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Citizen This is in response to your verbal enquiry concerning the question as to what amount should be considered to be an "income or profits tax" for purposes of calculating the foreign tax credit ("FTC") in Canada for XXXXXXXXXX The documents indicate the following facts. 1.      ... However, where such credit is not applied for and the resulting tax paid to the United States is greater than that allowed by the Convention such excess tax is considered a voluntary payment and would not qualify as an "income or profits tax" for the purposes of the FTC. ...

In considering the issue of whether a deduction is available under paragraph 8(1)(b) of the Act, one must first determine whether the benefits awarded by the court are taxable under paragraph 6(1)(f) of the Act and whether the insurer is considered to be an employer for the purpose of paragraph 8(1)(b) of the Act. ... A quick glance at the types of remuneration listed in Regulation 100(1) shows that it includes pension payments, unemployment insurance benefits and other amounts which are typically paid by an entity which is not normally considered to be the recipient's employer for the purposes of the Act. ...

A plan which provides a carryforward provision in excess of 12 months or a plan which provides for the carryforward of both credits and expenses however, will not likely qualify as a PHSP because the plan would not likely have the necessary element of risk to be considered a plan of insurance. We caution you that the above noted comments represent our considered opinion only and as such, are not binding on the Department. ...

The options you are considering include a carryforward provision, the transfer of funds into RRSP accounts administered on a group basis and the withdrawal of funds in cash where such withdrawal is considered employment income to the employee at the time the funds are withdrawn. ... In addition, we would like to point out that a plan which purports to be a PHSP will not be considered as such if the plan reimburses expenses (such as the reimbursement of premiums for a plan or insurance other than a PHSP), which do not qualify as medical expenses as defined in the Act. ...

Our Comments: At the outset, we are mentioning that since Form T2200 must be prepared by an employer before an employee is entitled to claim certain expenses, the comments set out below must be considered from that perspective. ... Nevertheless, it is the Department's general position that this requirement may also be considered to have been satisfied where it is tacitly understood by the employer and the employee that the workspace be provided by the employee. ...

Is the rollover from a U.S. employer pension plan to the IRA considered income for purposes of paragraph 3(a) of the Act such that it would cause a tax liability under Part I.2, even though the rollover is deductible under subparagraph 110(1)(f)(i)? ... Answer: An interest in an IRA is considered a "right or thing" within the meaning of subsection 70(2) of the Act and in the year of death there are three alternative tax treatments available as follows: 1) the total value may be included in the deceased's income in the year of death and, if exempt from income tax in the United States, a corresponding deduction taken under subparagraph 110(1)(f)(i) of the Act, 2) the deceased's legal representative may make the election under subsection 70(2) of the Act and file a separate return, including the value of the IRA in the income reported on the separate return and, if exempt from income tax in the United States, claiming a corresponding deduction under subparagraph 110(1)(f)(i) of the Act, or 3) amounts received out of the IRA may be taxed in the recipient beneficiary's hands under clause 56(1)(a)(i)(c.1) of the Act in the year of receipt if ownership of the IRA is transferred to the beneficiary (whether the spouse or child) in the time specified in subsection 70(3) of the Act. ...

You have asked for our comments regarding whether the amounts paid to individuals from developing countries in order to come to Canada to attend school full-time (usually for a period of one to three years) would be considered taxable income under paragraphs 56(1)(n) or 56(1)(o) of the Income Tax Act (the Act). ... As was the case in the previous review, there is nothing in the material submitted to us to suggest that the work (study) undertaken by these trainees would constitute "research" in the sense explained in Interpretation Bulletin IT-75R3 or that the amounts so received should be considered "research grants" pursuant to paragraph 56(1)(o) of the Act. ...

Generally up to 1/2 hectare is considered to be relevant to the personal use of a principal residence. However, where a portion of the land is used to earn income from a business or property, such portion will not usually be considered to contribute to such use and enjoyment. ...

Accordingly, the character of three lump sum payments on account of arrears was not considered to have changed by reason of the timing of the payments where they were made for the purposes of carrying out the terms of the agreement. (b)      It is also our general view that the lump sum payment made in the above situation will not be considered to include an interest element where the amount of the arrears does not include any interest element, the lump sum payment is less than the arrears and the lump sum payment has also been determined without reference to an interest element; and (c)      The Department's general position on the deductibility of alimony and maintenance under paragraph 60(b) of (c) of the Act is set out in paragraphs 2 and 3 of Interpretation Bulletin IT-118R3 "Alimony and Maintenance". ...

From your description of the employee's use of the automobile it is not clear whether he or she would meet this 90% test keeping in mind that travel such as between his temporary residence and the work place is considered personal in nature. ... Where the employee's temporary principal place of residence is in the foreign city and he or she must report to work at a field office of the employer which itself is in a remote location and independently meets the criteria of subparagraph 6(6)(b) then the transportation assistance will not be considered taxable. ...