Income Tax Severed Letters - 2015-09-02

Ministerial Correspondence

17 June 2015 Ministerial Correspondence 2015-0580791M4 - Deducting the value of one's own labour

CRA Tags
54 "adjusted cost base", 18(1)(a)

Principal Issues: Whether a taxpayer can 1) deduct the value of his own labour in computing his income from a farming business and 2) include the value of lumber from his trees in calculating the adjusted cost base of a structure used in his farming business.

Position: 1) No; 2) No

Reasons: 1) Paragraph 18(1)(a) which states "an outlay or expense"; 2) the definition of "adjusted cost base" which, in the case of a depreciable property, is the capital cost to the taxpayer of the property

Technical Interpretation - External

29 July 2015 External T.I. 2015-0594201E5 - Election under 159(6.1)

CRA Tags
104(4)(a.1), 104(5.2), 104(4)(a.3), 104(4)(c), 104(4)(a.2), 104(4)(b), 104(4), 104(5), 104(4)(a.4), 108(1), 66(15), 159(6.1)
Summary Under
Tax Topics - Income Tax Act - Section 159 - Subsection 159(6.1)
election available for s. 104(5.2) deemed dispositions of resource properties

Principal Issues: Is election under subsection 159(6.1) of the Income Tax Act (the "Act") available in respect of tax payable as a result of a deemed disposition of resource properties pursuant to subsection 104(5.2) of the Act?

Position: Yes.

Reasons: Because of reference to paragraphs 104(4)(a) to (a.4), (b) and (c) in subsection 159(6.1) which is applicable to subsection 104(5.2).

29 July 2015 External T.I. 2015-0575631E5 - social assistance

CRA Tags
ITR 233, 237(2), 110(1)(h), 56(1)(u)
Summary Under
Tax Topics - Income Tax Act - Section 3
payments in kind by social assistance organization
Summary Under
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(u)
potential exclusion of payments in kind
Summary Under
Tax Topics - Income Tax Regulations - Regulation 233 - Subsection 233(2)
potential exclusion of payments in kind

Principal Issues: What are the obligations of an organization to issue T5007 slips?

Position: Subsection 233(1) of the Income Tax Regulations requires every person, who makes a payment described in paragraph 56(1)(u) of the Act, to file an information return in prescribed form in respect of such payment with certain noted exceptions.

Reasons: General information provided.

18 June 2015 External T.I. 2015-0578071E5 F - Reimbursement of overpayment of QPIP benefits

CRA Tags
56(1)(a)(vii), 60(n)(v.1)
Summary Under
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(n) - Subparagraph 60(n)(v.1)
no s. 60 deductions if non-resident
Summary Under
Tax Topics - Income Tax Act - Section 4 - Subsection 4(2)
s. 60 deduction denied for repayment of previous income inclusion
Summary Under
Tax Topics - Other Legislation/Constitution - Federal - Financial Administration Act - Section 23 - Subsection 23(2)
general criteria for granting remission

Principal Issues: Whether the repayment in a given year by an individual of an overpayment of benefits received in a prior year under the Quebec Parental Insurance Plan can give rise to adjustments to an income tax return produced in respect of the prior year?

Position: No.

Reasons: Application of the Act.

1 June 2015 External T.I. 2015-0579831E5 - Tax status of Indian

CRA Tags
81(1)(a), Indian Act - 87

Principal Issues: Confirm that personal property of an Indian situated on a reserve will be exempt

Position: Can only comment on income – rental income may be exempt – depends on the facts.

Reasons: 87 Indian Act

Technical Interpretation - Internal

7 August 2015 Internal T.I. 2015-0585011I7 - Osteopaths & naturopaths in Quebec

CRA Tags
118.4(2)
Summary Under
Tax Topics - Income Tax Act - Section 118.4 - Subsection 118.4(2)
Quebec osteopaths and naturopaths excluded in contrast to their eligibility for Quebec purposes

Principal Issues: 1) Whether osteopaths and naturopaths are authorized medical practitioners in the province of Quebec for purposes of the federal medical expense tax credit (METC). 2) Whether Revenue Quebec's brochure entitled "Medical Expenses" can be relied on in determining whether a practitioner is an authorized medical practitioner for the purposes of the federal METC.

Position: 1) No. 2) No.

Reasons: 1) There is currently no specific legislation in Quebec which authorizes osteopaths and naturopaths to provide medical services. 2) The Office des professions du Quebec seems to be the provincial authority for the purpose of determining which regulated professions are recognized in the province of Quebec.

29 January 2015 Internal T.I. 2014-0544651I7 - Section 85 transfer of Swap Contracts

CRA Tags
85(1.1), 85
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Inventory
swap contract treated as inventory
Summary Under
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1)
swap contract treated as inventory
Summary Under
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1)
swap contract recorded on securities rather than inventory line of T2057
Summary Under
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange
swap contract treated as inventory

Principal Issues: 1. Whether swaps are inventory and eligible property for a subsection 85(1) transfer. 2. Whether the subsection 85(1) T2057 election was invalid.

Position: 1. Yes 2. No

Reasons: 1. Prior positions taken by the CRA. 2. The error was of a clerical nature and the election is valid.