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MNR (1966), the following two tests were considered in determining whether a taxpayer processes goods:-whether there is a change in the form, appearance or other characteristics of the goods subject to the operation and-whether the product becomes more marketable. ... As you have noted, the Department has taken the position, in paragraph 6 of Interpretation Bulletin 145R, that the activities of breaking bulk and repackaging for subsequent resale where there is a systematic procedure to make a product more marketable are generally considered to be processing. ... Finally we note that paragraph 31 of the Bulletin, which discusses the definition of "qualified activities", states that if a good can be sold in bulk, but is packaged for the convenience of making a sale or because the taxpayer can receive a higher price if the product is placed in packages, it will generally be considered to be a finished good before packaging takes place. ...

29 March 1993 External T.I. 9235745 F- Definition of Active Business Income Royalty Income Unedited CRA Tags 110.6(1) qualified farm property   XXXXXXXXXX Attention:  XXXXXXXXXX Dear Sirs: RE:  Definition of Active Business Income This is in reply to your letter dated November 26, 1992 requesting an interpretation of whether royalty income earned by a farming operation would be considered to be active business income. ... This could include issues involving residence, carrying on of a business and the existence of a partnership or whether income could be considered to be active business income. ... However, where it could be established that the royalty income is related to an active business carried on by the recipient corporation or the recipient corporation is in the business of dealing in or originating the property from which the royalties are received such income would be considered to be income from an active business. ...

Factors which may be considered in making such a determination would include consideration of the fair rental value of such equipment and whether the employer is restricted in the manner in which the equipment is used (i.e is it only available for use by the employee who has provided the equipment). Where the monthly amount paid for the use of the equipment is not considered as remuneration, the employee would be required to include the amount in income, net of any applicable expenses including capital cost allowance. ... Provided that the amount is not considered remuneration, there is no authorized form required of the employer to show the amount of rent paid to the employee for the equipment. ...

Would any benefits under the plan be considered to be taxable under the paragraph 6(1))f) of the Income Tax Act. 2.      ... Under such circumstances the plan will be considered an employee pay-all plan provided such an arrangement was in place at the time the payment was made. ... We would emphasize in respect of the latter comment that an employer cannot change the tax status of a plan by simply adding to the employee's income the employer's contribution to such a plan that would normally be considered to be non-taxable benefits. ...

You referred to paragraph 12 of Interpretation Bulletin IT-218R (the "IT") which states that vacant land that is a capital property used to produce income will be considered to have been converted to inventory at the time of making application to subdivide the lands into lots for sale, provided that the taxpayer proceeds with the development of the subdivision. ... Our Comments: Paragraph 24 of the IT goes on to state that where the taxpayer goes beyond mere subdivision of the land into lots and installs improvements such as watermains, sewers or roads, or carries on an extensive advertising campaign to sell the lots, the taxpayer will be considered to have converted the land from capital property into a trading property. ... In our view, where a property is a capital property, in the absence of plans to proceed with the development of a subdivision, making application to the relevant authority for approval of a plan to subdivide would not, in and by itself, cause the property to be considered as being converted to inventory. ...

However, the rules provided in subsection 207.6(2) of the Act will apply where the employer, former employer or a person or partnership with whom the employer or former employer does not deal at arm's length, purchases, pursuant to an arrangement, an interest in a life insurance policy that may reasonably be considered to be acquired to fund benefits described in that subsection. ... Under subsection 207.6(2) of the Act, the person who acquires the policy is considered to be the custodian of an RCA, the life insurance policy is considered to be the "subject property" of the RCA, an amount equal to twice the amount of any premium paid under the policy is treated as a contribution to an RCA, and payments under the policy and refunds of refundable tax are treated as distributions by an RCA. ...

Szeszycki (613) 957-2135 August 12, 1993 Dear XXXXXXXXXX Re: Private Health Services Plan This is in reply to your letter of February 4, 1993 in which you requested our views with respect to the approach being considered in funding a private health services plan (PHSP). ... For your further information we have enclosed Interpretation Bulletin IT-339R2 —Meaning of "Private Health Services Plan"—which discusses in more detail the requirements that must be met for a plan to be considered a PHSP. ... In order to be considered employer-funded, it must not diminish the compensation arrangement to which the employer is contractually committed. ...

" Your request relates to a specific agreement that XXXXXXXXXX As indicated in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990, requests for written opinions on completed transactions are generally considered by the taxpayer's local District Taxation Office. ... The issue of trust versus agency was considered in the court case Patricia M. ... As any reassessment would most likely be initiated by that district office, they would be in the best position to advise you what factors would be considered in any assessment proceedings. ...

Paragraph 6.2 of the Income Tax Conventions Interpretation Act (the "ITCIA") was enacted to clarify that Canada maintains its right to tax the Canadian partners on their share of income of a partnership which may be considered a resident or enterprise of the other country under a tax convention or agreement. ... In that decision, it was held that a resident partner's share of the income of a partnership managed in another country may be considered to be the income of a resident of that other country for purposes of a tax treaty. ... It clarifies that a partner's share of the income of the partnership is subject to the Income Tax Act regardless of whether the partnership may be considered to be a resident of another country under a tax treaty concluded by Canada. ...

Our Comments: If the terms of a trust indenture or a statutory act governing the trust do not provide that capital gains are to be considered income for the purposes of the trust, then capital gains arising in the trust are considered to be capital of the trust under trust law. ... As the Cemeteries Act prevents the payment of any capital portion of a Care and Maintenance Fund to the cemetery owner, no part of any capital gains earned by such a trust in a year would be considered "paid or payable" to the cemetery owner for the purposes of paragraph 104(6)(b) and subsection 104(24) of the Act. ...