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21 November 2007 External T.I. 2007-0259631E5- Art 21(5)(b) Canada Norway Income Tax Convention Principal Issues: Whether the remuneration of seafarers aboard a ship which does repair work in respect of a site where activities are carried on in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in Canada is exempt from Canadian income tax pursuant to subparagraph 5(b) of the Canada-Norway Income Tax Convention? ... FACTS: My understanding of the facts is as follows: A Norwegian resident ship-owner is contracted to perform repair work in respect of a drilling site situated in Canada (i.e. a site where activities are carried on in connection with exploration or exploitation of the seabed and subsoil and their natural resources situated in Canada). ... Reasons: Paragraph 5(a) of Article 21 of the Canada-Norway Income Tax Convention deals with the taxability of the salary and wages of Norwegian resident employees that would be employed in Canada in activities carried on in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in Canada. ...

Reasons: Commissions received by a self-employed real estate agent from a real estate broker, arising in connection with the agent's purchase of their own personal residence or their own investment property would be considered commission received in their capacity as a purchasing agent. Likewise, a commission received in connection with the sale of an agent's own investment or personal real property would be considered commission income received in their capacity as a selling agent. ... Likewise, a commission fee received in connection with the sale of an agent's own investment or personal real property would be considered a commission fee received in his or her capacity as a selling agent. ...

Specifically, for purposes of subparagraph 212(1)(d)(vi), you have asked us whether “a royalty or similar payment on or in respect of a copyright in respect of the production or reproduction of any literary, dramatic, musical or artistic work” includes a payment for the right to use a copyright on artistic work in connection with the manufacture, sale and distribution in Canada of products in circumstances where the taxpayer ultimately only sells and distributes products in Canada that use that copyrighted artistic work. ... The Licensing Agreement grants both USCo and Canco with the right to use the Copyright Property in connection with the manufacture, sale and distribution of products using the Copyright Property. ... In our view, where a payor has entered into a legal agreement with a non-resident for the right to use copyrighted property in connection with the manufacture, sale and distribution of any artistic work in Canada, a royalty or similar payment for that right would be considered to be “on or in respect of a copyright in respect of the production or reproduction of any...artistic work” in subparagraph 212(1)(d)(vi) even if the payor does not manufacture the artistic works, which it distributes under that legal agreement. ...

Would the expenses incurred in connection with an unsuccessful bid to obtain a loan be deductible, by virtue of subparagraph 20(1)(e)(ii) where a second attempt at obtaining a loan with another creditor is successful. ... The case law suggests (see below) that the words "in the course of" as they appear in paragraph 20(1)(e), are used in the sense of "in connection with" or "incidental to" or "arising from" and refer to the process of carrying out or the things which must be undertaken to carry out the issuing or selling or borrowing or in connection with which the expenses are incurred. ... The Department’s views in connection with the above was provided at the 1987 Canadian Tax Foundation Round Table. ...

Paragraph (b) of the definition of "qualifying educational program" excludes any program taken by the student (i)during a period in respect of which the student receives income from an office or employment, and (ii)in connection with, or as part of the duties of, that office or employment. In our view the expression "in connection with" has a broad meaning and the reference to "that office or employment" is simply a reference to the "office or employment" which entitles the student to receive income, as referred to in subparagraph (i). We believe that most CMA/CGA programs undertaken by Revenue Canada employees would be taken "in connection with" or "as part of the duties of" their office or employment. ...

" versus indians who have little or no connection with the reserve. 950391 XXXXXXXXXX A.M. ... Although the employee's residence would not be a factor which connects the Indian's employment to the reserve, it is appropriate, under the circumstances set out in Guideline 4, to recognize a connection since the employee is working for the benefit of Indians who for the most part live on reserve. However, if the population served by the organization was not comprised almost entirely of Indians who live on reserve, this latter connection would not exist. ...

Moreover, paragraph 18(1)(c) of the Income Tax Act (the "Act"), which applies to restrict the deduction of an outlay or expense to the extent it may reasonably be regarded as having been made or incurred for the purpose of gaining or producing exempt income or in connection with property the income from which would be exempt, does not apply to expenses incurred in connection with child support amounts, even though not included in the recipient's income pursuant to parameter B of the formula in paragraph 56(1)(b) of the Act. ... Technical Notes issued by the Department of Finance in connection with this amendment provide that this was to ensure that expenses incurred in respect of support amounts would continue to be deductible even where the amount was a child support amount that was not included in income under Part I. As a result, in response to your first inquiry, the comments made in Draft ITTN No.24 in connection with legal costs to obtain an increase in support are not restricted to spousal support. ...

The Act In general terms, a reasonable allowance received by an employee for the use of his or her personal motor vehicle in connection with the duties of employment, may be excluded from employment income by virtue of subparagraph 6(1)(b)(v), (vi) or (vii.1) of the Act. ... The basis for this position is that the minimal daily amount is nominal in light of the actual usage and is designed to compensate the employee for the actual expenses incurred in using the motor vehicle in connection with the duties of employment for that day. ... However, the flat rate allowance is still deemed unreasonable by virtue of paragraph 6(1)(b)(x) of the Act, since it is not based solely on the number of kilometres for which the motor vehicle is used in connection with the duties of employment, and consequently, is included in the employee's income under paragraph 6(1)(b). ...

However, if the employee can show that the business-related motor vehicle expenses are in excess of the allowance, and voluntarily includes the per-kilometre allowance in income, the CRA will permit the deduction (assuming all the other requirements of section 8 are met, including the employer's certification that the employee is required to use the motor vehicle in connection with his or her duties of employment). ... In general terms, a reasonable allowance received by an employee for the use of his or her personal motor vehicle in connection with the duties of employment, may be excluded from employment income by virtue of subparagraph 6(1)(b)(v), (vi) or (vii.1) of the Income Tax Act (the Act). ... The measurement of the use of the motor 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 the duties of employment; or? ...

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 addition new paragraph 62(3)(h) provides that utility connections and disconnections, changing addresses on legal documents and replacing drivers' licenses and vehicle permits will now be considered moving expenses. ...