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Humenuk 957-8953 Attention: Heather Molyneux Team Co-ordinator 940808 Home Relocation Loans We are replying to your memorandum of March 22, 1994 in which you ask whether there are any time limitations during which an employee must purchase a dwelling in order for an employer-provided loan to be considered a "home relocation loan" as defined in subsection 248(1) of the Act. ... With respect to the second example cited, it is significant to note that an employee must move from the residence in Canada at which he ordinarily resided to a residence in Canada at which, after the move, he ordinarily resided in order for the loan used to acquire that second residence to be considered a home relocation loan. ... However, where the employee establishes a settled routine of life at the first location, the employee is considered to ordinarily reside at that location even though the employee intends to move to another location at the earliest opportunity. ...

In particular, you describe two fact situations and ask whether the individual would be considered a first-time home buyer and thus eligible to withdraw an amount from the individual's registered retirement saving plan (RRSP) pursuant to the terms of the Home Buyers' Plan. ... The proposed addition of paragraph 146.01(2)(a.1) sets out the circumstances in which an individual will be considered to have an owner-occupied home. John will be considered to have an owner-occupied home in the period beginning January 1, 1990 and ending in 1994, if, among other things, he owns a home during that time (not the case in this situation). ...

For the purpose of this definition where an employer sets aside and holds property for an employee the arrangement can be considered an RCA. ... The Department's concern has been whether or not these security arrangements could also be considered as funding for the RCA and this issue would have to be decided on a case by case basis given full knowledge of all the facts. ... " However, we have also generally stated that if the assets are not specifically set aside for the RCA and can be used for other purposes or to satisfy other creditors, providing such security would not likely be considered as contributions to the RCA. ...

Pursuant to proposed paragraphs 80(2)(g) and 80(2)(g.1) of the Act: (g) where a corporation issues a share (other than an excluded security) to a person as consideration for the settlement of a debt issued by the corporation and payable to the person, the amount paid in satisfaction of the debt because of the issue of the share shall be deemed to be equal to the fair market value of the share at the time it was issued; (g.1)where a debt issued by a corporation and payable to a person is settled at any time, the amount, if any, that can reasonably be considered to be the increase, as a consequence of the settlement of the debt, in the fair market value of shares of the capital stock of the corporation owned by the person (other than any shares acquired by the person as consideration for the settlement of the debt) shall be deemed to be an amount paid at that time in satisfaction of the debt; Under these proposed provisions a corporate debtor is considered to have paid an amount in satisfaction of a debt equal to the fair market value of a share, where that share is issued by the debtor as consideration for the settlement of the debt. Pursuant to proposed paragraph 80(2)(g.1) of the Act, a corporate debtor is considered to have paid an amount equal to the increase in value of the shares of the capital stock of the debtor that are owned by the creditor (other than those shares issued as consideration for the settlement of the debt) to the extent that the increase in value is as a consequence of the settlement of the debt. ...

Principal Issues: Loans made in respect of dwellings more than one year after the employee commences work at the new location- whether there are timing restrictions involved in a home relocation loan as defined in subsection 248(1) in relation to such loans Position: None in the law- a review of facts surrounding significant delays could put the loan off side Reasons: In the most common situation, there is a delay between the relocation to a new city and purchase of home (the employee lived in temporary accommodation during the delay)- if it can be said that the employee ordinarily resided at that other place then the loan to purchase any other home will not be a home relocation loan because the home purchased is not the new residence; it would, accordingly, seem that if an employee purchased a dwelling more than a year following the commencement of his employment duties, it would be unlikely that the dwelling would be considered to be the residence at he or she ordinarily resided after the move- Two other timing delays were also noted: (i) a delay between the commencement of work at the new work place and the relocation to that place, and (ii) the granting of the loan and the purchase of the dwelling June 24, 1996 Sudbury Taxation Centre HEADQUARTERS Ms. ... You have enclosed correspondence submitted to your office by XXXXXXXXXX In the correspondence, XXXXXXXXXX has indicated that if a residence is purchased by an employee within one year of the commencement of employment duties, the loan is considered to qualify as a "home relocation loan" (HRL), as defined in subsection 248(1) of the Income Tax Act. ... " Generally, when an employee purchases a dwelling more than one or more years following the commencement of his employment duties at the new location, doubts arise as to whether the dwelling could be considered to be the "new residence" at which he or she ordinarily resided after the move. ...

For example, the supply dealer accepts the ticket as a payment on a farmer's account resulting in a current expense for the year, as the farmer will be considered to have made a payment in that year. ... The farmer, therefore, is considered to have made a payment for a like amount at that time. ... The repayment of the $18,000 is considered to be a constructive receipt in that the liability for the advance was, in fact, decreased and, therefore, the $18,000 would be treated as if it were received in cash and repaid against the advance. ...

In the event that the cost of the new cabinets is not an eligible expense, you asked whether costs could be allowed to the extent that they are considered to represent the cost of replacing the old cabinets with equivalent cabinets. ... Our Comments It is our view that the costs of preparing the reports can be considered to be amounts paid "in respect of medical or dental services" for the purposes of paragraph 118.2(2)(a) of the Act. 2.Prescription Filling Fees You have also asked us whether a "prescription filling fee" (which is part of the cost of obtaining prescribed drugs) is an eligible medical expense. ... Other Comments In your E-Mail of August 8, 1996 and your facsimile of September 9, 1996, you requested information on the provinces in which certain individuals could be considered to be medical practitioners. ...

Reasons: 1.Our long-standing position has been that a band that has passed bylaws under both sections 81 and 83 of the Indian Act (or, formerly, if they reached an advanced stage of development) would be considered to be a "public body performing a function of government in Canada" within the meaning of paragraph 149(1)(c) of the Income Tax Act. ... Only those bands that act similarly to the Pas Indian Band would be considered to be a municipality for purposes of paragraph 149(1)(d). 2.In the Otineka case, the two corporations carried on business that was atypical of business carried on by a municipality. ... First, the band was considered to be a municipality. Second, the corporations operated within the jurisdiction of the band. ...

Position: IF THE AMOUNT FOREGONE OR FORGIVEN BY THE SCHOOL HAS BEEN INCLUDED IN THE EMPLOYEE'S INCOME, THAT AMOUNT IS CONSIDERED TO HAVE BEEN PAID. ... When an amount has not been "paid" directly to the school, but the value of the free or foregone tuition has been included in income, then the question is whether an amount can be considered to have been "paid." If the amount foregone or forgiven by the school has been included in the employee's income, that amount is considered to have been effectively "paid" by the employee. ...

3.Whether the provisions of subsection 8(13) of the Income Tax Act (the Act) need to be considered by an employer in determining whether to certify Form T2200 with respect to work space in the home Position: 1. ... Since employee while on disability leave not performing the required duties of employment does not meet the requirements of 8(1)(i)(iii) or 8(13). 3.Subsection 8(10) of the Act which deals with certification does not require subsection 8(13) of the Act to be considered. ... Although XXXXXXXXXX may be, or feel, obligated to continue to perform certain minimal employment duties for XXXXXXXXXX while he is on disability leave, it is our opinion that, during this time, he cannot be considered to be principally performing his employment duties as required by subparagraph 8(13)(a)(i) of the Act. ...