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Massicotte, CA, M.Fisc. (613) 590-1116 Attention: William Gonzalez 2003-002274 Internet Fees for Employees Earning Commission Income This is in response to your email of June 9, 2003, requesting our comments in connection with the deduction under paragraph 8(1)(f) of the Income Tax Act (the "Act") of internet fees of a taxpayer employed in connection with the selling of property or negotiating of contracts for the taxpayer's employer. ... Subject to inter alia subsection 8(10) of the Act, where a taxpayer is employed in connection with the selling of property or the negotiation of contracts for his or her employer, paragraph 8(1)(f) of the Act allows the taxpayer to claim a deduction for amounts expended in the year for the purpose of earning the income from such employment (not exceeding the commissions or other similar amounts fixed by reference to the volume of the sales made or the contracts negotiated and received by the taxpayer in the year), provided all the requirements in subparagraphs 8(1)(f)(i) to (iv) are met. ...

The payment is in connection with the planned demolition of the Taxpayer's residence on the reserve? The payment represents compensation for the inconvenience endured by the Taxpayer in being required by the Indian band to move to another house on the reserve Given the foregoing, it is our opinion that a sufficient, indeed a significant, connection can be made between the income in question and the reserve. ... In the absence of the payment's connection to the reserve, it would be necessary to determine how the payment should be characterized in order to ascertain its taxability. ...

Based upon the above-noted facts, proposed transactions and the opinions of Natural Resources Canada dated October 1, 2002, it is our view that upon the installation of XXXXXXXXXX Turbines as described in 3 and 4 above, the Turbines would be considered as "test wind turbines" for the purposes of section 1219 of the Regulations, provided that: (a) the Draft Regulations will be enacted as proposed by Finance on July 26, 2002; (b) each of the Turbines will be affixed to a concrete foundation at the location as described in 4 above as part of the Project for the primary purpose of testing the level of electrical energy produced by the wind turbine from wind at such location; (c) the electrical substation and the single connection to the xxxxxxxxxx kW power transmission line as described in 3 above will not be used by any project(s) other than the Project, and such connection will be the sole connection from the Project; (d) no other test wind turbines will be installed within 1,500 metres of each of the Turbines; and (e) no other wind turbines will be installed within 1,500 metres of each of the Turbines until the electrical energy production level of each of the Turbines has been tested for at least 120 calendar days. ...

We also acknowledge the information provided in subsequent telephone conversations in connection with your request (XXXXXXXXXX) and your amended and restated advance income tax ruling request dated XXXXXXXXXX as well as additional correspondence. To the best of your knowledge, and that of the taxpayers involved, none of the issues contained herein are: (i) dealt with in an earlier return of the taxpayer or a related person; (ii) being considered by a tax services office or taxation centre in connection with a previously filed tax return of the taxpayer or a related person; (iii) under objection by the taxpayer or a related person; (iv) subject to a ruling previously issued by the Income Tax Rulings Directorate; or (v) before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has not expired. ... Nothing in this ruling should be construed as implying that the Canada Customs and Revenue Agency has accepted, approved or confirmed any other income tax implications, XXXXXXXXXX, in connection with the facts or proposed transactions that are not described herein. ...

Principal Issues: Whether fees incurred by Purchaser to prepare and distribute an information circular relating to a take-over of Target are deductible in computing business income Position: Generally, no Reasons: The fees incurred by Purchaser in connection with a take-over will normally be added to the cost of the Target shares acquired by Purchaser XXXXXXXXXX 2002-015141 Gwen Watson March 5, 2003 Dear XXXXXXXXXX: Re: Information Circular- Costs Incurred by Purchaser This is in reply to your letter of June 28, 2002, wherein you requested our views regarding the tax treatment, under the Income Tax Act (Canada) (the "Act"), of fees incurred to prepare and distribute an information circular. ... Specifically, Purchaser pays fees to lawyers, accountants and investment bankers in connection with the preparation of the circular, as well as costs incurred to print and distribute the circular. ... In particular, you note that the information circular is prepared by Purchaser in compliance with Securities legislation and is circulated in advance of, and with the purpose of, obtaining shareholder approval of certain matters in connection with the proposed acquisition of Target. ...

Principal Issues: For purposes of the standby charge benefits calculation, is the use by an employee of an emergency vehicle for travelling between the employee's home and usual workplace considered personal use or is the use "in connection with or in the course of the taxpayer's office or employment" where the employee is required by the terms of the employee's employment contract to so use the emergency vehicle. ... For purposes of our response, we have assumed that the emergency vehicles are otherwise only used in connection with or in the course of the employees' office or employment. ... The employees contend that because they are required by the terms of their employment to use the emergency vehicles when travelling between their homes and their usual workplace, those kilometres are driven "in connection with or in the course of the taxpayer's office or employment". ...

Provided that the airfare is given to the missionary to be used in connection with the charitable activities of the charity, there are no income tax implications to the missionary. ... When the credits are redeemed by the charity for airfares or other awards to be used in connection with its charitable activities, it is our view that the value of the awards would be considered an expenditure on charitable activities for disbursement quota purposes. ... Based on the premise that the airfare is given to the missionary to be used in connection with the church's charitable activities, there are no income tax implications to the missionary even if the missionary is an employee of the church. ...

Our Comments Subparagraph 6(1)(b)(vii.1) of the Act provides that reasonable allowances for the use of a motor vehicle received by an employee (other than an employee employed in connection with the selling of property or the negotiating of contracts for the employer) from the employer for travelling in the performance of the duties of the office or employment are not taxable. However, subparagraph 6(1)(b)(x) of the Act provides that, for purposes of subparagraphs (v), (vi) and (vii.1), an allowance received in a taxation year by a taxpayer for the use of a motor vehicle in connection with or in the course of the taxpayer's office or employment is deemed not to be a reasonable allowance if the measurement of the use of the vehicle for the purpose of the allowance is not based solely on the number of kilometres for which the vehicle is used in connection with or in the course of the office or employment. ...

In connection with an appeal in respect of a ruling, comments on page 16 (Line 9809- legal and Accounting fees) of the Farming Income guide state that "If you paid accounting and legal fees to file an appeal against an assessment or decision under the Act,... the EI Act..., do not deduct them here. ... In the case of paragraph 18(1)(a) of the Act in respect of the employer, paragraph 2 of IT-99R5 indicates that legal fees incurred in connection with normal activities necessary to the earning of income from a business are generally deductible under paragraph 18(1)(a) of the Act. ... On the basis that the legal fees in question are incurred in connection with normal activities necessary to the earning of income from a business (see paragraphs 1 and 2 of IT-99R5 "Legal and Accounting Fees"), it is our general view that they would likely be deductible under paragraph 18(1)(a) of the Act. ...

They import such meanings as “in relation to”, “with reference to” or “in connection with”. The phrase “in respect of’ is probably the widest of any expression intended to convey some connection between two related subject matters”. In our view, mortgage interest paid by an employer in connection with an employee’s old residence should be included in the employee’s income under paragraph 6(1)(a) and subsection 6(23) of the Act because it is clearly in respect of the financing of a residence. ...