Income Tax Severed Letters - 2019-04-03

Ruling

2018 Ruling 2018-0753831R3 - Supplemental Ruling - Extension of Time

Principal Issues: Whether the time to complete the proposed transactions can be extended until XXXXXXXXXX.

Position: Yes.

Reasons: The extension of time will allow the taxpayers to complete the proposed transactions.

Technical Interpretation - External

19 March 2019 External T.I. 2018-0758641E5 - Expenses of an office

Unedited CRA Tags
8(1); 8(10); 8(13); 81(2); 81(3); 248(1) “office”, “officer”, “employee”, “employer”, “employment”

Principal Issues: Whether members of a legislative assembly and certain elected municipal officers are permitted to deduct expenses under section 8 of the Income Tax Act?

Position: Yes.

Reasons: See response.

11 March 2019 External T.I. 2018-0749251E5 - Power of Attorney fees

Unedited CRA Tags
5(1), 6(1)(c), 9(1), 248(1)

Principal Issues: The tax consequences of the compensation received by a power of attorney under the Act.

Position: Question of fact, but will be either business income or income from an office.

Reasons: See response.

Technical Interpretation - Internal

19 November 2018 Internal T.I. 2018-0777321I7 - Tax treatment of a proposed XXXXXXXXXX program

Unedited CRA Tags
12(1)(x), 56(1)(n), 56(1)(u), 56(1)(r), 56(4.1), 80.4(1), 118.62

Principal Issues: 1. Would the benefit received by an individual in the form of an interest-free student loan, under the proposed XXXXXXXXXX program for student loans, be taxable to the recipient?
2. Would an amount, equivalent to the amount of interest paid by the debtor of the student loan, applied to reduce the principal balance of the loan, under the proposed XXXXXXXXXX program for student loans, be taxable to the debtor?

Position: 1. No 2. No.

Reasons: 1. The benefit received by an individual in the form of an interest-free loan, under the proposed XXXXXXXXXX program for student loans, does not appear to be income from a source under the Act and therefore, not required to be included in the income of the recipient.
2. The amount applied to reduce the principal balance of the student loan, under the proposed XXXXXXXXXX program for student loans, does not appear to be income from a source under the Act and therefore, is not required to be included in the income of the debtor.

27 March 2018 Internal T.I. 2017-0691941I7 F - Investissement frauduleux – Fraudulent Investment

Unedited CRA Tags
12(1)c); 20(1)p); 152(3.1)b); 152(4.2)
s. 152(4.2) reversal of Ponzi interest inclusion must be applied for by 10th anniversary of the taxation year
Ponzi scheme investors can generally write off their reinvested interest income in the year the perpetrators are charged
court order ab initio declaring loan void would eliminate interest income

Principales Questions: 1) Dans la présente situation, est-il possible de demander un redressement des déclarations de revenu pour les années antérieures? 2) Quelle est la position de la DDI dans les cas de stratagèmes frauduleux de type Ponzi dans un contexte où un contribuable a inclus des revenus de placement dans le calcul de son revenu pour des années d’imposition antérieures? / 1) In this situation, is it possible to request adjustments to tax returns for prior years? 2) What is Rulings’ position with respect to fraudulent investment schemes such as Ponzi schemes, where a taxpayer has included investment income in computing their income for prior tax years?

Position Adoptée: 1) Oui mais seulement dans les délais prévus aux paragraphes 152(3.1) et 152(4.2). 2) Le traitement fiscal se détermine au cas par cas. Dans ce contexte, l’investisseur pourrait déduire des créances irrécouvrables selon l’alinéa 20(1)p) pour les revenus de placement inclus dans le calcul de son revenu dans les années précédentes. / 1) Yes, but only within the time limits set out in subsections 152(3.1) and 152(4.2). 2) The tax treatment should be determined on a case-by-case basis. Under the present context, the investor may claim a deduction for bad debt pursuant to paragraph 20(1)(p) for investment income reported for prior years.

Raisons: 1) Pour que le Ministre puisse établir une nouvelle cotisation pour une année d’imposition d’un contribuable, il doit le faire à l’intérieur de la période normale de nouvelle cotisation. À l’extérieur de celle-ci, il pourrait établir une nouvelle cotisation pour cette année d’imposition, si ce contribuable demande un allègement dans les dix ans qui suivent l’année d’imposition. 2) En nous appuyant sur une position administrative de l’ARC, nous tenons pour acquis que les intérêts sur XXXXXXXXXX constituent une « créance » aux fins de l’alinéa 20(1)p). / 1) In order to reassess a prior tax year return, the Minister must do so within the normal reassessment period. Outside this period, the Minister could reassess that tax year’s return if the taxpayer makes a request for relief within ten years of the end of the taxation year. 2) Based on a CRA’s administrative position, we consider interest on XXXXXXXXXX to be a "debt" for purposes of paragraph 20(1)(p).