Translations of recent severed letters

Bundle Date Translated severed letter Summaries under Summary descriptor
2002-11-22 5 December 2002 Internal T.I. 2002-0155667 F - DEDUCTIBILITE DES INTERETS CAPITALISEES Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) capitalized simple interest on loan to acquire common shares was deductible if reasonable expectation of dividends
Income Tax Act - Section 80 - Subsection 80(2) - Paragraph 80(2)(b) debt forgiveness rules do not apply to forgiveness of compound interest
Income Tax Act - Section 80 - Subsection 80(1) - Forgiven Amount debt forgiveness rules do not apply to forgiveness of compound interest
5 December 2002 External T.I. 2002-0163135 F - Source Deductions - Nominal Partnership Income Tax Act - Section 153 - Subsection 153(1) - Paragraph 153(1)(a) an individual could cover the payroll of the employees of him and another in agreed proportions as agent and principal, and handle all the source deductions, and prepare one information return
General Concepts - Agency paymaster under payroll agency arrangements could fulfill the source deduction and T4 reporting requirements of the principal
5 December 2002 Internal T.I. 2002-0171847 F - RESIDENCE D'UNE FIDUCIE Income Tax Act - Section 15 - Subsection 15(2.1) s. 15(2) applies to loan made by a corporation to a personal trust of which its shareholder is a beneficiary
Income Tax Act - Section 54 - Principal Residence - Paragraph (c.1) - Subparagraph (c.1)(ii) principal residence designation is available in respect of a specified beneficiary even though the residence is rented by the trust to that beneficiary
5 December 2002 External T.I. 2002-0172315 F - Contingent Right to Acquire Shares Income Tax Act - Section 251 - Subsection 251(5) - Paragraph 251(5)(b) ss. 251(5)(b) and 256(1.4) applicable where the 3 equal shareholders agree that they must purchase the shares of anyone committing fraud – but not if redemption requirement
2002-11-08 25 November 2002 External T.I. 2002-0126825 F - AVANTAGE CONFERE A UN EMPLOYE Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) reimbursing employee-tenants for time spent in upgrading their units beyond normal rental industry practice would generate a taxable benefit
6 November 2002 External T.I. 2002-0132395 F - Robot Class 10 Catégorie 10 Income Tax Regulations - Schedules - Schedule II - Class 10 - Paragraph 10(a) cost of remote-controlled duct-inspecting robot to be allocated between Class 10(a) (“automotive equipment” – which is broadly construed) and Class 8(j) (“radiocommunication equipment”)
Income Tax Regulations - Schedules - Schedule II - Class 8 - Paragraph 8(j) cost of remote-controlled duct-inspecting robot to be allocated between Class 10(a) (“automotive equipment”) and Class 8(j) (“radiocommunication equipment” – informed by IA meaning of “radiocommunication”)
4 December 2002 External T.I. 2002-0139345 F - REVENUS D'INTERETS Income Tax Act - Section 118 - Subsection 118(1) - Paragraph 118(1)(b) income of dependant child includes interest income generated from tax-free receipts
27 November 2002 Internal T.I. 2002-0149207 F - INTERETS ET FRAIS LEGAUX Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) prejudgment interest included in damages received for defective work on the recipients’ personal homes was taxable
2 December 2002 External T.I. 2002-0151325 F - FRAIS DEPLACEMENT Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(h.1) tacit requirement could not be invoked where the collective agreement explicitly assigned responsibility for travel expenses to the employer (who refused to pay)
5 December 2002 Internal T.I. 2002-0155187 F - DEPENSES PERSONNELLES Income Tax Act - Section 248 - Subsection 248(16) ITRs, like ITCs, treated as government assistance, so that included under s. 12(1)(x) unless s. 12(2.2) election made
Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(hh) repayment of ITRs would result in deduction under s. 20(1)(hh)(i) or (ii) depending on whether or not an s. 12(2.2) election had been made
21 November 2002 External T.I. 2002-0156565 F - INTERETS HYPOTHEQUE SUR RESIDENCE Income Tax Act - Section 20 - Subsection 20(3) interest on new home mortgage deductible if used to pay off mortgage on old home that had been used for income-producing purposes
15 November 2002 Internal T.I. 2002-0162427 F - Price Adjustment Clause & 85(7.1) Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e.2) significant FMV shortfall suggested that a benefit was desired to be conferred
General Concepts - Effective Date large FMV discrepancy suggested lack of bona fide valuation so that price adjustment clause need not be applied/ if applied, s. 85(1) election must be amended
Income Tax Act - Section 85 - Subsection 85(7) amended s. 85(1) election must be filed if price-adjustment clause applied
14 November 2002 Internal T.I. 2002-0169957 F - "Exercice" - Effet de 134.2 Income Tax Act - Section 134.2 - Subsection 134.2(2) s. 134.2 election has no effect on corporation’s fiscal period
Income Tax Act - Section 249.1 - Subsection 249.1(1) s. 134.2 election affects only the corporation's current taxation year and not its fiscal period
6 November 2002 External T.I. 2002-0170545 F - Section 55(3)(a) - Exception55(3)(a) Income Tax Act - Section 55 - Subsection 55(4) s. 55(4) inapplicable where parent retained de jure control primarily for protection of their economic interest
2002-10-25 14 November 2002 External T.I. 2002-0136485 F - REVENU D'ENTREPRISE ET REVENU DE BIEN Income Tax Act - Section 129 - Subsection 129(4) - Income or Loss long-term rental of excess space unlikely to be assimilated to business income
21 November 2002 External T.I. 2002-0141455 F - TITRES DETENUS PAR UN FIDUCIAIRE Income Tax Act - Section 108 - Subsection 108(1) - Trust - Paragraph (a.1) exclusion of s. 7(2) trusts for greater certainty
30 October 2002 Internal T.I. 2002-0146787 F - PRET SANS INTERET A UNE FILIALE Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) interest incurred to make interest-free loans to non-resident subsidiary was deductible if an expectation of income from its shares
5 November 2002 External T.I. 2002-0160815 F - CDC HYPOTHEQUE Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (d) change in policy re CDA credit for life insurance proceeds paid to creditor is retroactive re the computation
5 November 2002 External T.I. 2002-0161695 F - CDC HYPOTHEQUE Income Tax Act - Section 89 - Subsection 89(1) - Capital Dividend Account - Paragraph (d) no credit to CDA of creditor on receiving life insurance proceeds pursuant to pledged policy of debtor
7 November 2002 External T.I. 2002-0168795 F - REER TRANSFERT D'ACTIONS AU RENTIER Income Tax Act - Section 146 - Subsection 146(8) shares can be distributed out of RRSP to annuitant – but with their FMV being included as a benefit
14 November 2002 Internal T.I. 2002-0171377 F - REER PLACEMENT ADMISSIBLE Income Tax Act - Section 204 - Qualified Investment - Paragraph (a) money means currency
2002-10-11 28 October 2002 External T.I. 2002-0117595 F - REVENU EXPERT-COMPTABLE Income Tax Act - Section 9 - Nature of Income accountants required to individually recognize professional income earned by them as employees of an NPO corporation
30 October 2002 External T.I. 2002-0126045 F - TRANSFERT A UN MINEUR Income Tax Act - Section 248 - Subsection 248(1) - Specified Member contributions of the specified member to the partnership business must be instrumental to its success
30 October 2002 External T.I. 2002-0132745 F - RENOVATION A UN IMMEUBLE Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense expenditure to restore a building to its original condition may be a current expense
30 October 2002 Internal T.I. 2002-0134077 F - ATTRIBUTION DES GAINS EN CAPITAL Income Tax Act - Section 74.2 - Subsection 74.2(1) indirect transfer where individuals transfer shares to their Holdcos, who transfer such shares to the individuals’ respective spouses
Income Tax Act - Section 74.5 - Subsection 74.5(6) presence of indirect transfer through Holdcos for s. 74.5(1) purposes reinforced by s. 74.5(6)
28 October 2002 External T.I. 2002-0134785 F - Partitioning of Shares Income Tax Act - Section 248 - Subsection 248(21) s. 248(21) could apply to partitioning a share if the corporation could issue fractional shares on the partition satisfying the FMV test, and similarly for partitioning MFT units (viewed as a single property)
Income Tax Act - Section 98 - Subsection 98(3) partners not permitted to receive divided interest in shares on s. 98(3) wind-up
Income Tax Act - Section 248 - Subsection 248(1) - Property interest in trust is a single property even if held as units
Income Tax Act - Section 248 - Subsection 248(20) s. 248(20) might apply if a partition results in the issuance of whole shares
2 October 2002 Internal T.I. 2002-0135807 F - Lumpsum Somme Forfaitaire Reg 102 / 103 Income Tax Regulations - Regulation 103 - Subsection 103(4) - Paragraph 103(4)(c) withholding on retiring allowance paid in periodic instalments determined under Reg. 102(1)

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