13 October 1989 Income Tax Severed Letter AC74369 - Non-residents' Income Earned in Canada - Revision of IT-420R2

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Publications Division              Rulings Directorate
Roy Shultis                        Frank S. Gillman
Director                           957-9768

R.A. Primeau

Interpretation Bulletin Project Number 1658 Non-Residents-Income Earned in Canada Revision of IT-420R2

We are writing in response to your memo, dated September 22, 1989. Therein you requested that we forward to you any concerns we may have with regard to paragraphs 13, 14, 15(d), 17(a), (b), (c), 22(b) and 27(c) in version 3 of revision of IT-420 , dated September 8, which you attached to the above-mentioned memo. Our concerns are as follows:

1. Paragraph 13

At paragraph 13(d) we suggest that you include the word "only" between "purposes" and "of". Paragraph 115(4)(b) specifically states that the deeming provision is for "... purposes only of computing the non-resident person's income earned in Canada for the year...".

At the bottom of page 10 and the top of page 11, we suggest that you delete the paragraph, "Subsection 115(4) can apply,... subparagraph 115(1)(a)(iii.3) (see 17(c) below)." It is our opinion that such examples as expressed in that paragraph are redundant to the text of the bulletin.

2. Paragraph 14

Within the first sentence of paragraph 14, we suggest that you state that the deeming provision is only for purposes of computing the non-resident's income earned in Canada for the taxation year {subsection 115(1)}, and that it would not have general application for all purposes of the Act.

3. Paragraph 15

With respect to timber properties, this term is too vague and could be construed as including such timber properties as timber limits and cutting rights which may not be timber resource properties for purposes of the Act - see paragraph 13(21)(d.1) for the definition of timber resource properties. We suggest the term "timber resource property" be used instead as this term is specifically contemplated by the legislation. Paragraph 15(d) uses the word "predominantly" to mean "50% or more." This usage indirectly gives a definition to the word predominantly which may not be the definition the Department desires. We recommend that the words " proportionately as to 50% or more" be substituted thereto.

In addition at paragraph 15(d) we propose that the words "any other" be added to the 3rd line after "timber properties or". This would be more in keeping with the text of the legislation.

We suggest that the defined term Canadian resource property be used instead of the words "Canadian mining, oil" at paragraph 15(d) as this would be more explicit to the reader.

4. Paragraph 17

We propose that you add the word "otherwise" on the 5Lh line of paragraph 17(c) between the words "would" and "be includable". This would better communicate the meaning of that subparagraph.

As discussed with Rick Primeau, we note that you have not adopted any new Departmental positions in the revised version, but have in essence rearranged the positioning of the paragraphs.

Director Bilingual Services and Resource Industries Division Rulings Directorate