Translations of recent severed letters

Bundle Date Translated severed letter Summaries under Summary descriptor
2004-01-16 7 January 2004 Internal T.I. 2003-0038217 F - gain en capital / résidence principale Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit rental of second floor of house to son at cost was not a business
Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c) no partial change of use of residence where rental operation was not a business, or the business was ancillary
7 January 2004 Internal T.I. 2003-0046717 F - MODIFICATION DE PBR INSCRIT SUR T664 Income Tax Act - Section 220 - Subsection 220(3.2) correction to ACB shown on s. 110.6(19) election did not constitute an amendment to the election
Income Tax Act - Section 110.6 - Subsection 110.6(27) correction of ACB shown on s. 110.6(19) election not an election amendment that must comply with s. 110.6(27)
9 January 2004 External T.I. 2003-0049195 F - Winding Up or a Contractor Subco Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(e.1) s. 88(1)(e.1) would permit parent to step into shoes of sub re s. 12(1)(a) inclusion and s. 20(1)(m) reserve
Income Tax Act - Section 9 - Timing exclusion of contract holdbacks and unapproved invoices from construction contractor’s income is unaffected on s. 88(1) wind-up and flows through to parent
Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) deferred revenue of construction contractor would not be triggered on its s. 88(1) wind-up and parent would be put to claiming any available new s. 20(1)(m) reserve
2004-01-09 8 December 2003 Internal T.I. 2003-0042537 F - CIEE & SRAS Income Tax Act - Section 122.3 - Subsection 122.3(1) lay-off due to SARS did not qualify as an absence
18 December 2003 Internal T.I. 2003-0044007 F - OPTION D'ACHAT D'ACTIONS RACHETEES Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(b) full option surrender consideration included under s. 7(1)(b) even though a portion thereof never paid
Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(g) - Subparagraph 40(2)(g)(ii) unpaid and defaulted balance of stock option surrender consideration was not property used in a property or business source
Income Tax Act - Section 54 - Capital Property employee stock option surrender proceeds were not from the disposition of capital property
16 December 2003 Internal T.I. 2003-0046167 F - Section 50- Shares of Insolvent Corporation50(1) Income Tax Act - Section 50 - Subsection 50(1) - Paragraph 50(1)(b) - Subparagraph 50(1)(b)(iii) corporation not insolvent if affiliates intend to pay its creditors, and its shares have value if it has non-capital losses
Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) sale of Lossco with no assets but non-capital losses for nil consideration to another subsidiary generated a gain under s. 69(1)(b)
General Concepts - Fair Market Value - Shares shares of corporation that had ceased business and had no assets but had non-capital losses had a significant value
17 December 2003 Internal T.I. 2003-0047367 F - Benefit Conferred on Non-arm's Length Person Income Tax Act - Section 84 - Subsection 84(2) s. 84(2) inapplicable on sale by defunct corporation of its assets at an undervalue to one of its shareholders
Income Tax Act - Section 246 - Subsection 246(1) s. 246(1) applicable to sale of assets by corporation to employee-shareholder at an undervalue
Income Tax Act - Section 52 - Subsection 52(1) application of s. 15(1) or 246(1) to property distributed by corporation to shareholder would be added to the property’s ACB
17 December 2003 Internal T.I. 2003-0047727 F - Right of Use-Deemed Trust Income Tax Act - Section 105 - Subsection 105(1) no s. 105(1) benefit from personal use of personal-use property of a trust
Income Tax Act - Section 105 - Subsection 105(2) potential s. 105(2) benefit where Opco pays all of the expenses on its property to a portion of which the sister of Opco’s indirect controlling shareholder has a right of (personal) use
23 December 2003 External T.I. 2003-0008145 F - TRANSFERT ENTRE EX-CONJOINT Income Tax Act - Section 248 - Subsection 248(23) deemed transfer to spouse before divorce where property was subject to matrimonial regime to which s. 248(3) applied, so that no need to rely on being in settlement of matrimonial rights
Income Tax Act - Section 73 - Subsection 73(1.01) - Paragraph 73(1.01)(b) property transferred in settlement of rights arising out of marriage also includes property transferred in settlement of rights arising out of a matrimonial regime
Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) one-sided adjustments under ss. 69(1)(b) and (a)
23 December 2003 External T.I. 2003-0014655 F - article 125.5 Income Tax Act - Section 125.5 - Subsection 125.5(1) - Eligible production corporation - Paragraph (d) exclusion under para. (d) applies where there is indirect control by the province
Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer province is a “taxpayer” exempt from tax
18 December 2003 External T.I. 2003-0021195 F - Etablissement Stable en Ontario Income Tax Regulations - Regulation 400 - Subsection 400(2) an office with only incidental functions will not constitute a fixed place of business
Income Tax Regulations - Regulation 400 - Subsection 400(2) - Paragraph 400(2)(b) Ontario sales office was not a deemed PE since general authority to contract was at the Quebec administrative office
9 December 2003 External T.I. 2003-0032585 - Immeuble détenu par une succession Income Tax Act - Section 54 - Principal Residence - Paragraph (c.1) income beneficiary of estate could be a specified beneficiary using as principal residence
Income Tax Act - Section 107 - Subsection 107(2) s. 107(2) rollover unavailable to an income beneficiary
15 December 2003 External T.I. 2003-0182855 - Fiducie pour Loi au Quebec Income Tax Act - Section 248 - Subsection 248(3) - Paragraph 248(3)(e) meaning of “a right as a beneficiary in a trust” is found in s. 248(25)
General Concepts - Ownership sole beneficiary of Quebec trust is the beneficial owner of its property
Income Tax Act - Section 73 - Subsection 73(1.02) - Paragraph 73(1.02)(b) - Subparagraph 73(1.02)(b)(ii) no change in beneficial ownership on transfer of property to self-benefit Quebec trust
Income Tax Act - Section 75 - Subsection 75(2) policy is for s. 75(2) application not to result in double taxation
2004-01-02 22 December 2003 External T.I. 2003-0000125 F - TITRE DE CREANCE INDEXE Income Tax Regulations - Regulation 7001 - Subsection 7001(1) detailed illustration
Income Tax Act - Section 248 - Subsection 248(1) - Indexed Debt Obligation stripped indexed coupons were indexed debt obligations but would not give rise to excluded payments
Income Tax Regulations - Regulation 7001 - Subsection 7001(7) - Excluded Payment stripped indexed coupons did not give rise to excluded payments because no single fixed rate
Income Tax Regulations - Regulation 201 - Subsection 201(4.1) reporting of inflation adjustments on indexed bonds
Income Tax Act - Section 20 - Subsection 20(14) application of s. 20(14) to indexed debt obligation
11 December 2003 External T.I. 2003-0015975 F - calcul du gain/perte sur disposition Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) portion of share sales proceeds required under a Bankruptcy Act proposal to be paid to the unsecured creditors, not a disposition expense
10 December 2003 External T.I. 2003-0023335 F - COUT D'UN BIEN REMIS EN RECOMPENSE Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) $500 gift policy applies where parent incurs the cost (which must include any customs and shipping costs)
16 December 2003 External T.I. 2003-0027245 F - MCIA-ACQUIS. D'UNE PERSONNE LIEE Income Tax Act - Section 14 - Subsection 14(5) - Cumulative Eligible Capital - Variable A - Variable A.1 subsequent arm’s length acquisition does not vitiate application of A.1

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