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As discussed with you in our telephone conversation of March 28, 1989 whether assets, i.e. goodwill and mangement contract of Opco, are considered to be used in an active business is a question of fact that requires consideration of all the circumstances of the situation before it can be determined whether or not the operations of Opco constitute an active business. ...

It also states that a payment made after December 20, 1991 that is otherwise a periodic pension payment would not be a periodic payment and thus subject to the full 25% Part XIII tax where, subject to certain exceptions, the total of all payments made under the RRIF at or before that time of the payment and in the year exceeds the greater of (a) twice the amount that would be the minimum amount under the fund for the year, and (b) 10% of the amount that would be the fair market value of the property held in connection with the fund at the beginning of the year if all property transferred in the year and before that time to the carrier of a fund as consideration under the fund had been transferred immediately before the beginning of the year and the definition of "minimum amount" in paragraph 146.3(1)(b.1) of the Income Tax Act were applicable with respect to all RRIF's. ...

Based on the foregoing, it is our view that generally a guarantee fee is not income from property but rather is income from business and should not be taken into consideration when calculating an individual's CNIL account. ...

In addition, the fair market value of the specific rights which are being assigned to the employee or shareholder in excess of the consideration, if any, which would be paid by the employee or shareholder for such rights would constitute a taxable benefit pursuant to paragraph 6(1)(a) or subsection 15(1). ...

You requested our comments regarding the application of subsection 55(2) of the Act in the following hypothetical circumstances. (1) Opco is a Canadian-controlled private corporation and a taxable Canadian corporation within the meanings of paragraphs 125(7)(b) and 89(1)(i) of the Act, respectively. (2) The common shareholders of Opco are married individuals owning 65 per cent and 35 per cent of the issued shares respectively. (3) The corporation has a fair market value of $1,000,000 represented by $800,000 of active business assets and $200,000 cash. (4) The corporation has accumulated $500,000 in safe income for the purposes of subsection 55 (2) of the Act. (5) The shareholders intend to sell 50 per cent of each of their shareholdings to an arm's length party for $500,000. (6) Before the intended sale, a new company ("Newco") is incorporated, and the spouses transfer one half of their respective shares of Opco to Newco pursuant to the provisions of subsection 85(1) of the Act and receive common shares of Newco as consideration. ...

As discussed in IT-339R2, a PHSP must be in the nature of insurance and must contain the following basic elements: i) an undertaking of one person, ii) to indemnify another person, iii) for an agreed consideration, iv) from a loss or liability in respect of an event, v) the happening of which is uncertain. ...

Accordingly, a prescribed DSLP would not be disqualified as such where withdrawals other than to fund a leave of absence are permitted only with the employer's approval and such approval is given only where the employer is satisfied that the employee entered into the arrangement to fund a leave of absence but that financial or other considerations make it a hardship for the employee to continue his or her participation. ...

With respect to a variation of a trust which would add discretionary beneficiaries, serious consideration should be given as to whether such a variation constitutes a disposition of any interests in the trust. ...

Directive CA92-25 dated April 16, 1992 sets out specific criteria in paragraphs 6 & 7 for the cancellation of penalties and related interest assessed on source deduction accounts; the paragraphs which follow, however, appear to be more general and allow for discretionary consideration. ...

We shall forward a copy of our letter to the Publications Division for their consideration in the next revision of the Bulletin. ...