Income Tax Severed Letters - 2018-09-19

Technical Interpretation - External

17 July 2018 External T.I. 2017-0735391E5 - Educational Assistance

Unedited CRA Tags
56(1)(n); 56(1)(r); 56(1)(u), 118.6(1), Income Tax Regulation 200(2)

Principal Issues: 1) Are payments under the XXXXXXXXXX included in the student’s income as social assistance or bursaries?
2) Are the payments under the XXXXXXXXXX taxable to the student?
3) What are the reporting and/or filing obligations arising from payments made under the XXXXXXXXXX?

Position: 1) Likely a bursary under 56(1)(n).
2) Question of Fact. An amount paid as a bursary is included in income to the extent it exceeds the scholarship exemption.
3) Payer of bursary is required to file a T4A Summary of Pension, Retirement Annuity, and Other Income, and a related T4A Statement of Pension, Annuity, and Other Income.

Reasons: 1) Paragraph 56(1)(n) is broad and would encompass almost any form of financial assistance paid to a student to enable the student to pursue his or her education.
2) Given that the XXXXXXXXXX applies to a wide range of study programs each student would need to determine whether they meet the definition of a "qualifying student" pursuant to subsection 118.6(1) of the Act.
3) Income Tax Regulation 200(2).

17 July 2018 External T.I. 2018-0753081E5 - Treatment of losses

Unedited CRA Tags
9, 12(1)(i), 20(1)(p), 38(c), 39(1)(b), 39(1)(c), 40(2)(g)(ii), 50(1), 111(1)(a), 111(1)(b), 54 capital property, 111(8) non-capital loss, 125(7) Canadian-controlled private corporation.

Principal Issues: Tax implications of losses incurred as a result of a fraudulent investment scheme.

Position: Various implications discussed.

Reasons: See below.

11 July 2018 External T.I. 2017-0735991E5 - Assistance for laid off XXXXXXXXXX workers

Unedited CRA Tags
56(1)(r)

Principal Issues: Are payments made under three different grant streams by the Government of XXXXXXXXXX taxable in the hands of the recipients? The three grant programs are (i) Bridge to re-employment, (ii) Bridge to retirement, and (iii) relocation assistance.

Position: (i) Included in income under subparagraph 56(1)(r)(iv).
(ii) Included in income under subparagraph 56(1)(r)(iv).
(iii) Likely not income from a source that is taxable under the Act.

Reasons: (i) The amount appears to be an income replacement benefit similar to a program established under the EI Act.
(ii) The amount appears to be an income replacement benefit similar to a program established under the EI Act.
(iii) Appears to be for personal expenses related to the cost of relocating due to the closure of a XXXXXXXXXX.

Technical Interpretation - Internal

3 August 2018 Internal T.I. 2018-0755351I7 - Trust claiming CG reserve

Unedited CRA Tags
40(1)(a)(ii); 40(1)(a)(iii); 104(21); 104(21.2); 110.6(2); 110.6(2.1) and 110.6(31)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(31)
s. 110.6(31) limitation on LCGE claims applied to capital gains reserves distributed by a personal trust
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(21.2)
flow-through of s. 110.6 treatment respecting distributed capital gains reserve

Principal Issues: ABSB raised a scenario involving a reserve amount claimed in respect of a disposition by a trust of QSBC shares or QFFP. When the amount is included in income of a beneficiary of the trust in the subsequent taxation year, what LCGE amount is the capital gains deduction which the beneficiary may claim based on?

Position: The capital gains deduction which the beneficiary may claim will be based on the LCGE for the taxation year in which the disposition occurred.

Reasons: Subsection 110.6(31) would apply to the beneficiary.