Income Tax Severed Letters - 1997-08-08

Miscellaneous

10 May 1996 7M12851 - LIFE INSURANCE POLICIES

Unedited CRA Tags
20(1)(c) 70(5.3)

Principal Issues:

Discussing various transactions involving universal life insurance policies

Position: See attached

Reasons:See attached

30 November 1995 961621A - USE OF DEDUCTIONS AND CREDITS IN RELATED CORPORATE GROUP

Unedited CRA Tags
20(1)(c)

Principal Issues:

Whether transactions based upon ATR-44 may be utilized to utilize deductions and investment tax credits within a related corporate group.

Position:

Yes.

Reasons:

30 November 1995 9625081 - SHAREHOLDER BENEFIT, TRANSFER OF CONTROL TO SON

Unedited CRA Tags
15(1) 246(1)

Principal Issues:

whether a transfer of controlling interest from father to son results in a benefit

Position:

depends on whether there is a premium on that interest

Reasons:

30 November 1995 962809A - EXCESS CASH FLOW - DPS

Unedited CRA Tags
9(1) 248(1)

Principal Issues:

Ruling

23 December 1996 Ruling 962373A - SALE OF TIMBER ON FARMLAND

Unedited CRA Tags
110.6

Principal Issues:

Would capital gain resulting from proceeds received from permitting another person to cut and remove standing trees from land that is a qualified farm property be eligible for the enhanced capital gain exemption.

Position:

No.

Reasons:

30 November 1996 Ruling 9629743 - CEILING PAYMENTS MADE BY DOCTORS TO XXXXXXXXXX

Unedited CRA Tags
9

Principal Issues:

tax consequences relating to the payment by an association\partnership of salaried doctors to XXXXXXXXXX where the doctors carry on the practice of medicine

Position:

the payment to XXXXXXXXXX by the partnership will be deductible in computing the income of the partnership of doctors with the result that each partner's income from the partnership will be nil and the gross salary paid to the doctors by XXXXXXXXXX will constitute the full amount of their income from the duties of employment which includes the practice of medicine

Reasons:

25 November 1996 Ruling 962693A - DEFERRED CASH GRAIN TICKETS

Unedited CRA Tags
76(4)

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.

962693.1
XXXXXXXXXX A.M. Brake

Attention: XXXXXXXXXX

November 25, 1996

Dear Sirs:

Re: Deferred Cash Grain Tickets, Subsection 76(4)

1996 Ruling 9612883 - : RRSP XXXXXXXXXX

Unedited CRA Tags
: 146, 204.2(1.2), 153(1), 9

Principal Issues:
XXXXXXXXXX

Position:
XXXXXXXXXX

Reasons:
In accordance with ATR-24

30 November 1995 Ruling 9617343 - REORGANIZATION, INTERLOCKING SHAREHOLDINGS

Unedited CRA Tags
55(3)(b)

Principal Issues:

Distributing corporation holds shares of transferee and transferee holds shares of DC. How to determine types of property.

Position:

Transferee's investment in DC will be determined excluding the investment in the transferee corporation.

Reasons:

30 November 1995 Ruling 9626743 - SELLING COMMISSIONS - MUTUAL FUND LTD PARTNERSHIP

Unedited CRA Tags
96(2.2) 237.1 143.2

Principal Issues:

Public mutual fund limited partnership formed to fund selling commissions. Basically the same deal as file #953217 dated XXXXXXXXXX, 1996, except the prospectus is being amended to raise additional capital to fund selling commissions.

Position:

Rulings and opinions given as file #953217, except the 143.2 opinions have been updated to reflect the NWMM tabled XXXXXXXXXX.

Reasons:

30 November 1995 Ruling 9609153 - PROPERTY...IN WHICH THE BUSINESS... IS CARRIED ON"

Unedited CRA Tags
Art 13

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.

		960915
XXXXXXXXXX	XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: XXXXXXXXXX
Advance Income Tax Ruling

30 November 1995 Ruling 9625593 - LOSS CONSOLIDATION

Unedited CRA Tags
20(1)(c) 15(1) 56(2) 246(1) 245(2)

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.

XXXXXXXXXX							3-962559
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to the XXXXXXXXXX advance income tax ruling request submitted on behalf of XXXXXXXXXX.

30 November 1995 Ruling 9618173 - PARTITION OF SHARES IN A PARTNERSHIP

Unedited CRA Tags
98(3) 54
partition of securities holdings

Principal Issues:

1.Whether shares and limited partnership units held by a partnership can be distributed to the partners and partitioned in a tax free manner.

Position:

1.XXXXXXXXXX on an similar ruling request we provided a favourable ruling that shares and units can be partitioned in the manner proposed without causing a disposition within the meaning of section 54

Reasons:

30 November 1995 Ruling 9626823 - REORG SHAREHOLDER TO PARTNER

Unedited CRA Tags
54(e) 69(11)

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.

XXXXXXXXXX							3-962682
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: XXXXXXXXXX

30 November 1995 Ruling 9611983 - APPLICABILITY OF WITHOLDING EXEMPTION UPON WINDING UP

Unedited CRA Tags
212(1)(b)(vii) 87 88

Principal Issues:

Whether the withholding tax exemption under 212(1)(b)(vii) continues to apply after a wind-up subject to subsection 88(1)

Position:

Yes

Reasons:

30 November 1995 Ruling 9625733 - DSLP

Unedited CRA Tags
REG 6801

Principal Issues: Routine 6801 plan

Position: Routine

Reasons: Routine

30 November 1995 Ruling 9620373 - DPS

Unedited CRA Tags
112

Principal Issues:

Distress preferred shares - Parking of shares with 3rd party bank. Lender has original loan at say 12%. Agrees to accept DPS with dividends of 7% so that same after tax return. If unable to use dividend deduction it will "park" shares. If interest rate that it gets on deposit of proceeds from sale of DPS equates to original interest rate, then ok. However, what occurs is that because of interest fluctuations the original lender receives less on its deposit. Third party Bank is receiving a dividend rate greater than it would receive on a similar loan return, therefore agrees to return an amount to original lender to make them whole.
In order to achieve this end the Bank proposes to accept proceeds on deposit and pay market value interest. It will lend on an interest free basis an amount that will allow the vendor to invest (ie: deposit with the Bank) and increase its return up to original interest rate.
Is this any different than non-deductible put fee?

Position:

In our view we see this arrangement as no different than direct payment of put-fee.

Reasons:

30 November 1995 Ruling 9612453 - RETIRING ALLOWANCE XXXXXXXXXX SPOUSE

Unedited CRA Tags
60(j.1)

Principal Issues:

can XXXXXXXXXX pay retiring allowance to spouse/employee?

Position TAKEN:

Yes. A retiring allowance can be paid with respect to each year during which the spouse was employed

Reasons:

30 November 1995 Ruling 9625783 - ASSET SALE- EVENT OF DEFAULT

Unedited CRA Tags
212(1)(b)(vii)

Principal Issues:

30 November 1995 Ruling 9523913 - WHETHER A GIFT.

Unedited CRA Tags
118.1(1) 118.1(2) 118.1(3)

Principal Issues:

Whether proposed donations considered a gift?

Position:

YES

Reasons:

30 November 1995 Ruling 9623223 - SUPPLEMENTARY TO XXXXXXXXXX LOSS UTIL RULING

Unedited CRA Tags
20(1)(c)

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.

XXXXXXXXXX							1-962322
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: XXXXXXXXXX - Advance Income Tax Ruling
our file No. 3-961507 (the "Ruling")

30 November 1995 Ruling 9627273 - REORG FARM CORP

Unedited CRA Tags
55(3)(b) 73(4)

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.

XXXXXXXXXX 3-962727

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: XXXXXXXXXX
Advance Income Tax Ruling

30 November 1995 Ruling 9626033 - FLEX PLAN-XXXXXXXXXX

Unedited CRA Tags
6(1)(a)

Principal Issues:

flex plan ruling - no significant new issues

Position:

ruled as requested

Reasons:

30 November 1995 Ruling 9532173 - LIMITED PARTNERSHIP FOR MUTUAL FUND COMMISSIONS

Unedited CRA Tags
9(1) 96(2.2)(d) 20(1)(e) 143.2

Principal Issues: Mutual fund distribution limited partnership

1. timing of deductibility of sales commissions;

2. application of at-risk rules in respect of fees, distributions and a guarantee on bank loans to partnership.

3. application of draft section 143.2.

Position: Favourable ruling

1. 1/3 per year.

2. at-risk amount not reduced.

3. opinions given

Reasons: Standard arrangement. With respect to guarantee, it is not intended to reduce partners' risk of loss.

30 November 1995 Ruling 9628093 - DISTRESS PRFERRED SHARES

Unedited CRA Tags
9(1) 12(1) 20(1)

Principal Issues:

30 November 1995 Ruling 9613993 - RRSP XXXXXXXXXX

Unedited CRA Tags
6(1)(a) 146(8) 147(10) 204.2(1.2) 9

Principal Issues:

XXXXXXXXXX

Position:

XXXXXXXXXX

Reasons:

30 November 1995 Ruling 9626163 - Utilization of 84(2) to circumvent 84(4.1).

Unedited CRA Tags
84(4.1) 84(2) 53(2)(a)(ii)

Principal Issues:

Whether a particular fact pattern would constitue a "reorganization" of the taxpayer's business for purpose of subsection 84(2) of the Act. If so, subsection 84(4.1) of the Act will not apply.

Position:

Yes.

Reasons:

30 November 1995 Ruling 9603073 - QUALIFIED DOMESTIC TRUST

Unedited CRA Tags
54 70(5)

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.

XXXXXXXXXX							960307
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: XXXXXXXXXX

30 November 1995 Ruling 9625113 - TRANSFER OF FARM PROPERTY

Unedited CRA Tags
73(3) 110.6(1)

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.

XXXXXXXXXX							3-962511
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX 1996

Dear Sir:

Re: XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX wherein you requested an advance income tax ruling on behalf of the above taxpayers.

30 November 1995 Ruling 9615073 - RELATED GROUP LOSS UTIL SCHEME

Unedited CRA Tags
20(1)(c)89(1)

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.

XXXXXXXXXX 3-961507

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re:XXXXXXXXXX
Advance Income Tax Ruling

30 November 1995 Ruling 9626713 - FINANCIAL DIFFICULTY - LIMITED PARTNERSHIP

Unedited CRA Tags
248(1)(e)(iii)

Principal Issues:

1.Whether the proposed issuance of distressed preferred shares meets the requirements of the exception in subparagraph (e)(iii) of the definition of "term preferred share" in subsection 248(1). The debt being converted into share capital is a debt of a limited partnership the sole limited partner of which is wholly-owned by the general partner.
2.Can dividends be paid on distress preferred shares from the date of ruling, even though the shares are not issued until after the date of the ruling?

Position:

1.Favorable ruling given.
2.Yes, but only back to the date of the ruling. To the extent that interest becomes payable on the indebtedness for the period between the date of the ruling and the date the DPS are issued section 80 will apply.

Reasons:

30 November 1995 Ruling 9604983 - RRSP & DPSP SALE OF XXXXXXXXXX

Unedited CRA Tags
147(2)(e) 147(2)(k.1) 146(2)(c) 146(2)(c.4) 198(6)

Principal Issues:

Whether purchase by employer of group RRSP and DPSP rights to amounts owing under an investment issued by XXXXXXXXXX results in advantage or benefit to annuitants/members, appropriation of property by employer, or surrender or assignment of interests or rights under RRSPs or DPSP.

Position:

No.

Reasons:

30 November 1995 Ruling 9625393 - DISTRESS PREFERRED SHARES

Unedited CRA Tags
248("T") 112(2.6) 20(1)(e) 12(1)(x) 112(4)

Principal Issues:

DPS Financing Requested

Position:

Accept

Reasons:

Technical Interpretation - External

21 May 1997 External T.I. 9628495 - qualified farm property clause APPLIES

Unedited CRA Tags
110.6(1) 70(10) 31

Principal Issues:

Whether land, buildings and quota acquired by two grandsons from their grandparent after June 17, 1987 would qualify as qualified farm property, where the property is presently used by a partnership of which the two grandsons are partners.

Position:

The property would likely qualify as qualified farm property, since clause (a)(vi)(A) of the definition of "qualified farm property" would be met: the property was used by the grandparent who was actively engaged in the business of farming and whose sole income was from farming.

Reasons:

14 May 1997 External T.I. 9629635 - LOOK-THROUGH PROVISION IN ARTICLE 13 U.K. TREATY

Unedited CRA Tags
art 13

Principal Issues:

Whether subparagraph 7(b) of Article 13 of the Canada -U.K. Income Tax Convention should be applied on a look-through basis for purposes of subparagraph 5(a) of Article 13.

Position:

Yes.

Reasons:

1 May 1997 External T.I. 9624205 - SUMMARY OF CANADIAN TAX SYSTEM

Unedited CRA Tags
/

Principal Issues:

Summary of Canadian Taxation of Corporations and Partnerships

Position:

General Comments Provided

Reasons: N/A

22 April 1997 External T.I. 9620535 - NON-PROFIT ORGANIZATION

Unedited CRA Tags
149(1)(l)

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.

		                    					962053
XXXXXXXXXX						                  B. Kerr

Attention: XXXXXXXXXX

April 22, 1997

Dear Sir/Madam:

Re: Non-Profit Organization

27 March 1997 External T.I. 9625415 - PART XII.2 - REQUEST FOR AN ADMINISTRATIVE RELIEF

Unedited CRA Tags
210.2 104(13) 104(13.1) 53(2)(h)

Position:

17 March 1997 External T.I. 9621345 - SALE/REDEMPTION OF SHARES BY A U.S. RESIDENT

Unedited CRA Tags
84(3) 212(2)

Principal Issues:

Tax Consequences Arising From the Sale/Redemption of Shares of a Canadian Corporation Owned by a U.S. Resident

Position:

Deemed dividend pursuant to s. 84(3) subject to Part XIII tax and U.S. will grant a FTC for the Part XIII tax. Any capital gain on both sale and redemption of shares may be taxable in Canada pursuant to Article XIII of the Canada-U.S. Convention.

Reasons:

17 March 1997 External T.I. 9607505 - PART XIII - DIVIDENDS IN KIND

Unedited CRA Tags
212(2)

Principal Issues:

Does Part XIII Tax Apply to Dividends in Kind

Position:

Yes

Reasons:

7 March 1997 External T.I. 9621945 - STATUS AS A NRO

Unedited CRA Tags
133(8)

Principal Issues:

Would the fact that an NRO agrees to accept shares of a related company in satisfaction of interest owing to it by that company result in the NRO being considered as trading or dealing in shares for the purposes of definition of NRO in 133(8) of the Act?

Position:

Unable to determine.

Reasons:

4 March 1997 External T.I. 9625445 - AMOUNT PAYABLE BY A DISCRETIONARY TRUST

Unedited CRA Tags
104(24) 104(13) 104(6)(b)

Principal Issues:

1) Requirements to be met in order that an amount will be considered payable in the year to the beneficiary of a discretionary trust for the purposes of subsection 104(24).
2) Does the legal incapacity of a minor to personally sue to enforce payment of an amount owing by a trust affect whether an amount is payable to a minor beneficiary?

Position:

1) The trustees must exercise their discretion to apportion the trust's income among the beneficiaries in the trust's taxation year and the beneficiaries must advised of that right in the year.
2) No.

Reasons:

18 February 1997 External T.I. 9531855 - ACB OF PARTNERSHIP INTEREST

Unedited CRA Tags
53(1)(e)(i) 53(2)(c)(i) 98(3) 98.1(1)

Principal Issues:

Effects of the Department's change in position on timing of the adjustment to the ACB of a partnership interest for current year's partnership income or loss.

Position:

Favourable consideration may be given in certain situations.

Reasons:

10 February 1997 External T.I. 9621935 - : Farm Partnership and At-Risk Adjustments

Unedited CRA Tags
: 143.2, 96(2.2)(d), 96(2.1)

Principal Issues:
1. Do draft 143.2(2) & (6) apply to limit deductibility of farming losses carried on by a limited partnership in any of the following scenarios:
(i) where a taxpayer, who holds a unit in the partnership, has a right to sell his interest in the partnership to a third party for a pre-determined price?
(ii) where the partnership has a priority right to revenues, up to a pre-determined amount, where the amount of such priority is not guaranteed in any way?
(iii) where the partnership is guaranteed a certain level of revenue?
(iv) where the partnership has a right to sell certain property of the partnership to an arm's length third party for a pre-determined price?

Position:
1. Gave qualified opinions (depending on the facts) that draft 143.2(2) & (6) may not apply to limit deductibility of farming losses carried on by a limited partnership in any of the above scenarios.

Reasons:
1. The "at-risk adjustment", defined in 143.2(2), specifically excludes expenditures which are the cost of a partnership interest to which subsection 96(2.2) applies. In the case of (i) & (iii) & (iv) the application of 96(2.2) may preclude an at-risk adjustment. In the case of (ii) there may not be any benefit that would either reduce the at-risk amount calculated pursuant to 96(2.2) or constitute an at-risk adjustment pursuant to 143.2(2).

6 February 1997 External T.I. 9610765 - LLC'S STATUS AS A CORPORATION

Unedited CRA Tags
Article IV Canada-U.S. Income Tax Convention

Principal Issues:

Where a particular U.S. state or foreign country requires out-of-state or foreign LLCs to register under its LLC legislation in order to carry on business in that state or country, does the fact that the foreign LLC is referred to as a "unincorporated" association or organization call into question it status as a corporation?

Position:

No

Reasons:

6 February 1997 External T.I. 9626625 - SECTION 116 - JOINT TENANCY

Unedited CRA Tags
116

Principal Issues:

Where property is held by a non-resident and a resident in joint tenancy, should the section 116 certificate for the disposition by the non-resident be at half the proceeds?

Position:

Yes.

Reasons:

6 February 1997 External T.I. 9610755 - Exemption for interest payable to non-resident - INSTALMENT SALE

Unedited CRA Tags
Article XI(3)(d) Canada-U.S. Income Tax Convention

Principal Issues:

Whether interest exemption provided for by paragraph 3(d) of Article XI of the Canada-U.S. Income Tax Convention would continue to apply if repayment terms and interest rate modified.

Position:

Question of fact. Would depend if the changes were so fundamental as to result in the disposition of the old debt obligation and an acquisition of a new obligation.

Reasons:

28 January 1997 External T.I. 9625015 - JOINT STOCK COMPANIES IN RUSSIA

Unedited CRA Tags
95(1)

Principal Issues:

Whether or not a Russian joint stock company ("JSC") would be considered to be a corporation for purposes of the Act (in particular the definition of foreign affiliate).

Position:

Yes, provided the JSC does not have a limited life and provided the JSC is not transformed into another entity.

Reasons:

20 January 1997 External T.I. 9629235 - TAX SPARING - KINGDOM OF MOROCCO

Unedited CRA Tags
ART XXII ART XI

Principal Issues:

Are bonds issued by the Kingdom of Morocco eligible for tax sparing under Article XXII of the Canada-Morocco Convention?

Position:

No.

Reasons:

17 January 1997 External T.I. 9613405 - FOREIGN ACCRUAL TAX - LIMITED LIABILITY COMPANY

Unedited CRA Tags
95(1) 20(11) 20(12) 126(1) 91(1)

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.

									Tim Kuss
XXXXXXXXXX							961340

Attention: XXXXXXXXXX

January 17, 1997

Dear Sirs:

Re: Limited Liability Company - Foreign Accrual Tax

17 January 1997 External T.I. 9629325 - DIVIDEND REFUND

Unedited CRA Tags
129(1.2)

Principal Issues:

whether subsection 129(1.2) applies when shares moved within related corporate group

Position:

yes; if purpose test is met

Reasons:

16 January 1997 External T.I. 9629335 - RENTAL SUBSIDY ON RELOCATION

Unedited CRA Tags
6(1)(a)

Principal Issues:

rental subsidy paid to employee upon relocation to assume temporary or permanent duties in other city, subsidy to be permanent or temporary

Position:

taxable unless exempt by reason of 6(6)

Reasons:

20 December 1996 External T.I. 9622855 - DONATION OF CAPITAL PROPERTY

Unedited CRA Tags
118.1

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.

		962285
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

December 20, 1996

Dear Madam:

Re: Donations of Cultural Property

19 December 1996 External T.I. 9629805 - ARTICLE XXIX B(1) AND ARTICLE XXI(6)

Unedited CRA Tags
Article XXIX B Article XXI

Principal Issues:

Whether bequest to U.S. charities is creditable under paragraph 1 of Article XXIX B of Canada-U.S. Income Tax Convention

Position:

No.

Reasons:

17 December 1996 External T.I. 9605575 - TESTAMENTARY TRUST - INSURANCE PROCEEDS

Unedited CRA Tags
108(1)

Principal Issues:
Whether a trust meets the definition of a testamentary trust where it is funded by insurance proceeds

Position:
Where a trust has been established in a testator's will, it is our opinion that the payment of an insurance policy available on the testator's death will not, in and by itself, jeopardize the status of a testamentary trust. Where a trust has been funded from the proceeds of a life insurance policy available on the death of an individual and the terms of which have been established by the individual during his lifetime, separate from his will, we will consider such a trust as a testamentary trust within the meaning of subsection 108(1) of the Act as it has been created on or after the insured's death or as a consequence thereof.

Reasons:
ccm 962597

12 December 1996 External T.I. 9627825 - MOVING EXPENSES

Unedited CRA Tags
62 64.1

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.

		962782
XXXXXXXXXX	M. Eisner

December 12, 1996

Dear XXXXXXXXXX:

Re: Moving Expenses

This is in reply to your letter of August 20, 1996 concerning the above noted subject. We also acknowledge our telephone conversations.

9 December 1996 External T.I. 9611945 - CALCULATION OF SAFE INCOME FOR FOREIGN AFFILIATE

Unedited CRA Tags
55(5)(d) 55(2) 93(1)

Principal Issues:

Calculation of safe income of a foreign affiliate, in particular stub period earnings.

Position:

a) Concept of safe income of foreign affiliate not a relevant concept vis à vis the Canco that has a direct interest in the foreign affiliate. However, could get same result as payment of dividend out of safe income by electing appropriate amount and using 93(1) election.

b) In another situation where safe income was relevant, stub period accounting is appropriate, with conditions.

Reasons: a) Law

4 December 1996 External T.I. 9624905 - ATTRIB ON TRUST PROP GIFTED FROM BENEFIC, INDIRECT

Unedited CRA Tags
75(2) 107(4.1)

Principal Issues:

whether 75(2) applies in various situations involving
1) the payment of a debt with a gift from a beneficiary, 2&3) possible indirect transfers to the trust from the beneficiary &
4) whether an agreement or covenant between the trust & beneficiary can avoid the application of 75(2)

Position:

1) question of fact as to whether the gift by beneficiary is applied against debt so that the trust no longer holds the property
2&3) it is likely that an indirect gift has been made so that 75(2) does apply
4) unable to offer meaningful comment without full details, including the covenant or agreement to vary the terms of the trust

Reasons:

29 November 1996 External T.I. 9627435 - MORTGAGE SUBSIDIES

Unedited CRA Tags
6(1)(a) 80.4

Principal Issues:

An individual, with respect to a job-related move, relocated from one city to another city where housing costs were higher. The employer paid the individual a lump sum amount in respect of the housing cost differential computed by reference to the interest rate of Prime plus XXXXXXXXXX%. XXXXXXXXXX The issue is whether the payment is non-taxable or whether it is taxable under paragraph 6(1)(a) or 6(1)(b) of the Act.

Position:

The payment is taxable either as a benefit under paragraph 6(1)(a) or as an allowance under paragraph 6(1)(b).

Reasons:

27 November 1996 External T.I. 9620635 - gift of remainder interest of ecologically sensitive LAND

Unedited CRA Tags
110.1(1)(d)

Principal Issues:

1.Whether, where a remainder interest in ecologically sensitive land is gifted by a corporation to a heritage or conservancy organization, section 43.1 of the Act would apply.

2.Whether the corporation would be considered to have conferred a benefit on its shareholders who will have the right to use the property for their lives.

Position:

1.Section 43.1 would not apply.

2.A benefit would be considered to have been conferred on the shareholders if the corporation retains a life interest pur autre vie.

Reasons:

29 October 1996 External T.I. 9621665 - 160(1) ON DEATH OF TAXPAYER

Unedited CRA Tags
160(1) 159

Principal Issues:

does 160(1) apply:

1. when the taxpayer dies and the child of the taxpayer is the beneficiary of the life insurance policy and

2. when a family member of the deceased makes application to the courts for the estate to provide additional maintenance and support as permitted under a provincial statue such as the Family Relief Act of Alberta?

Position:

1. No.

2. Should not be an issue.

Reasons:

28 June 1996 External T.I. 9622415 - DEDUCTIBILITY OF INTEREST EXPENSE

Unedited CRA Tags
20(1)(c) 20(3)

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.

XXXXXXXXXX 5-962241

June 28, 1996

Dear Sirs:

Re: Deductibility of Interest Expense

This is in reply to your letter of June 15, 1996 in which you request an opinion on the deductibility of interest on your "Home Equity Plan".

Technical Interpretation - Internal

18 July 1997 Internal T.I. 9716996 - REFUND OF PREMIUMS FROM RRSP/RRIF

Unedited CRA Tags
146(8.9) 60(l) 104(6)(a.2) 146.3(6.2) 146.3(6.2)

Principal Issues:

Tax consequences to deceased annuitant, RRSP and RRIF trusts, and spouse beneficiary after death of annuitant when distribution occurs later than 1 full calendar year after year of death.

Position:

General comments on RRSP trust; analysis of consequences re RRIF given specific facts.

Reasons:

6 March 1997 Internal T.I. 9606227 - amount payable to a beneficiary of a discretionary trust

Unedited CRA Tags
104(24) 104(13) 104(6)

Principal Issues:

1)Creation of an amount payable to a beneficiary by a discretionary trust (pursuant to subsection 104(24)) and payment of that amount by cheque or demand promissory note.
2)Payment in respect of an amount payable to a minor beneficiary.

Position:

1)Legal entitlement of a beneficiary to enforce payment of an amount of the trust's income in the year is established by a) the trustees exercising their discretion in the year and b) the trustees giving notification of that exercise to the beneficiary in the year. Payment of that amount by a) a cheque cashable on the date of issue or b) a demand promissory note payable on demand without restriction should be made by the trust once the amount is known.

2)Payment in respect of an amount payable to a minor beneficiary may delivered to the child's legal guardian where permitted under the trust indenture.

Reasons:

26 February 1997 Internal T.I. 9529647 - Promissory note-discretionary trust amount payable

Unedited CRA Tags
104(24) 104(13) 104(6)(b)

Principal Issues:

Further comments on E9604555 - 1) Can a promissory note, payable on demand without restriction, be issued to the beneficiary of a discretionary trust as evidence of an amount payable by the trust to the beneficiary?

Position:

1)Yes, if the requirements indicated in the memo are met.

Reasons:

13 February 1997 Internal T.I. 9525356 - PENSIONABLE (FOR CPP) EMPLOYMENT OF STATUS INDIANS?

Unedited CRA Tags
81(1)(a)

Principal Issues:
Whether the employment income of certain Indian employees of XXXXXXXXXX (the "Employer") is pensionable for Canada Pension Plan (CPP) purposes.

11 February 1997 Internal T.I. 962240A - POST-DATED CHEQUES, GRAIN

Unedited CRA Tags
76(4)

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.

XXXXXXXXXX 962240.1

Attention: XXXXXXXXXX

February 11, 1997

Dear Sirs:

Re: Post-Dated Cheques for Grain Deliveries

24 January 1997 Internal T.I. 9622427 - ASSIGNMENT OF RIGHT TO RECEIVE ALIMONY/MAINTENANCE

Unedited CRA Tags
60(b) 60(c) 56 56(2)

Principal Issues:

whether an amount of "social assistance" received from the province should be re-characterized as alimony or maintenance. Social assistance recipient assigned all right to receive alimony to the province as a precondition to receiving social assistance

Position:

cannot recharacterize. The recipient received social assistance to which s/he was entitled under the social assistance legislation. On basis of Bishop (XXXXXXXXXX), no deduction to payor as the payments to the province in this situation (assignment or subrogation of rights) are not on behalf of or for the recipient's benefit.

Reasons:

19 September 1996 Internal T.I. 9614387 - PART I.3 - INCOME OF CONTRACTORS

Unedited CRA Tags
181.2(3) 181.2(4) 181(1) 9(1) 12(1)(b)

Principal Issues:

(1)Whether the adverse decision in the Tax Court of Canada case "Grocery People Ltd. v. MNR" (95-686(IT)I) changes the Part I.3 position on outstanding cheques.
(2)Whether deferred revenue of a construction company, with respect to services rendered, partially composed of uncertified progress billings, is included in capital.
(3)Uncertified progress billings of a contractor are included in income under paragraph 12(1)(b). IT92-R2 allows those amounts to be excluded from income. Does this exclusion reduce the Part I.3 capital inclusion under paragraph 181.2(3)(b) because of the wording "...except to the extent...deducted...under Part I,".

Position:

(1)No.
(2)Yes under either paragraph 181.2(3)(b) as a reserve or 181.2(3)(a) as surplus.
(3)No.

Reasons:

11 September 1996 Internal T.I. 9619187 - TERM PREFERRED SHARE

Unedited CRA Tags
112(2.1) 248(1)(a)(iii)

Principal Issues:

Does a formula conversion of a convertible preferred share into common shares having a value equal to the shareholder's original investment constitute a form of guarantee or security for the purposes of subparagraph (a)(iii) of the term preferred share definition?

Position:

It is a form of guarantee or security within the ordinary meaning of these words

Reasons:

19 August 1996 Internal T.I. 9611787 - PREFERRED SHARES WITH NO DIVIDEND ENTITLEMENT

Unedited CRA Tags
110.6(8) 6205(2)

Principal Issues:

Whether subsection 110.6(8) would apply to deny the capital gains exemption on the exchange of shares for other shares.

Position:

Question of fact.

Reasons:

26 July 1996 Internal T.I. 9615787 - PROFESSIONAL FEES AND THEIR DEDUCTIBILITY

Unedited CRA Tags
20(1)(e)

Principal Issues: Professional Fees and their Deductibility

Position:

Reasons: 20(1)(e)

24 May 1996 Internal T.I. 9605827 - TAXATION OF RPP RECEIPT IF NO DEDUCTION CLAIMED

Unedited CRA Tags
56 4(4)

Principal Issues:
Can RPP receipt be taxed where a deduction was not claimed on contribution

Position:
Yes

Reasons:
TPs argument that 4(4) will prevent the taxation of the amount is not accepted

Ministerial Letter

31 October 1996 Ministerial Letter 9628108 - XXXXXXXXXX

Unedited CRA Tags
256(6)

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.

DM'S OFFICE (2) 96-05792M
ASSOCIATE DEPUTY MINISTER(1)
ADM'S OFFICE(3)
RETURN TO 15TH FLOOR, ALBION TOWER
PENDING COPY

XXXXXXXXXX

Dear XXXXXXXXXX: