Income Tax Severed Letters - 2014-09-10


2014 Ruling 2014-0532411R3 - Convertible Notes & Part XIII Tax

CRA Tags
212(3), 212(1)(b), 214(7)

Principal Issues: In the event of a conversion of a convertible note for common shares, whether the excess (if any) determined under subsection 214(7) would constitute "participating debt interest" as defined in subsection 212(3)?

Position: No.

Reasons: Based on the provisions of the convertible notes and indenture, wording of the relevant provisions, and CRA response to the question on convertible debentures at the CRA Round Table Discussion at the 2013 CTF 65th Annual Conference.

Technical Interpretation - External

29 August 2014 External T.I. 2014-0541901E5 - Meaning of "child" in "principal residence"

CRA Tags
54 "principal residence"

Principal Issues: 1. Whether the Taxpayer's adult son is a "child" for the purposes of paragraph (a) in the definition of "principal residence" in section 54 of the Act.

Position: 1. Yes.

Reasons: 1. The use of the word "child" in the definition of "principal residence" in section 54 is unrestricted and can include a taxpayer's adult child.

14 August 2014 External T.I. 2014-0527271E5 - Moving expenses

CRA Tags
6(2), 62(3)(d), (g)
allocation of lease termination costs between spouses

Principal Issues: Whether rental payments incurred qualify as moving expenses under section 62 of the Act.

Position: It is a question of fact.

Reasons: See response.

11 August 2014 External T.I. 2014-0525511E5 - Moving expenses

CRA Tags
6(2), 248(1)

Principal Issues: Whether moving expenses incurred to relocate closer to a permanent position would qualify for the moving expense deduction for income tax purposes.

Position: It is a question of fact, most likely no.

Reasons: See response.

7 August 2014 External T.I. 2014-0521901E5 - Damages in settlement of grievances

CRA Tags
6(1)(a), 248(1) "retiring allowance", 56(1)(a)(ii)

Principal Issues: Whether a settlement amount received is taxable.

Position: Question of fact.

Reasons: See response below.

Technical Interpretation - Internal

31 March 2014 Internal T.I. 2013-0514921I7 - Meaning of "gross revenue" follow-up

CRA Tags
402(3), 248(1)

Principal Issues: (1) Whether any or all amounts received or receivable as volume discounts should be included in a corporation's "gross revenue" for purposes of subsection 402(3) of the Income Tax Regulations. (2) Whether this position represents a change of position.

Position: (1) Amounts received or receivable other than on account of capital. Amounts received or receivable that are adjustments to expenses would not be included in gross revenue.(2) This is a change of position only in respect of the definition of gross revenue for purposes of provincial income allocation.

Reasons: The purpose of the formula in 402(3) is to provide a proxy through which to allocate provincial income allocation. While gross revenue can be similar to financial statement revenue, it is technically not the same, as it includes amounts that are usually not included in financial statement revenue, such as those in paragraph 12(1)(a) and (b). This is a change in position on the meaning of gross revenue for purposes of provincial income allocation.