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Paragraph 122.3(1)(b) of the Act states that throughout the qualifying period all or substantially all of the duties of employment must be performed outside Canada and the work must be done in connection with a contract under which the employer carries on business outside Canada. ... The duties performed by an individual outside Canada during a qualifying period in connection with a qualifying activity of a specified employer (qualifying duties) are compared to all of the duties that the individual performed for that employer during the same period. ... When the aggregate of the employment duties performed outside Canada in connection with ineligible activities and those performed in Canada in connection with any activity represent more than 10% of all the employment duties, the individual will not meet the "all or substantially all" test. ...

It may not always be easy to decide whether an expense has so arisen but it seems to me that the words "in the course of" in section 11(1)(cb) are not a reference of time when the expenses are incurred but 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 for or in connection with which the expenses are incurred. ... When a corporation enters into a transaction that results in the issuance or sale of shares of its capital stock, the following expenses would be deductible, pursuant to 20(1)(e)(i) of the Act, in computing income for the year in which they are incurred: (a)legal fees in connection with the preparation and approval of a prospectus pertinent to the issuance or sale of shares, units, or interests; (b)accounting or auditing fees in connection with the preparation of reports on financial statements and statistical data for inclusion in, or presentation with the prospectus. ... This position is confirmed in paragraph 13 of IT-341R3 in which we state: "For expenses to qualify under paragraph 20(1)(e), in connection with the issuance or sale of shares, it is not necessary for the taxpayer to obtain additional capital by the issuance or sale of shares. ...

In the case where the interest paid is in connection with a permanent establishment that the Canadian bank has in Australia and such interest will be borne by that permanent establishment, the interest will be deemed to arise in Australia. ... In the case where the interest is in connection with a permanent establishment of the Canadian bank situated in a third state, the default is to source the interest to the state in which the payer is resident. ... Convention sources interest to a third state where the interest is in connection with a permanent establishment the payer has in that state and the interest is borne by that permanent establishment. ...

For example, reasonable allowances for the use of a motor vehicle in connection with the duties of employment may be excluded by virtue subparagraph 6(1)(b)(v), (vi) or (vii.1) of the Act. ... However, the flat rate allowance is still deemed unreasonable by virtue of paragraph 6(1)(b)(x) of the Act and must be included in the employee's income, 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. ... You should also note that an employee who receives any allowance(s) for the use of a motor vehicle in connection with the duties of employment that was not included in computing employment income for the year because of paragraph 6(1)(b) of the Act is not eligible to deduct motor vehicle expenses under paragraph 8(1)(h.1). ...

Principal Issues: Are legal costs incurred in connection with an Ontario Municipal Board hearing regarding the rezoning of farm property from rural to agricultural status deductible under 20(1)(cc)? ... May 12, 2000 XXXXXXXXXX Tax Services Office HEADQUARTERS David Shugar Attention: XXXXXXXXXX 2000-000173 Legal Costs- Farm Pr operty This is in reply to your enquiry of January 5, 2000 concerning the deductibility, under paragraph 20(1)(cc) of the Income Tax Act (the "Act"), of legal costs incurred by farmers, in connection with making representations to the Ontario Municipal Board, supporting the rezoning of their farm property from rural to agricultural status. ... Therefore, legal fees paid, in connection with making representations to the Ontario Municipal Board, relating to a business carried on by a taxpayer, would be deductible in the year paid under paragraph 20(1)(cc) of the Act. ...

In this context, the words "in respect of" have been held by the Courts to imply a connection between the loss of employment and the subsequent receipt, where the primary purpose of the receipt was compensation for the loss of employment. Two questions set out by the Courts to determine whether a connection exists for purposes of a retiring allowance are as follows: 1- But for the loss of employment would the amount have been received? ... We note, however, that damages received in connection with a loss of employment fall within the definition of a retirement allowance. ...

In this context, the words "in respect of" have been held by the Courts to imply a connection between the loss of employment and the subsequent receipt, where the primary purpose of the receipt was compensation for the loss of employment. ... Two questions set out by the Courts to determine whether a connection exists for purposes of a retiring allowance are as follows: 1- But for the loss of employment would the amount have been received? ... We note, however, that damages received in connection with a loss of employment fall within the definition of a retirement allowance. ...

Where it can be demonstrated that there is a pre-existing right to property income (such as dividends) and there is a direct connection between the legal fees incurred and efforts to enforce the payment of that property income, the expense may be deductible in the taxation year in which it was incurred. ... However, if legal costs are incurred in connection with normal activities necessary to the earning of property income, then a deduction may be available. ... Accordingly, where it can be demonstrated that there is a pre-existing right to property income (such as dividends) and there is a direct connection between the legal fees incurred and efforts to enforce the payment of that property income, the expense may be deductible in the taxation year in which it was incurred. ...

Reasons: The March 2004 budget eliminated the exclusion for courses taken while an individual is employed and the course is taken in connection with that employment. 2007-022762 XXXXXXXXXX Eliza Erskine (613) 274-3022 April 4, 2007 Dear XXXXXXXXXX: Re: Education Tax Credit While Pursuing Directed Field Studies ("DFS") We are writing in reply to your email correspondence of March 15, 2007, regarding the above-noted subject matter. ... In this regard, we note that for years prior to 2004, the definition of "qualifying educational program" in the Act excluded any program taken by a student: (a) during a period for which the student received income from an office or employment, and (b) in connection with, or as part of the duties of, that office or employment. ... This means that, provided all other requirements are met, a course or program taken by an individual after 2003 in connection with his or her employment is eligible for the ETC. ...

Paragraph 3 of IT-99R4 states, "In limited circumstances, legal fees have been held to be deductible where they are incurred in connection with the defence by a taxpayer against a charge of performing illegal actions in the operation of the business or in defense of the day-to-day methods of carrying on business." From the information provided by the taxpayer it appears that in his situation the legal fees were incurred in respect to the charges relating to theft and destruction of property rather than in connection with an alleged performance of illegal operation of his business or in connection with charges relating to the day-to-day methods of carrying on his business. ...