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") is considered to be resident in the U.S. for purposes of paragraph 1 of Article IV of the Canada-United States Income Tax Convention (the "Convention"). ... In our opinion, as long as our position regarding a S corporation being a person resident in the U.S. for the purpose of paragraph 1 of Article IV of the Convention remains unchanged, a QSSS would be considered a person resident in the U.S. for the same purpose. ...

The letter opines that unused sick leave payable annually on a given date is not considered a retiring allowance even when paid coincidentally with the termination of employment. ... When a payment is not conditional on retirement or loss of office but is paid annually as a term of employment, we are of the view that the payment is considered employment income for purposes of the Income Tax Act (the "Act") and the payment has to be reported in accordance with the provisions of section 5 of the Act. ...

Francis Attention: XXXXXXXXXX November 18, 1998 Dear Sirs: Re: Meaning of Connected Person This is in reply to your letter of February 22, 1996, wherein you requested our opinion as to whether a partnership could be considered to be connected with a shareholder of a corporation for the purpose of subsection 15(2) of the Income Tax Act (the "Act"). ... Accordingly, a partnership would be considered a person for purposes of subsection 15(2.1) of the Act and will be connected with a shareholder of a corporation where the partnership does not deal at arm's length with that shareholder. ...

It applies where the corporations are related to each other, one corporation (directly or indirectly) transfers assets to the other corporation and one of the reasons for the transfer can reasonably be considered to be to reduce the amount of the adjusted aggregate investment income of the associated group for the purposes of the passive income reduction rule in paragraph 125(5.1)(b). Whether subsection 125(5.2) would apply in any given situation remains a question of fact that can only be made once all the relevant facts of a particular situation are known and have been fully considered. ...

Accordingly, in the above situation, where there is only one employee covered in the plan and as the plan is not a private health services plan, we are of the view that the plan would not be considered to be health and welfare trust and the exception in subparagraph 6(1)(a)(i) of the Income Tax Act (the "Act") would not be applicable. ... As a consequence, the individual would be considered to be in receipt of a taxable benefit under subsection 15(1) of the Act. ...

As a consequence thereof, a payment received by the employee in respect of any such departure would not be considered a retiring allowance. The Department is of the view that where, in an arm's length situation, a long term employee has retired without any assurance of being rehired at that time, and has received a payment from the employer in recognition of long service, the payment would normally be considered to be a retiring allowance regardless of the fact that the employee is rehired at a later date when circumstances have changed. ...

As a consequence thereof, a payment received by the employee in respect of any such departure would not be considered a retiring allowance. The Department in of the view that where, in an arm's length situation, a long term employee has retired without any assurance of being rehired at the time, and has received payment from the employer in recognition of long service, the payment would normally be considered to be a retiring allowance regardless of the fact that the employee is rehired at a later date when circumstances have changed. ...

It would appear from our reading of the translation of the German decision that the German court considered that the vendor/licensor, not the purchaser/licensee, is the person upon whom the German VAT is imposed and who is liable therefore and that accordingly the VAT is included in the vendor's/licensor's income for income tax purposes as described in the first paragraph on page 2 of our Memorandum to you dated May 7, 1991, namely: "If, on the other hand, the VAT is a tax imposed on the vendor/licensor as the person primarily liable therefore (as opposed to merely being liable in its capacity as a collecting agent with an absolute obligation to collect), as appears to be indicated in the letter to you from the German competent authority dated August 17, 1990, we would be inclined to conclude that the entire amount payable to or for the account of the vendor/licensor or for which the vendor/licensor obtained credit against its VAT liability by virtue of action taken by the purchaser/licensee would be "consideration for the use of, or the right to use, any copyright, (etc.)... ... " As indicated by our Memorandum to you in respect of this matter dated May 7, 1991, while we considered it likely that the German VAT, like the Canadian GST, is a tax on the purchaser/licensee rather than on the vendor/licensor, we were unable to determine the German law in this regard.  ...

There are a number of changes in C-28 which affect Nova Scotia but it would appear that only the following need be considered: 1)     Section 38 amends section 152 of the federal Act to add subsection 3.1. ... Saskatchewan indicated to us that it was revising its Income Tax so that on the previous amendments, it only wished to enact those that were considered to be essential. ...

Where the payments, however, have been directed into a bank account or other investment in the child name and the investment can be readily identified as belonging to the child the investment income earned on that account or that investment would be considered income of the child. ... It is our opinion that, under the circumstances described above, the investment income accruing to the policy would be considered income of the child. ...