Income Tax Severed Letters - 2015-12-30

Technical Interpretation - External

24 November 2015 External T.I. 2015-0599901E5 - Qualified Property - Fishing Vessel

CRA Tags
127(5), 127(9), 4600(2)

Principal Issues: Could a fishing vessel that is built from new and used parts meet the definition of QP in subsection 127(9) of the Act?

Position: Question of fact but in this case no.

Reasons: The law.

6 November 2015 External T.I. 2015-0611691E5 F - Member of a cooperative corporation

CRA Tags
meaning of “member” informed by corporate law rather than 135(4) definition
Words and Phrases

Principales Questions: 1. Does the definition of member pursuant to subsection 135(4) apply to define a member of a cooperative corporation for the purpose of paragraph 136(2)(c)?
2. If the answer to question 1 is no, what is the definition of a member of a cooperative corporation?

Position Adoptée: 1. No.
2. The term member will have the meaning ascribed in the statute under which the cooperative corporation was incorporated. It also depends on its charter and by-laws.

Raisons: 1. The preamble of subsection 135(4) clearly states that the definitions are for the purpose of sections 135 and 135.1.
2. There is no definition of the term member in the Act.

29 October 2015 External T.I. 2015-0589051E5 F - Pension income splitting and bankruptcy

CRA Tags
election available where pensioner or pension transferee is bankrupt/apportionment of split-pension amount
s. 60.03 deductions/inclusions still available

Principales Questions: Whether a joint election, as defined in subsection 60.03(1), can be made by a pensioner and a pension transferee where (1) the pensioner has become a bankrupt during a calendar year or (2) the pension transferee has become a bankrupt during a calendar year.

Position Adoptée: Yes, in both situations.

Raisons: Subsection 128(2) does not exclude the joint election under section 60.03, nor the inclusion or deduction pursuant to paragraphs 56(1)(a.2) and 60(c). Because the split-pension election relates to the taxation year, it is possible for a pensioner and a pension transferee to jointly elect for each of his or her pre-bankruptcy and post-bankruptcy taxation years, providing the conditions stated in section 60.03 are met. If the pensioner becomes a bankrupt in a year, the split-pension amounts deducted on the returns filed for the pre-bankruptcy and/or the post-bankruptcy taxation year(s) of the pensioner pursuant to paragraph 60(c) must be reported as income on the pension transferee’s return for the calendar year, according to paragraph 56(1)(a.2). If the pension transferee becomes a bankrupt in a year, the split-pension amount deducted by the pensioner should be apportioned between the pre-bankruptcy and the post-bankruptcy taxation years of the pension transferee, based on the eligible pension income received in each taxation year. In such a situation, the split-pension amount that relates to the post-bankruptcy taxation year of the pension transferee will generally be reported on the return filed by the bankrupt under paragraph 128(2)(f).