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It is our view, however, that where an asset, such as cash temporarily surplus to the needs of a business, is invested in short-term income producing investments, those investments may be considered to be used in the business. Where on the other hand substantial amounts of cash and deposits which are obviously in excess of that required for use in the business are retained in the corporation on a permanent basis, they would not be considered to be funds used in the business. Rather such funds would be considered as permanently set aside for investment or non-qualified uses (i.e., uses other than for active business). ...

Principal Issues: whether non-interest bearing loans made by a foreign affiliate that is a regulated foreign bank to its subsidiaries as a way of financing them other than by way of capital are considered assets used in its banking business for the purpose of making the determination of whether the banking business is conducted principally with persons the affiliate does not deal at arm's length for the purposes of the investment business definition. ... Would the NAL Loans be considered assets used in the non-arm's length portion of the affiliate's Banking Business in making the determination of whether that business is conducted principally with persons with whom the affiliate does not deal at arm's length? ... In the circumstances described above, the dividend income of the affiliate from shares held by the affiliate in subsidiary companies would be considered income from property. ...

An employer-promoted contest would be considered income when a corporation has a history of providing bonuses to its employees. ... Would the value of the prize be considered taxable income to the winner of the lottery? ... Would the prize be considered taxable income to the winner? Department's Position As in the answer to the first part, any prize awarded through an employer-sponsored contest would be received by an employee "in respect of...or by virtue of... ...

Sarazin Attention: XXXXXXXXXX June 20, 1996 Dear Sirs: Re: Definition of Foreign Property This is in reply to your letter dated April 4, 1996, wherein you requested our comments as to whether certain property would be considered foreign property, within the meaning assigned by subsection 206(1) of the Income Tax Act (the "Act") and whether an initial margin would be included in the cost amount of a contract. ... Subject to certain exceptions, we would generally agree that the contract would not be considered an intangible property situated outside Canada in a situation where both participants in a foreign currency forward contract are resident in Canada. ... Certain Put and Call Warrants Would put and call warrants issued by a Canadian financial institution or other Canadian contra parties which are settled for cash and under which the settlement is determined by reference to a formula which is directly linked to foreign property be considered foreign property for purposes of the Act? ...

It specifies that the borrowed money may be considered to be used for the purpose of earning income from the partnership interest and subsection 20.1(1) the Act will apply much the same way as it applies to borrowed money used to acquire shares in a corporation. ... If the decrease in the adjusted cost base of a partnership interest is attributable to drawdowns by the partners of capital from the partnership, the borrowed money is traceable to an ineligible use and the amount of the decrease is not considered to be lost because of a decline in value of property for purposes of section 20.1 of the Act. ... Generally, the amount of borrowed money to which subsection 20.1(1) of the Act applies is the total amount of borrowed money outstanding just before it ceases to be used to earn income from the property minus the amount of borrowed money that is not considered to have been lost determined as follows:-money that is traceable to an ineligible use such as a drawdown of capital-where the property has been disposed of for an amount of consideration at least equal to the fair market value of the property, the amount of the borrowed money that, under the existing rules, is traceable to the consideration, and-otherwise, the amount of the borrowed money that would, under existing rules, be traceable to the money received by the taxpayer if the taxpayer had disposed of the property for an amount of money equal to the fair market value of the property. ...

Principal Issues: Whether an elderly widow can be considered to ordinarily inhabit her principal residence as required by the definition in section 54 in circumstances where she goes into a nursing home as a result of illness and rents her home for an indeterminate period. Position: If she goes into the nursing home on a temporary basis, it is likely that she could be considered to ordinarily inhabit her residence. ... Also, the change in use rules in paragraph 45(1)(a) and the election under section 45(2) should be considered. ...

Every situation must be considered on the basis of the facts of the particular situation and without specific details of the situation, we are prepared to offer only the following general comments: We agree that a trade payable will be a "limited recourse amount", as the term is defined under subsection 143.2(1) of the Act, and also will be deemed to be a limited recourse amount for the purposes of subsection 143.2(7) of the Act, unless the requirements described in paragraphs 143.2(7)(a) and (b) are met. Also, it is our view that pursuant to proposed subsection 143.2(10) of the Act, an account payable of a taxpayer that was considered to be a limited recourse amount would only be an "expenditure" incurred by the taxpayer, for the purposes of section 143.2 of the Act, at the time and to the extent of the repayment thereof. ... An indebtedness of a taxpayer that otherwise would be a LRA under 143.2(7) and that is repaid within 60 days of the date on which the debt arose will be exempt under that latter subsection, provided that no part of such debt is repaid with a LRA or that the repayment cannot be considered to be a series of other debts and repayments that end more than 60 days after the debt arose. ...

Position: No Reasons: Excess amount is only the amount that an annuitant may withdraw under the terms of the contract in excess of the minimum amount and the other amounts are considered transfer of property for purposes of T2033. 962668 XXXXXXXXXX M.P. ... You have expressed a concern that a transfer of property requiring a form T2033 may also be considered a transfer of an excess amount requiring a form T2030. ... Where the individual has withdrawn the additional $4,000 prior to the transfer date then the $25,000 would be considered a transfer of property and a form T2033 would have to be completed. ...

You have asked whether or not the offset to tuition fees provided to a participating student could be considered a scholarship, bursary or fellowship as contemplated in paragraph 56(1)(n) of the Act, given participation is voluntary and the amounts are credited to the education costs of the student. ... In view of the foregoing, it is our opinion that the offset of the value of the services provided by the students against tuition fees in this situation cannot be considered to be a scholarship, fellowship or bursary received by the students under paragraph 56(1)(n) of the Act. ... Accordingly, any direct payment, or reduction, of the tuition fees by the post-secondary education institution is considered a taxable benefit in the hands of the student/employees in the year received or enjoyed as opposed to the time at which the services were provided. ...

Position: 1)Confirming new position that administration fees paid inside RRSP or RRIF trust do not constitute benefit or amount received to annuitant; 2)Confirming old position that investment management fees paid by annuitant are considered payment of a premium to RRSP but not a gift to RRSP for section 146 and Part X.1 purposes; and that payment of such RRIF expenses by annuitant is forbidden by 146.3(2)(f) and would cause income inclusion under 146.3(11); 3)Confirming Finance's position that both types of fees may be paid out of plan funds. ... The payment will not be considered the payment of a premium to the RRSP, nor a gift to an RRSP for purposes of Part X.1 of the Act. ... We have not considered your proposed arrangement and would require more information, possibly in the form of a request for an advance income tax ruling, before taking a position on it. ...