Income Tax Severed Letters - 2023-03-22

Technical Interpretation - External

6 September 2022 External T.I. 2021-0907701E5 - Training allowance payments

Unedited CRA Tags
ITA: Section 3; Paragraphes 56(1)(n), (r), (u).

Principal Issues: Whether the training allowance payments received by a trainee are to be included in the recipient’s taxable income under the Act.

Position: In this situation, yes. The training allowance payments will be included in a trainee’s income under paragraph 56(1)(n) to the extent the amount exceeds the scholarship exemption.

Reasons: The training allowance payments received by trainees are to defray living costs while learning occupational skills. Therefore, the primary purpose of a training allowance payment is to provide assistance to enable a trainee to pursue an education and would be included in a trainee’s income under paragraph 56(1)(n).

Technical Interpretation - Internal

23 December 2022 Internal T.I. 2021-0880421I7 F - SUCL - Dépenses de loyer admissibles

Unedited CRA Tags
125.7(1) « Dépenses de loyer admissibles »
Summary Under
Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Rent Expense - Variable A - Paragraph (b) - Subparagraph (b)(i)
government assistance does not reduce interest

Principales Questions: 1) Est-ce qu’une aide gouvernementale se rapportant à l’intérêt payé sur un titre de créance garanti par une hypothèque sur un bien admissible réduit le montant d’intérêt payé sur ce titre par ailleurs visé au sous-alinéa 125.7(1)b)(i) de la définition de « dépenses de loyer admissibles »? / Whether government assistance related to interest paid on a debt obligation secured by a mortgage or hypothec on a qualifying property reduces the amount of interest paid on the debt obligation otherwise referred to in subparagraph 125.7(1)(b)(i) of the definition « qualifying rent expense ».
2) À l’égard de quelle période d’admissibilité un montant d’intérêt payé annuellement sur un titre de créance garanti par une hypothèque sur un bien admissible se qualifie de « dépenses de loyer admissibles » au sens de cette définition prévue au paragraphe 125.7(1)? / In respect of what qualifying period an amount of interest paid annually on a debt obligation secured by a mortgage or hypothec on a qualifying property is « qualifying rent expense » within the meaning of this definition in subsection 125.7(1)?

Position Adoptée: 1) Non. / No. 2) Aucune. / None.

Raisons: 1) Libellé de la Loi. / Wording of the Act. 2) Question de fait qui ne peut être résolue qu’après un examen de tous les faits et documents pertinents entourant une situation donnée. / Question of fact that can only be resolved after a review of all relevant facts and documents surrounding a given situation.

8 September 2022 Internal T.I. 2021-0892791I7 - Paragraph 94(3)(f) election

Unedited CRA Tags
150, 152(1), (4) and (7); 94(3)(f)
Summary Under
Tax Topics - Income Tax Act - Section 94 - Subsection 94(3) - Paragraph 94(3)(f)
election can be filed with a very late return, likely including a return filed after an arbitrary assessment
Summary Under
Tax Topics - Income Tax Act - Section 152 - Subsection 152(7)
CRA should be well supported in any decision not to reassess where a timely return is filed following an arbitrary assessment

Principal Issues: 1. Can a paragraph 94(3)(f) election be filed by a non-resident trust whose activities are being examined by the CRA, and if so, in what manner?
2. Would a non-resident trust be prevented from filing a return of income that includes a paragraph 94(3)(f) election if an assessment has already been issued for the first taxation year in which it was a deemed by subsection 94(3) to be a resident in Canada?

Position: 1. Yes. The criteria of paragraph 94(3)(f) must be met. In that regard, the election must be filed by the taxpayer with the (initial) income tax return for a taxation year to be valid, i.e., it cannot be filed on its own separately
2. If a valid election is filed with a return of income for a taxation year that has not yet been assessed, the Minister must examine the return under subsection 152(1) and assess the taxation year accordingly.
If the election is filed with a return of income for a taxation year that has already been assessed under subsection 152(7), the Minister has the discretion to reassess the taxation year under subsection 152(4).

Reasons: 1. As required by paragraph 94(3)(f) and paragraph (c) of the definition of "electing trust" in subsection 94((1) of the Act.
2. The Minister has the discretion to reassess a taxpayer under subsection 152(4) unless the legislation prevents such a reassessment. For example, the Minister may not generally issue a reassessment where the normal reassessment period of a taxation year has expired unless one of the exceptions in subsection 152(4) is met. However, if the Minister exercises her discretion not to reassess in a manner that reflects the information provided by a taxpayer in a return of income, her decision would have to be well supported.