Income Tax Severed Letters - 1997-06-27

Principal Issues:

1.Where a taxpayer immigrating to Canada has a right to receive payments under an annuity, would paragraphs 128.1(1)(b) and (c) apply to deem the taxpayer to have disposed of and then reacquired that right at its fair market value immediately before immigration?
2.Whether payments received under two U.S. annuities as part of an out-of-court settlement are subject to tax in Canada.
3.Whether the accrual rules in section 12.2 will apply to a taxpayer who has a right to receive payments under an annuity but is not the owner of the annuity contract.

Position:

1.Generally, a right to receive income would constitute "property" as defined in subsection 248(1). Since paragraphs 128.1(b) and (c) apply to each property of a taxpayer who becomes resident in Canada (with exceptions), a right to receive payments under an annuity would appear to be subject to those provisions.
2.Question of fact. Only provided general comments.
3.Subsection 12.2(1) applies to a taxpayer who holds an interest in a life insurance policy. This is a factual determination. If subsection 12.2(1) is not applicable, paragraph 56(1)(d) may apply as it applies to any amount received by a taxpayer as an annuity payment subject to certain exceptions.

Reasons:

Principal Issues:

whether payments into an estranged spouse's RRSP are deductible as alimony or maintenance

Position:

no but they may be deductible as a contribution to a spousal RRSP, subject to the contributor's RRSP room & the monthly tax on any "cumulative excess amount"

Reasons:

Principal Issues:

Where a flow-through share is acquired under an employee stock option, would 53(1)(j) apply to add the employment benefit to the adjusted cost base of the share?

Position: Yes

Reasons:

Principales Questions:

Est-ce que le fait que le contribuable ait à transporter du matériel qu'il utilise dans l'exercice de ses fonctions aurait une incidence sur l'opinion émise dans le dossier F9611115?

Position Adoptée:

Principal Issues:

1. Can amounts received from U.K. personal pension schemes be transferred to an RRSP?
2. What other tax implications are there with respect to these types of plans?

Position:

1. Amounts can be transferred if they are taxable under 56(1)(a).
2. There are a number of taxing provisions that may have application with respect to a Canadian resident who has one of these plans. Only general information could be provided at this time.

Reasons:

Principal Issues:

whether interest would be imputed on an interest-free mortgage between arm's length parties (both individuals) -lender is not a corp, borrower is not non-resident so 17(1) doesn't apply -the borrower is the life insurance agent of the lender, the reason for the lack of interest is goodwill and the life insurance agent will agree to be co-executor of the lender's estate on death and will hold Power of Attorney

Position:

it may be a barter transaction but if not, no interest is likely to be imputed

Reasons:

Principal Issues:

Income tax consequences of a change in one income earning use to another on a portion of land where subsection 45(1) of the Act does not apply and the taxpayer dies before the land inventory is sold. Land transfers automatically to taxpayer's spouse as the land is jointly held.

Position:

Question of fact when a change in use occurs. Land inventory is deemed to be disposed of pursuant to paragraph 70(5.2)(d) of the Act for proceeds equal to its cost amount - no election to dispose of for FMV is possible and capital gain/loss is computed on the notional disposition as indicated in IT-218R. Yes a portion of vacant real estate can qualify as land inventory and there is a deemed disposition on death.

Reasons:

Principal Issues:

Can pension benefits be divided between spouses where a marriage breakdown has not occured?

Position:

This would not be possible under Income Tax legislation alone but may be possible if provincial legislation permits it.

Reasons:

Principal Issues:

If a plan provides leave credits in substitution for vacation leave credits and sick leave credits, can all or a portion of any amount paid in respect of the credits be treated as a retiring allowance?

Position:

Principales Questions:

Est-ce que certaines activités exercées par une pépinière sont des "activités agricoles"?

Position Adoptée:

Principal Issues:

whether the Dept's admin position relating to gifts has been changed to permit gifts with a value up to $200 to not be included in employee's income and whether an amount is required to be included in an employee's income for an award if the award has a departmental or corporate logo permanently affixed or engraved on it

Position:

no change in $100 ceiling re. admin position. While a logo or engraving may reasonably lessen the value of an award, it does not mean that an award has no value because of the existence of a logo or engraving.

Reasons:971061

Principal Issues:

Can a corporation deduct a net capital loss carryforward to offset a taxable capital gain in calculating taxable income when there is no taxable income.

Position:

Corporation can claim a net capital loss carryforward

Reasons:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

5-963532
XXXXXXXXXX Michel Lambert
(613) 957-8953

A l'attention de XXXXXXXXXX

Le 13 mai 1997

Mesdames, Messieurs,

Objet: Loi de l'impôt sur le revenu Érablière - Paragraphe 127(9)

Principales Questions:

1. Est-ce que la modification d'une convention régissant un régime de prestations aux employés amènerait une réception présumée d'un montant pour l'employé?

2. Advenant une modification d'un régime, est-ce que le régime ne se qualifierait plus à titre de "régime de prestations aux employés" établi avant 1986?

Position Adoptée:

Principales Questions:

approved association status and 149(1)(j) corporation

Position Adoptée:

Principal Issues:

Appropriate tax treatment of a payment required to be made under the BC Forest Act to keep a timber license after there has been a change in control of a corporation.

Position:

Question of fact.

Reasons: