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9 August 1991 External T.I. 911655 F- Child Tax Credit and the Equivalent-to-Married Tax Credit Unedited CRA Tags 122.2(2)(b), 118(1)(b) Subject: Child Tax Credit and the Equivalent-to-Married Tax credit This is in reply to your memorandum of June 17,1991 in which you asked us to consider two situations involving the above-noted tax credits. 24(1) As support for this position, you have referred to paragraph 17 of Information Circular 80-3R2 entitled "Child Tax Credit" which indicates that a spouse is still considered to have resided with the claimant at December 31 if separated only for business, employment, medical or educational reasons. ... In the situation where an individual's husband is 24(1)   overseas, we believe that he should be considered to reside with his spouse unless he can establish otherwise.  ...

The deemed dividend resulting from the redemption of the shares of the private Canadian Corporation is considered to be a taxable dividend under subsection 89(1)(j) of the Act and would be included in computing income of the trust. ... As the deemed dividends are the result of a transaction subsequent to the death of the spouse they cannot be considered to be paid or payable to the spouse in the year.  ...

The Department's view with respect to some of the factors to be considered in this regard can be found in Interpretation Bulletin IT-479R, entitled "Transactions in Securities" and Interpretation Bulletin IT-114, entitled "Discounts, Premiums and Bonuses on Debt Obligations". Where the whole course of a taxpayer's conduct indicates that a)     in security transactions the taxpayer is disposing of securities in a way capable of producing gains and with that object in view, and b)     the transactions are of the same kind and carried on in the same way as those of a trader or dealer in securities, the proceeds of sale will normally be considered to be income from a business and, therefore, on income account. ...

Where an employer acquires an interest in a life insurance policy that may reasonably be considered to fund benefits to be received by an employee upon his retirement or upon substantial change in services rendered, the arrangement would be subject to the RCA rules by virtue of subsection 207.6(2) of the Act.  ... All the factors of a particular situation would have to be considered to determine whether the RCA rules apply or not. ...

Humenuk   (613) 957-2135 July 25, 1989 Dear Sirs: Re:  Attribution Rules We are responding to your letter dated May 19, 1989, in which you ask whether the repayment of a loan in kind is considered a transfer within the meaning of subsection 74.1(1) of the Income Tax Act (the Act). ... X is not considered a transfer it is our view that subsection 73(1) of the Act does not apply to Mrs. ...

Pursuant to paragraph 96(1)(f) of the Act, the income of the partnership is considered to retain its identity when flowing through to the partners. ... Subparagraph 115(1)(b)(iv) of the Act describes the condition which would require shares of a public company to be considered "taxable Canadian property":      "a share of the capital stock of a public corporation if...not less than 25% of the issued shares...belonged to the non-resident person, to persons with whom the non-resident person did not deal at arm's length... ...

You have asked for confirmation that the disposition of subdivided lots that, in total, do not exceed a half-hectare, provided they were contiguous with the principal residence, would be considered to be a disposition of a principal residence for the purposes of paragraph 54(g) of the Act. In your view, the sale of all or part of contiguous land within one-half hectare of a principal residence would be considered to be a sale of a principal residence. ...

In our reply of November 3, 1989 to your letter of October 2, 1989, we considered all the situations listed in your letter, including situations 4 and 8, in our comments made in paragraphs 1 through 3.  Since the two situations you mention were considered in our reply, we are of the view that no additional comment is warranted. 2.      ...

Leung   (613) 957-2116 October 30, 1989 Dear Sirs: Re:  Paragraph 54(b) of the Income Tax Act (the "Act") We are writing in response to your letter of September 28, 2989 wherein you requested our view on whether, for purposes of subsection 80(1) of the Act, "cash" would be considered capital property within the meaning assigned by paragraph 54(b) of the Act. ... It is therefore, our opinion that, for purposes of subsection 80(1) of the Act, money in Canadian currency would not normally be considered capital property within the meaning assigned by paragraph 54(b) of the Act. ...

However, we do offer the following general comments: It is our opinion that an amendment to an employee stock option plan addressing what will happen in the event of a takeover or reorganization would not in and of itself be considered so fundamental a change to the agreement as to constitute a new agreement.  ... If however, the intent and effect of the amendment is to make available to the employees shares that are fundamentally different than those contemplated by the original agreement, then it could be argued that a fundamental or cornerstone item of the Plan has significantly been altered (e.g. the type of share being offered to participating employees may now include shares of a Parent Company) and as a result could be considered to render the old agreement extinguished. ...