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Accordingly, any income or expense from the swap would not be considered to be derived from the associated hedged assets or the stream of income therefrom. ... It is also our view that any income earned or expense incurred from the swap would not be considered to be derived from the associated assets for which it may be designed to hedge. Accordingly, for the purpose of subparagraph 204.4(2)a)(v) of the Act, the income from the swap would not be considered to be derived from the associated assets. ...

Principal Issues: Whether Hong Kong is considered part of China for purposes of paragraph 95(2)(a.1) Position: Yes Reasons: As a result of the unification of Hong Kong and the People's Republic of China, there is no reason, for purposes of paragraph 95(2)(a.1), to distinguish the two. XXXXXXXXXX 1999-001460 Tim Kuss February 22, 2001 Dear XXXXXXXXXX: Re: Paragraph 95(2)(a.1) Technical Interpretation This is in reply to your letter requesting whether Hong Kong is considered to be part of China for purposes of paragraph 95(2)(a.1) of the Income Tax Act. ... In our view, as a result of the unification of Hong Kong and the People's Republic of China, Hong Kong would be considered part of China for purposes of paragraph 95(2)(a.1). ...

Reasons: All three activities taken together are considered mental functions necessary for everyday life (a basic activity of daily living) for purposes of paragraph 118.4(1)(c.1). ... Whether a combination of any two of the three activities would be considered a basic activity of daily living would likely be a question of fact. ... Certainly all three activities together are considered a basic activity of daily living for purposes of paragraph 118.4(1)(c.1), and any single one of those activities would likely not be. ...

In our view this "reasonably be considered to relate" test must be applied on a case by case basis in that the details and facts will differ from case to case. The fact that other assets have been pledged and that the lender in accordance with industry practice requires collateral in excess of the loan balance would be the type of factors to be considered in applying the test. ... Accordingly, we agree that the remarks in PS 83-16 may be considered a better guide, as to the amount of the insurance premium which may "reasonably be considered to relate" to the loan, than the remarks in IT 309R paragraph 7. ...

For example, a housing loan amortized over 25 years, renewable every five years, at a prescribed rate of interest would be considered acceptable while a non-interest bearing housing loan with a 15 year repayment term would be considered much less so.  We are, therefore, unable to provide you with a definitive reply as to whether the type of arrangement described would be considered bona fide without taking into account the circumstances of a particular employee.  It follows, also, that any change to the repayment arrangement that would bring it closer to one that is available in normal commercial practice would increase the likelihood that it would be considered bona fide. ...

Therefore an amount is considered to be deductible in the year it is capable of being deducted. If an amount is added to the cost of inventory, and the addition is not elective in nature, the outlay or expense is not considered to be "deductible". If the taxpayer has no option as to whether or not to deduct an expense, that is, he must capitalize the outlay, the amount will not be considered to be deductible' and section 78 would not apply. ...

In considering whether royalties received by a corporation in any business can be considered to be income from an active business for the purpose of subsection 125(1) of the Act as opposed to income from property and therefore constituted income from a specified investment business within the meaning of a paragraph 125(7)(e) of the Act, we believe that as a general rule royalty income is income from a source that is property. ... As noted in paragraph 11 of Interpretation Bulletin IT-73R4 the word "principal" is considered synonymous with the words "chief" and "main". ... However, where it can be established that the royalty income is incidental to an active business carried on by the recipient corporation or the corporation is in the business of developing the property from which the royalties are received, such income would not normally be considered as income from property. ...

In particular, you are concerned whether significant amounts of cash held by a cyclical business in term deposits will be considered as assets used in an active business. ... It is our view that where cash is temporarily surplus to the needs of a business and is invested in short-term income-producing investments, those investments may be considered to be used in the business. ... Such funds would be considered to be permanently set aside for investment or uses other than in an active business. ...

PRINCIPAL ISSUES: Whether transportation expenses incurred byTax Volunteers considered Gift to HER Majesty? POSITION: NO REASONS: To be considered a gift property must be transferred. ... The volunteers are asking that these transportation expenses be considered a "Gift to Canada". ...

Amounts received (whether in a lump sum or on a stumpage basis) for permitting other persons to remove standing trees from the woodlot are considered to be on account of capital. ... However, an amount received from an infrequent transaction allowing other persons to remove timber from a woodlot is considered a capital receipt. ... Whether the payments received for the removal of timber from the XXX are incidental to the XXX operation, and therefore would be considered to be capital, is a question of fact. ...