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Toronto North Tax Services Office (613) 590-1116 2004-008806 Capital Gains Deduction- Paragraph 110.6(2.1)(d) of the Income Tax Act ("Act") This is in response to your enquiry of July 27, 2004, in which you request our comments in connection with the application of paragraph 110.6(2.1)(d) of the Act in a specific situation. ... Pursuant to subsection 110.6(2.1) of the Act, Mr.X claimed a capital gains deduction of $XXXXXXXXXX in computing his taxable income for the year of death in connection with the taxable capital gains realised on the deemed disposition of the QSBC shares described above. 4. ... You ask whether the capital loss resulting from the redemption of the shares of A Co, and deemed to be the capital loss of Mr.X for the year of death pursuant to paragraph 164(6)(c) of the Act, will affect the amount determined under paragraph 110.6(2.1)(d) of the Act in connection with the capital gains deduction which Mr.X may claim in the year of death. ...

The mathematical connection between the R-factor and oil production is what brings the royalty within the meaning of the phrase 'can reasonably be regarded as being in relation to' in the preamble of paragraph 12(1)(o) of the Act. In Nowegijick, 83 DTC 5041, the Supreme Court determined that the phrase "in respect of" is probably the widest of any expression intended to convey some connection between two related subject matters. The Court said the words are words of the widest possible scope and import such meanings as "in relation to," "with reference to," or "in connection with. ...

The sufficiency of the connection will be decided on a case by case basis. ... In the present situation, since XXXXXXXXXX did not hold shares of XXXXXXXXXX, he has to demonstrate that there was sufficient connection between him and the income that could have been generated by XXXXXXXXXX. ... Also, we believe the possibility of the taxpayer to receive income is too remote to demonstrate that there is a sufficient connection between the taxpayer and the income that could have been earned. ...

Paragraph (f) (footnote 1) of the definition of public health restriction in subsection 125.7(1) of the Act requires that, as a result of the particular order or decision, some or all of the activities of the eligible entity at, or in connection with, the qualifying property (that it is reasonable to expect the eligible entity would, absent the order or decision, otherwise have engaged in) are required to cease (referred to as “restricted activities”). ... It requires that it is reasonable to conclude that at least approximately 25% of the qualifying revenues of the eligible entity for the prior reference period that were earned from, or in connection with, the qualifying property were derived from the restricted activities. ... Whether it is reasonable to conclude that at least approximately 25% of the qualifying revenues of an eligible entity for the prior reference period, were earned from, or in connection with, a qualifying property, were derived from restricted activities is a question of fact, and would have to be determined on a case-by-case basis. ...

Reasons: A scholarship or bursary will not be considered to be received in connection with the individual’s enrolment in an educational program except to the extent that it is reasonable to conclude that the award is intended to support the individual’s enrolment in the program. ... These amounts are in respect of a scholarship, fellowship or bursary received in connection with the student’s enrolment in an educational program in which the student is a qualifying student (as defined in subsection 118.6(1) of the Act) in the taxation year, in the immediately preceding taxation year or in the following taxation year. ... According to paragraph 56(3.1)(a) of the Act, a scholarship or bursary will not be considered to be received in connection with the individual’s enrolment in an educational program except to the extent that it is reasonable to conclude that the award is intended to support the individual’s enrolment in the program. ...

Muller Limited 2: Goodwill is the benefit and advantage of a good name, reputation and connection of a business. ... In that connection I understand the word to include whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers, and agreed absence from competition, or any of these things, and there may be others which do not occur to me. ... It is the whole advantage, whatever it may be, of the reputation and connection of the firm, which may have been built up by years of honest work or gained by lavish expenditure of money. ...

Reasons: Commissions are paid in connection with the sale of property and amount to either business income or income in respect of independent personal services. ... However, subparagraph 212(1)(d)(iii) of the Act does not apply to payments that are made for services performed in connection with the sale of property or the negotiation of a contract. ... However, as previously mentioned, in order for the Commissions to be subject to subparagraph 212(1)(d)(iii) of the Act, they must not be paid for "services performed in connection with the sale of property". ...

X performed all or substantially all the duties of his employment outside Canada while on assignment to CanOpco in connection with CanoOpco's business carried on outside Canada with respect to qualifying activities. ... Betteridge in France was in connection with a contract the University had with Semex in respect of a business, if any, carried on in Canada and not abroad. ... It further stated that the OETC enables Canadian employers to reduce their employment costs with respect to foreign contract work, while maintaining the after-tax value of the remuneration their employees receive in connection with such work. ...

What we normally look for are factors that would connect a status Indian's income to the reserve not just his or her connection to the reserve so, generally, it would require at least two of the three factors listed under the words "if employment duties are performed entirely off a reserve; and" to make the income exempt or partially exempt. ...

However, we subsequently learned that the issue involved is presently being considered by Vancouver District Office personnel in connection with a tax return already filed.  ...