Income Tax Severed Letters - 2015-03-11

Technical Interpretation - External

25 February 2015 External T.I. 2014-0534681E5 F - Interaction of subsections 69(11) and 70(9.01)

CRA Tags
69(11), 70(9.01)(b)(i), 70(9.01)(a)(i)
s. 69(11) is ousted by s. 70(9.01)

Principales Questions: Whether subsection 69(11) applies where a transfer on a rollover basis of a farm property at death occurs pursuant to subsections 70(9) and 70(9.01)?

Position Adoptée: No.

Raisons: Wording of the Act.

11 February 2015 External T.I. 2014-0557251E5 F - paragraph 110.1(1)(c) and clause 55(3)(a)(i)(B)

CRA Tags
110.1(1)(c), 69(1)(b), 55(3)(a)(i)(B)
"proceeds" of a gift for s. 55(3)(a)(i)(B) purposes were its deemed s. 69 proceeds of disposition

Principales Questions: Whether the clause 55(3)(a)(i)(B) would apply in a particular situation where a corporation is disposing of a property, that meets all the conditions in subsection 110.1(1)(c), by way of gift to an unrelated person.

Position Adoptée: In this situation, yes.

Raisons: Under subparagraph 69(1)(b)(ii), except as expressly otherwise provided in the Act, where a taxpayer has disposed of anything to any person by way of gift inter vivos, the taxpayer shall be deemed to have received proceeds of disposition therefor equal to that fair market value. Thus, the disposition of the property would not be subject to the application of paragraph 55(3)(a)(i), as such disposition by the corporation will be deemed by subparagraph 69(1)(b)(ii) to be at fair market value. Then, the clause 55(3)(a)(i)(B) would apply.

4 February 2015 External T.I. 2015-0565741E5 - Canadian-controlled private corporation

CRA Tags
256(6), 251(5)b), 125(7), 89(1)
indemnity agreement was not "indebtedness"
Words and Phrases
indebtedness
s. 256(5)(b) applied to acquisition right upon default under indemnity
s. 256(6) does not protect a company's CCPC status where its shares are pledged to a pubco to secure an indemnity, not debt
Words and Phrases
debt

Principal Issues: Whether a corporation would be a CCPC in a particular situation?

Position: Subject to the review of all the relevant documents, the corporation would not be a CCPC.

Reasons: Paragraph 251(5)(b) would apply and subsection 256(6) would not apply.

12 January 2015 External T.I. 2013-0511051E5 - Employer loan to RCA

CRA Tags
248(1), 20(1)(r), 207.5(1)

Principal Issues: The taxpayer requests our opinion regarding whether an amount paid by an employer to an RCA constitutes a contribution to the RCA.

Position: Question of fact.

Reasons: It is a question of fact whether an amount paid by an employer to an RCA is a contribution or a bona fide loan. In order to make such a determination, it is necessary to review all of the relevant facts and documents surrounding a particular situation.

6 January 2015 External T.I. 2014-0563261E5 - Converting RRIF to Life Annuity

CRA Tags
60(l)(v)

Principal Issues: Whether a RRIF may be converted into a life annuity?

Position: Yes.

Reasons: Allowed under the legislation

24 December 2014 External T.I. 2014-0555271E5 - Foreign Retirement Account - Isle of Man

CRA Tags
248(1), 126(1), 60(j)

Principal Issues: What are the tax consequences where a Canadian resident withdraws amounts from a retirement account in the Isle of Man? Can amounts in the retirement account be transferred to an RRSP?

Position: Canadian resident taxed on worldwide income. All amounts withdrawn from the retirement income must be included in the Canadian resident taxpayer's income in the year received. A transfer from the retirement account to an RRSP is not possible.

Reasons: Section 3. Paragraph 60(j).

17 December 2014 External T.I. 2014-0560281E5 - Arena and skateboard park - CCA classes

CRA Tags
20(1)(a), ITR Schedule II

Principal Issues: Which CCA classes do an arena and skateboard park belong to?

Position: Arena - 1 or 6; Skateboard park - 8(i)

Reasons: See below

14 November 2014 External T.I. 2014-0540411E5 F - Crédit d'impôt pour études

CRA Tags
118.6(1), 118.5(1), 118.6(2), 118.6
T2202A obligatory for student but not the school
program with essentially no admission criteria was not at the post-secondary level

Principales Questions: Les exigences requises pour émettre le certificat T2202A ainsi que de savoir si la clientèle décrite dans la situation ci-dessous est éligible aux crédits d'impôt pour études? What are the requirements to issue Certificate T2202A as well as whether the fees incurred qualify as an education tax credit?

Position Adoptée: Voir lettre ci-dessous. See letter below.

Raisons: Voir lettre ci-dessous. See letter below.

Technical Interpretation - Internal

10 December 2014 Internal T.I. 2014-0533151I7 - Qualified Donee - XXXXXXXXXX

CRA Tags
149.1(1), 149(1)(c)
Park needs to demonstrate it is performing municipal-type services

Principal Issues: Does the Park qualify as a municipal or public body performing a function of government for purposes of 149(1)(c) of the Act and the definition of a qualified donee in subsection 149.1(1).

Position: We require additional information in order to make a determination.

Reasons: They need to demonstrate that they are actually performing the functions of government they are empowered to perform.

28 November 2014 Internal T.I. 2014-0531221I7 F - Montants forfaitaires accordés aux témoins

CRA Tags
248(1), 3(a), 56(1), 9(1)
witness protection payments not income if for protection

Principales Questions: Quel est le traitement fiscal d'un montant forfaitaire accordé à un témoin dans le cadre d'une entente entre le témoin et la Sureté du Québec (« SQ »)? / What is the tax treatment of a lump sum payment to a witness based on an agreement between the witness and the SQ?

Position Adoptée: Le montant forfaitaire pourrait être imposable / The lump sum payment could be taxable.

Raisons: Le montant forfaitaire serait présumé avoir été reçu suite à la prestation de services en vertu de cette entente. / The lump sum payment could be deemed to have been received according to the service agreement.

12 November 2014 Internal T.I. 2014-0535341I7 - Retiring Allowance transfer to RCA

CRA Tags
56(1)(a)(ii), 60(j.1)
no deduction for retiring allowance transferred to RCA

Principal Issues: Whether a deduction is allowed for the transfer of a retiring allowance to a retirement compensation arrangement?

Position: No.

Reasons: No provision in the Act allows for a deduction on such a transfer.