Income Tax Severed Letters - 2024-10-09

Technical Interpretation - External

5 September 2024 External T.I. 2024-1019071E5 - Settlement monies & income tested benefits

Unedited CRA Tags
81(1)(a) and 12(1)(c) of the Income Tax Act

Principal Issues: 1. Would settlement monies received by a First Nations individual impact the determination of federal and provincial income-tested benefits or credits?
2. Are certain settlement monies received by First Nations individuals exempt from tax under paragraph 87(1)(b) of the Indian Act and paragraph 81(1)(a) of the Act?

Position: 1. The determination depends on the type of settlement monies received by the individual. Generally, the settlement monies, which are situated on a reserve and exempt from tax under the Indian Act, will not impact the determination of federal and provincial income-tested benefits or credits.
2. Please see below.

Reasons: 1. Pursuant to paragraph 81(1)(a) of the Act, amounts which are exempt from tax under the Indian Act, shall not be included in computing the taxpayer’s income for purposes of the Act.

15 August 2024 External T.I. 2023-0976441E5 - Significance employer residence connecting factors

Unedited CRA Tags
81(1)(a) of the Income Tax Act and 87(1)(b) of the Indian Act

Principal Issues: Is the employer’s residence a significant factor in a connecting factors test to situate on a reserve the employment income earned off-reserve by employees who are registered under the Indian Act and who live on the Reserve, and thus exempt the income from tax under section 87 of the Indian Act?

Position: Not in this situation.

Reasons: Based on the hypothetical situation provided and under a connecting factors test, the income does not appear to be situated on a reserve.

27 June 2024 External T.I. 2024-1010821E5 - Income from employment with the EBRD

Unedited CRA Tags
81(1)(a); 110(1)(f)(iii); Regulation 8900(1); European Bank for Reconstruction and Development Agreement Act, S.C. 1991, c. 12.

Principal Issues: Whether income from employment with the European Bank for Reconstruction and Development is subject to tax under the Act.

Position: If earned by a Canadian citizen residing or ordinarily resident in Canada, yes, otherwise, no.

Reasons: Under the European Bank for Reconstruction and Development Agreement Act, employees are not subject to national income tax on their salaries and emoluments. However, Canada deposited a declaration with its instruments of ratification that it retained the right to tax Canadian citizens residing or ordinarily resident in Canada on such salaries and emoluments.

22 May 2024 External T.I. 2024-1003781E5 - Saskatchewan Secondary Suite Incentive Grant

Unedited CRA Tags
3, 9(1), 12(1)(x), 13(7.1), 53(2)(k)

Principal Issues: Whether a grant received by a homeowner under the Saskatchewan Secondary Suite Incentive Grant Program (the “Program”) is taxable to homeowners, and if so, under which provision of the Act.

Position: Question of fact.

Reasons: If a grant that is received under the Program is received in respect of a secondary suite of a homeowner that is depreciable property (that is, a secondary suite used to earn income from a business or property), the amount will reduce the capital cost of the secondary suite in accordance with subsection 13(7.1) of the Act. On the other hand, if the grant is received in respect of a secondary suite of a homeowner that is non-depreciable capital property (for instance a secondary suite used for personal purposes as a dwelling for a homeowner’s parent or child), it will reduce the cost of the secondary suite in accordance with paragraph 53(2)(k) of the Act.