial Correspondence

7 July 2014 Ministerial Correspondence 2014-0532311M4 - child support amount

CRA Tags
118(1)(b), 118(5), 118(5.1), 56.1(4), 118(1)(b.1)

Principal Issues: Whether a former spouse can claim the equivalent-to-spouse tax credit and the child tax credit for a child that is living with that parent and that parent pays a child support amount in respect of that child?

Position: No, if that parent is the only parent that is required to pay a child support amount for that child.

Reasons: Where spouses have been living separate and apart throughout the year paragraph 118(5)(a) of the Act would apply to prevent the parent that is required to pay a child support amount to his spouse or former spouse, in respect of a child, from claiming the credits under paragraphs 118(1)(b) and 118(1)(b.1) of the Act for that child.

9 June 2014 Ministerial Correspondence 2014-0531061M4 - disability tax credit

CRA Tags
118.4

Principal Issues: Can a nurse practitioner certify an individual on Form T2201?

Position: No.

Reasons: Generally, the Income Tax Act requires the medical practitioner certifying Form T2201 to be a medical doctor. Although there are specific exceptions for certain impairments, none of the exceptions includes nurse practitioners.

5 May 2014 Ministerial Correspondence 2014-0524611M4 - scholarships, fellowships, research grants

CRA Tags
56(1)(n)

Principal Issues: How are stipends paid to graduate students in their capacity as graduate research assistants treated for income tax purposes?

Position: Amounts paid to graduate students at universities are generally either scholarships or fellowships, although they may also be research grants or employment income. XXXXXXXXXX.

Reasons: Any amount received from an office or employment is specifically excluded from paragraph 56(1)(n) of the Income Tax Act and the scholarship exemption is not available.

Technical Interpretation - External

17 July 2014 External T.I. 2014-0526121E5 - Electronic records

CRA Tags
230(1), 230(4), 230(4.1)
guidance in IC 05-1R1 also applicable to individuals

Principal Issues: Whether a taxpayer may keep only electronic images of original books and records to satisfy the requirements under subsection 230(1).

Position: Yes, subject to subsection 230(4.1).

Reasons: Subsection 230(1) requires that a taxpayer shall keep records and books of account, in such form and containing such information, as will enable taxes payable to be determined. The Act does not require taxpayers to keep their books and records in paper format. A person's statutory requirement to keep books and records can be met provided the content and the quality of the electronic image is sufficient to enable the taxes payable to be determined.

17 July 2014 External T.I. 2014-0536331E5 - Foreign affiliate liquidation and dissolution

CRA Tags
95(1), 88(3)(b)
property disposed of under s. 88(3)(b) can be excluded property based on immediately-prior use

Principal Issues: Whether property that is deemed to have been disposed of by paragraph 88(3)(b) can be "excluded property" of the affiliate at the relevant time?

Position: Yes.

Reasons: Based on textual, contextual and purposive interpretation of the relevant provisions.

9 July 2014 External T.I. 2014-0527591E5 F - Résidence principale

CRA Tags
54 "principal residence"
housing unit rented to son and unrelated roommate potentially could qualify as principal residence

Principales Questions: Est-ce qu'un particulier peut bénéficier de l'exemption pour résidence principale pour un logement qu'il loue à son fils ainsi qu'à XXXXXXXXXX autres personnes non liées à lui ou à son fils? / Can the principal residence exemption be allowed to an individual for a housing unit rented to his son and XXXXXXXXXX other persons not related to him or to his son?

Position Adoptée: Question de faits, probablement en partie / Question of facts, probably partially

Raisons: Généralement pas d'exemption pour résidence principale sur la partie utilisée aux fins de gagner un revenu / Generally no principal residence exemption on the part used to produce income

20 June 2014 External T.I. 2014-0520191E5 - Lump sum payments of support

CRA Tags
56.1(4), 60(b)

Principal Issues: Whether lump-sum payments of arrears support are deductible, specifically when there are more than one of these payments in a year?

Position: It is a question of fact; the arrears payment must be a support amount.

Reasons: When lump sum payments are made to bring periodic payments required by a court order or written agreement which have fallen into arrears up-to-date, the payments could be considered a support amount for purposes of subsection 56.1(4).

19 June 2014 External T.I. 2013-0502091E5 - Eligible Dependent Credit

CRA Tags
118(4), 118(1)(b), 118(5.1), 118(5)

Principal Issues: Clarification of the eligibility to claim the EDC in alternating years where both parties may be paying a support amount.

Position: It is a question of fact.

Reasons: There must be a court order or a written agreement in place signed by both parties, obligating both parties to pay an amount to the other. The supporting documentation and the facts provided must support the existence of that arrangement. Both parties must agree to who will claim the EDC or neither party can make the claim.

18 June 2014 External T.I. 2011-0417491E5 - Non-resident's partnership interest

[2011-0421481E5 is similar]
CRA Tags
2(3)(c), 40(3.1)
negative ACB gain not taxable to non-resident

Principal Issues: Whether non-resident partner can be considered to have disposed of taxable Canadian property when a gain is triggered under paragraph 40(3.1)(a) on a partnership interest that is taxable Canadian property.

Position: No.

Reasons: Paragraph 40(3.1)(b) of the Act only applies for the purposes of section 110.6.

18 June 2014 External T.I. 2011-0421481E5 - Non-resident's partnership interest

CRA Tags
2(3)(c), 40(3.1)

Principal Issues: Whether a non-resident can be considered to have disposed of taxable Canadian property when it is deemed to have a gain under the provisions of paragraph 40(3.1)(a) of the Act.

Position: No.

Reasons: Paragraph 40(3.1)(b) only applies for the purposes of section 110.6 of the Act.