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In our telephone conversation (19(1)/Guglich) you indicated that a view has been presented that although the generator and other equipment would be included in Class 1 under paragraph (k) or (m) the turbine could be considered a separate asset which is not electrical generating equipment. ... In our view all the assets used to produce the electrical energy would be considered to be "electrical generating equipment". Since the electrical energy is produced by an electrical generator which is run by a gas powered turbine both the generator and the turbine would be considered part of the electrical generating equipment. ...

The basis for this position is as follows: (1) The Financial Administration Act revers only to the remission of "tax, fee or penalty" in section 23. (2) Based on an informal legal opinion obtained some 15 years ago, it was indicated that there was legal support for the view that interest could properly be considered as a "tax" for purposes of section 17 (now 23) of the F.A.A. (3) Since in economic terms interest charges can be considered to be compensation payable by the taxpayer to the government for use of funds that are rightfully the government's once a tax debt becomes due, collection of interest charges was not considered an unfair burden to a taxpayer in cases where it was accepted that the tax debt upon which it was based was legitimate. ...

As stated in paragraph 19 of the Department's Interpretation Bulletin IT-470R, where the course for which the fees were paid was undertaken on the employer's initiative and for the benefit of the employer rather than the employee, the amount paid by the employer is not considered to be a taxable benefit to the employee. ... It is always a question of fact as to whether or not the course taken is primarily for the benefit of the employer (and considered not to be a taxable benefit to the employee) or to the benefit of the employee (and considered a taxable benefit). ...

Given that the use of licencing arrangements is the usual way for an R&D performer to sell rights to R&D, it is clearly our policy that such royalties should satisfy the requirements of these provisions... revenue arising from a licence to use computer software should not be considered revenue from the prosecution of scientific research and experimental development since the commercial reality of such a transaction is the sale of a finished product, not the results of R&D which are then utilized by the licencee in the course of its business. Our Comments XXX we now confirm that we accept the interpretation that royalties earned by a taxpayer whose business consists of carrying out SR & ED on its own behalf and then licensing the results on an exclusive or non-exclusive basis to one or more parties to commercially exploit the results should be considered revenue derived from the prosecution of SR & ED for the purpose of the revenue test in paragraph 2902(a) of the Regulations and paragraph 37(7)(e) of the Act. ... WordPerfect, would not normally be considered revenue derived from the prosecution of SR & ED since the licensor of such software, which is in fact a finished product, would have undertaken activities with respect to the software prior to licensing its use which would not qualify as SR & ED activities, such as the commercial production, marketing and distribution of the software. ...

As regards the remission procedure itself, you may wish to know that guidelines have been established to ensure that cases are fairly and uniformly handled and considered. In order to be favourably considered for tax remission, a case should satisfy one of the following three criteria: (1) extreme hardship (Under this guideline the hardship must be of an extreme nature and have existed continuously from the time of occurrence of the event giving rise to the tax for which remission is to be considered to the time of the remission request); (2) incorrect departmental action or advice; or (3) financial setback. ...

In the first hypothetical situation out lined above each of the four Canadian resident shareholders could have an equity percentage in Corporation A which was not less than 10% and therefore, assuming none of these shareholders was a non-resident-owned investment corporation, Corporation A would be considered a foreign affiliate of each of these shareholders. Corporation A would also be considered to be a controlled foreign affiliate of each of these shareholders pursuant to either of subparagraphs 95(1)(a)(ii) or (iii) of the Act. In the second hypothetical situation outlined above, Corporation B would have an equity percentage of 49% in Corporation A and therefore, assuming Corporation B was not a non-resident-owned investment corporation, Corporation A would be considered a foreign affiliate of Corporation B. ...

However, we offer the following general counts: In determining whether or not income is "from property" or from "a business other than an active business" and whether such income "pertains to or is incident to an active business" each situation must be considered in the light of its own particular facts. For example, if money is borrowed by a contractor to build dwelling houses, the interest on mortgages taken back on the sale of such houses could normally be considered to pertain to or to be incident to the construction business. On the other hand, if an investment producing FAPI (foreign accrual property income) is liquidated and the proceeds are used by the contractor to finance the construction of a house, the interest on the mortgage taken back on the sale of such a house may not be considered to pertain to or to be incident to the construction business. ...

Interest on money borrowed to purchase an income averaging annuity contract ("IAAC") prior to November 13, 1981, is considered to be borrowed for the purpose of earning income from property. ... This may, in your view, create an unfair situation whereby the interest is an investment expense subject to the CNIL rules, but the annuity income, not being considered property income, is not considered investment income for CNIL purposes. ...

Would the loss corporation, as partner, be considered to be carrying on "that business" carried on by the partnership for purposes of subsection 111(5) of the Act? It is your view that the partner would be considered to be carrying on "that business" carried on by the partnership. ... It is your view that the limited partner would still be considered to be carrying on the business of the partnership. ...

It is your view such a capital contribution should be considered a gift and paragraph 69(1)(c) of the Act would apply. ... A capital contribution by a shareholder to his corporation would result in an increase in the value of the shares of the corporation and the shareholder would be considered to have received a benefit. Consequently, a capital contribution by a shareholder to his corporation would not be considered a gift and paragraph 69(1)(c) of the Act would not apply to increase the ACB of the property contributed to fair market value. ...