Search - considered

The minimum return of capital has been considered as interest income to a partner even though there is no offsetting deduction available to a partnership. However, in our opinion, subject to the possible application of section 103 of the Act and reasonableness test on the rate of interest, a minimum return on capital can be considered as a distribution of income to the extent that it does not exceed the income of the partnership for the particular fiscal year. If both partners contributed capital to the partnership, a minimum return on capital available to one partner while not the other might be considered offensive and section 103 of the Act might apply. ...

Our Comments As you noted, it is the Department's position that driving between an employee's home and the employer's place of business is considered to be a personal use of the automobile.  ... Where an employee begins a drive between home and the employer's place of business and, during the course of that drive, is contacted by telephone and diverted to another place to perform an employment activity, it is our view that the portion of the drive from the point of diversion would be considered employment related and the portion of the drive up to that point would be considered to be personal in nature. ...

Our comments are as follows: (a)       We agree that for the purposes of section 125.1 of the Act the screening of soil, gravel or crushed stone in order to make a product more marketable would be considered to be a processing activity.  ... Such equipment would not be considered to qualify for the ITC.  Our opinion is consistent with the definition of the term "qualified activities" under section 5202 of the Income Tax Regulations which indicates that the activities of transporting. placing or supplying of raw materials do not qualify. (b)       Equipment that is used primarily in construction would not be considered to be used in M & P.  ...

You have asked whether, in the above situation, Revenue Canada would allow a loss to be recognized in 1988 without the application of subparagraph 40(2)(g)(ii) of the Act or alternatively, allow the loss to be recognized in 1989 even though the debt could be considered to have become bad in 1988. ... You have made reference in your letter to the Tax Court of Canada case of Fritz v MNR 85 DTC 507 as confirming that a debt can be considered bad even though the corporation is still operating.  ... You may wish to explore the possibility that the bad debt could be considered to have become bad in 1989 when the assets were sold to pay down existing debts of the corporation.  ...

As a consequence of the exemption from the RCA rules for the 1988 through 1991 taxation years, foreign pension plans will be considered to be employee benefit plans (EBP's), and if an election is made for the 1992 and subsequent taxation years, will continue to be treated as EBP's. If no election is made, the foreign pension plan will be considered an RCA with respect to contributions made after December 31, 1991, and our comments in the July 27, 1990 memorandum concerning post-December 1987 contributions should be applied. A 401(k) plan is considered to be a pension plan, whether it is employee funded or employer funded. ...

It is our view that, in such circumstances, the employee would be considered to have received a taxable benefit under paragraph 6(1)(a) of the Act at the time of the award. Similarly, it is also our view that if the employer subsequently incurs an expense in adding to the value of the article of jewellery that was previously awarded, the employee would also be considered to have received a benefit pursuant to paragraph 6(1)(a) of the Act at that time. ... While the determination of the fair market value of the benefit involves a question of fact, the fair market value of an article of jewellery would ordinarily be considered to be no less than the expense incurred by the employer. ...

Where, for instance, there is a n appointment of an irrevocable beneficiary in either of a policy insurance or an annuity policy under which the beneficiary obtains the unassailable right to ownership of the capital element of the policy such property would normally be considered to vest indefeasibly. ... However, where the Department is satisfied that a property is held in trust solely to carry out the terms of a will under which the ultimate and absolute ownership of that property is bequeathed to a particular individual and the trust arrangement is such that the individual's ownership rights whatsoever to an immediate or future benefit from that property or that rust, the property will be considered to vest indefeasibly in that individual. ... Although the beneficiary is considered by you to be an irrevocable beneficiary it would appear that, (1) changes can be made to the contract to allow partial withdrawals, and(2) the right is given to surrender the contract providing consent is given by the irrevocable beneficiary. ...

It is a question of fact as to whether an individual is considered an employee or self-employed for the purpose of the Income Tax Act (the "Act"). However, the Department will normally consider an individual to be an employee if the income is considered employment income for the purposes of the Unemployment Insurance (1971) Act and the Canada Pension Plan. ... In this regard it should be noted that travel between the employer's place of business and the employee's home is personal and not deductible and that an employee is not considered to be required to maintain an office in the home if the employer provides office space elsewhere. ...

Notwithstanding that the payments from the EBP trust to the employer are not deductible from the income of the EBB trust, the recontributions by the employer to the plan, if made after December 31, 1987, will be considered to be contributions to a "statutory arrangement" as that term is defined in the coming into force provisions of the RCA definition contained in subsection 248(1) of the Act and therefore subject to withholding provisions of paragraph 153(1)(p) of the Act. ... The grandfather treatment applies in the case of an SDA in respect of a taxpayer to the extent that the deferred amounts relate, or may reasonably be considered to relate, to services rendered by the taxpayer before July 1986. ... Also excluded are plans or arrangements to the extent that the deferred amounts relate, or may reasonably be considered to relate, to services rendered after June 1986 and where both of the following conditions are met:- the employer is legally obligated to defer payment of these amounts to the employee pursuant to an agreement in writing made with his employee or former employee before February 26, 1986; and- the employee cannot, at any time after June 1986, cancel or otherwise avoid that obligation. ...

You have asked whether, in the above situation, Revenue Canada would allow a loss to be recognized in 1988 without the application of subparagraph 40(2)(g)(ii) of the Act or alternatively, allow the loss to be recognized in 1989 even though the debt could be considered to have become bad in 1988. ... You have made reference in your letter to the Tax Court of Canada case of Fritz v MNR 85 DTC 507 as confirming that a debt can be considered bad even though the corporation is still operating. ... You may wish to explore the possibility that the bad debt could be considered to have become bad in 1989 when the assets were sold to pay down existing debts of the corporation. ...