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14 December 2011 Internal T.I. 2011-0424221I7- copyright music Unedited CRA Tags 212(1)(d)(vii); 212(5) Principal Issues: Whether a royalty fee paid by a Canadian resident to a non-resident in respect of copyright music that has been incorporated into a video and used in connection with television in Canada is subject to Part XIII tax? ... Views of the CRA Field Officer which raised the issue The field office raised the issue of whether or not this payment would be taxable in accordance with subsection 212(5) of the Act as the copyright music has been incorporated into a video and used in connection with television in Canada. ... Subsection 212(5) of the Act reads as follows: "Every non-resident person shall pay an income tax of 25% on every amount that a person resident in Canada pays or credits, or is deemed by Part I to pay or credit, to the non-resident person as, on account or in lieu of payment of, or in satisfaction of, payment for a right in or to the use of (a) a motion picture film, or (b) a film, video tape or other means of reproduction for use in connection with television (other than solely in connection with and as part of a news program produced in Canada), that has been or is to be used or reproduced in Canada. ...

10 June 1991 Internal T.I. 91M06217 F- Overseas Employment Tax Credit Unedited CRA Tags 122.3, 122.3(1)(b)(i) Dear Sirs: This is in reply to your letter dated March 7, 1991 whereby you requested our opinion as to whether an employee would be considered to perform the duties of his employment in   24(1)  in connection with a contract under which the employer carries on business in    for the purposes of qualifying for the overseas employment tax credit provided under section 122.3 of the Income Tax Act (the "Act"). ... Our Comments An individual (employee) must have performed all or substantially all the duties of his employment in one or more countries other than Canada in connection with a contract under which the specified employer carried on business in such other country or countries with respect to the exploration for or exploration of petroleum, natural gas, minerals or other similar resources.  ... In order for us to reach a conclusive opinion on such a transaction, we could have to review the contract itself and its connection, if any, with Canco's acquisition of the 24(1)  In the event this hypothetical example becomes a contemplated transaction, any request for a technical interpretation should be in the form of a request for an advance income tax ruling in accordance with the Information Circular 70-6R2 dated September 28, 1990.  ...

The expressions "in connection with" and "with respect to" are considered to have very broad meanings such that the activities described in (a) to (f) above would appear to be qualifying activities. The activities that are engaged by the employers in connection with the XXXXXXXXXX, as described in (g) above, do not appear to qualify as qualifying activities. In the event that the employers’ activities consist of both qualifying and non-qualifying activities, it will be necessary to establish that the XXXXXXXXXX employees performed all or substantially all their duties in connection with the qualifying activities for them to be entitled to the OETC. ...

Finally, the employee's duties of employment must be in connection with the employer's non-commercial activities carried on exclusively for the benefit of Indians who for the most part live on reserves. Given the nature of the employer, it is questionable whether the duties of employment of the employees are in connection with the non-commercial activities of the employer. It also seems unlikely that the duties of employment of the employees working for the Organization are in connection with activities carried on exclusively for the benefit of Indians who for the most part live on a reserve. ...

Principal Issues: Does the wording of subparagraph 149(1)(o.2)(i) of the Act restrict the activities of a corporation that was incorporated before Nov. 17, 1978 solely in connection with, or for the administration of, a registered pension plan? ... For example, the wording of paragraph 149(1)(o.1) refers to a corporation incorporated and operated solely for the administration of a registered pension plan, whereas, subparagraph 149(1)(o.2)(i) refers to a corporation incorporated solely in connection with a registered pension plan or a corporation incorporated solely for the administration of a registered pension plan. ... However, in our opinion, if the corporation was incorporated in XXXXXXXXXX and was incorporated solely in connection with, or for the administration of, a registered pension plan, the business activities of the corporation would not be restricted for purposes of subparagraph 149(1)(o.2)(i) of the Act. ...

Principal Issues: Are reasonable allowances for the use of a motor vehicle in connection with the duties of an office or employment that are based on a per-kilometer rate for travel outside the metropolitan area and a flat rate for travel inside the metropolitan area taxable benefits? ... The amount based upon a flat rate for travel within the metropolitan area is deemed not to be reasonable by virtue of paragraph 6(1)(b)(x) of the Act since it is not based solely on the number of kilometers for which the vehicle is used in connection with or in the course of the office or employment, and therefore it is a taxable benefit. ... Subparagraph 6(1)(b)(x) of the Act deems an allowance not to be reasonable where the measurement of the use of the vehicle is not based solely on the number of kilometres for which it is used in connection with or in the course of the office or employment. ...

Income Tax Convention exempts such payments made to a U.S. resident from Canada tax except where the information is provided in connection with a rental or franchise agreement. ... (b)Would a licence of information concerning industrial, commercial or scientific experience combined with a licence of computer software for use in dealing with the information be considered to be "in connection with a rental agreement"? ... (b) Again, it is a question of fact whether or not such an arrangement would be considered to be "in connection with a rental...agreement". ...

Position TAKEN: The marketing fees would be exempt from the 25% withholding tax to the extent that such fees are made for services performed by the taxpayer in connection with the sale of crude oil or the negotiation of a contract for the taxpayer. ... Rooke Section A/Assistant Director of Audit Peter Lee (613) 957-8977 Attention: Susan Clozza International Audit 943366 XXXXXXXXXX Further to our recent telephone conversation (Lee/Clozza), this is in reply to your memorandum of December 15, 1994 and to confirm that we are not able to comment on the reasonableness of the marketing fees paid by XXXXXXXXXX and on whether such fees were made exclusively for services performed in connection with the sale of crude oil and the negotiation of crude oil sales contracts. ... Accordingly, it is our view that the marketing fees would be exempt from the 25% withholding tax under subparagraph 212(1)(d)(iii) of the Act to the extent that such fees are made for services performed by XXXXXXXXXX in connection with the sale of crude oil or the negotiation of a contract for XXXXXXXXXX. ...

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 to the 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. ... That is, there must be a clear connection between the amount sought to be deducted and the issuance of the shares. Pursuant to paragraph 16 of IT-341R3 when a corporation has expenses that are incurred in the course of an issuance or sale of shares in the capital stock of the corporation the following expenses would be deductible in 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 for presentation with, the prospectus; (c) the cost of printing the prospectus, new share, unit, or interest certificates, etc; (d) registrars' or transfer agents' fees; and (e) filing fees charged by any public regulatory body which requires the filing of a prospectus for acceptance. ...

Case decided on its facts; also, Judge fully accepted testimony of taxpayer that his only reason for having a connection to Canada was to educate his children. ... In fact, in rendering his decision in Shih, Judge Mogan commented (at paragraph 24): "The next-of-kin and family connections of an individual are relevant and important factors in determining the residence of that individual. ... Regina may have been their family home but he was not there often enough or long enough to establish any personal connections with the various communities in Regina whether they be commercial, education, cultural, recreational or social.... ...