Income Tax Severed Letters - 2000-12-22

Ruling

7 December 2000 Ruling 2000-0040053 - Disposition - Mutual Fund Trust Units

Unedited CRA Tags
Reg 230
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition
new unit classes contemplated and their attributes similar

Principal Issues:
1) When units of a mutual fund trust are switched (transferred) for units of another mutual fund trust, is there a disposition?
2) When units of a class or series of a mutual trust are changed (reclassified or redesignated) to another class or series of the same mutual fund trust, is there a disposition?
3) Is a T5008 Information Return required in respect of 1) or 2) above.

2000 Ruling 1999-0010893 - XXXXXXXXXX ruling

Unedited CRA Tags
55(3)(a)

Principal Issues: Standard 55(3)(a) butterfly. Issue as to whether certain shares continued to be grandfathered for the purpose of paragraph 131(11)(b) of S.C. 1998, c. 19.

Position: Favourable rulings given.

Reasons: The law.

2000 Ruling 2000-0034813 - Partnership Reorganization

Unedited CRA Tags
125(7) 18(1)(8) 9(1) 256(2.1)

Principal Issues:
Where corporations are formed to perform XXXXXXXXXX services for corporation that has contracted with XXXXXXXXXX to provide XXXXXXXXXX work be considered personal service business?

Position: no.

Reasons: provided XXXXXXXXXX carrying out the activities through a Contracting company does not provide such services to the Newco in the capacity as employee or officer of that company.

2000 Ruling 2000-0010983 - Foreign affiliate reorganization

Unedited CRA Tags
93(2) 95(2)(e.1)

Principal Issues: Whether 95(2)(e.1) applies to a cross-border wind-up.

Position: Yes because the exception in 95(2)(e.1) can only apply if both foreign affiliates are in the same country.

Reasons: The words of the exception are unable to bear another meaning.

2000 Ruling 1999-0011203 - INTEREST ON FUNDS BORROWED OFFSHORE

Unedited CRA Tags
20(1)(c)

Principal Issues: Interest Expense on Funds borrowed from an offshore affiliate and used to purchase preferred shares of another offshore affiliate

Position: OK

Reasons: The proceeds from the preferred share subscription will be used to make a third-party acquisition and any value increase in this investment will ultimately accrue to the Canadian borrowed

2000 Ruling 2000-0015783 - Reorganization, 55(3)(a)

Unedited CRA Tags
55(3)(a)

Principal Issues: no new issues

Position:

Reasons:

2000 Ruling 1999-0013893 - SHAREHOLDER LOANS

Unedited CRA Tags
15(2) 80.4 6(9)

Principal Issues:
Are the conditions in paragraph 15(2.4) met, that is, at the time the loan was made, are there bona fide arrangements for repayment of the loan within a reasonable time?

2000 Ruling 2000-0041563 - Redesignation - Multiclass Mutual Fund

Unedited CRA Tags
104(7.1) 104(6)(b) 245(2)

Principal Issues:
This ruling request involves proposed transactions that will be undertaken by a group of mutual funds. Under the proposals, the mutual funds will be governed by a newly established master declaration of trust that will represent an amended and restated declaration of trust for each of the mutual funds. The master declaration of trust the funds will allow a fund to create additional classes of units; to rename certain of their existing units; and to add a redesignation feature to each class of units which will allow these units to be redesignated as another class of units of the same fund in certain circumstances. The purpose of the proposed transactions is to provide these mutual funds with more flexibility to meet the needs of a broader range of investors. This multi-class structure will allow the manager to more effectively market the funds to different segments of the investor market and to tailor the fees and expenses applicable to such segments by offering a separate class of units of each such fund. In this ruling, the principal issues are:

2000 Ruling 2000-0015793 - XXXXXXXXXX

Unedited CRA Tags
125.4 1106(1)

Principal Issues:
1. Will a particular distribution agreement result in the film tax credit being reduced or eliminated?
2. Will the amalgamation of a production subsidiary into its parent and the subsequent disposition of certain assets to a new subsidiary result in the application of the investor rules or the excluded production rules to deny the Canadian film or video production tax credit?
3. Will each episode in a television series be considered to be a property in and by itself, or is the entire series considered to be one single property?

Position:
1. Not if the distribution agreement represents a fair market value commercial arrangement and the distributor does not acquire any portion of the legal and/or beneficial ownership of the production copyright.
2. No.
3. Each episode is considered to be a separate property.

Reasons:
1. In this fact situation, the distributor is a qualified corporation therefore it is not an investor and subsection 125.4(4) of the Act does not apply. In addition the distributor will not acquire legal or beneficial ownership of the production. Therefore, the excluded obligation rules in Regulation 1106(1) do not apply. A similar ruling was given in file 992141 regarding a distribution arrangement and the ruling has been caveated to meet the criteria in the POSITION above.
2. Paragraph 87(2)(j.94) applies with modifications so that for the purposes of 125.4, Amalco is deemed to be the same corporation as, and a continuation of the production corporation. Therefore, Amalco is not an investor and 125.4(4) of the Act will not have application. We also considered the definition of excluded production in subsection 1106(1) of the Regulations. The proposed transactions would not result in there being an excluded production since the Regulations contemplate transfers of copyright within Canadian corporate families.
3. Consistent with position in file 981630. CAVCO only issues one certificate for a series, but that certificate shows a range of certificate numbers on it (one for each episode). Each episode must meet the Canadian content rules in order to be certified.

2000 Ruling 2000-0053563 - EMPLOYER-PROVIDED COMPUTERS

Unedited CRA Tags
6(1)(a)

Principal Issues: Whether provision of computer and Internet access to employees constitutes taxable benefit to employees; whether company can deduct the monthly lease payments required to provide computers to employees

Position: There is no taxable benefit to the employee participants in the program. The company can deduct the monthly lease costs.

Reasons: The computer equipment and Internet access is provided to the employees to enable them to become more computer literate. It falls within the guidelines for General Employment-Related Training set out in Technical News 13 and is consistent with a similar ruling given for a comparable program; the monthly lease costs are a regular business expense deductible in accordance with section 9.

2000 Ruling 2000-0025723 - phantom stock plan-executives

Unedited CRA Tags
6801(d)

Principal Issues: Will proposed amendments to an arrangement adversely affect rulings that were previously obtained with respect to the 6801(d) plan?

Position: No.

Reasons: The proposed amendments do not have any effect on the rulings previously issued because the provisions of 6801(d) remain satisfied.

2000 Ruling 1999-0006543 - EX. OF FIRST NATIONS LTD PTSHP

Unedited CRA Tags
149(1)(c)

Principal Issues:
1. Is the XXXXXXXXXX exempt from tax by virtue of paragraph 149(1)(c) of the Act.
2. Are certain status Indian employees of the limited partnerships exempt from income tax by virtue of paragraph 81(1)(a) of the Act?

Position:
Yes.
Yes.

Reasons:
1. The Band has passed by-laws under section 81 & 83 of the Indian Act and is performing several functions of government.
2. The limited partnerships are resident on reserve for purposes of the Employment Income Guidelines. Provided the other requirements of guideline 2 & 3 are met, the status Indians will be exempt from income tax.

2000 Ruling 2000-0029483 - Interest paid to non-residents

Unedited CRA Tags
212(1)(b)(vii)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Subparagraph 212(1)(b)(vii)

Principal Issues:
* Whether failure to make an offer to purchase debentures in respect of an asset sale are acceptable events of default for purposes of Clause 212(1)(b)(vii)(C).
* Whether the termination or material adverse amendment provisions in respect of the Material Agreements are acceptable events of default for purposes of Clause 212(1)(b)(vii)(C).

Position: OK

Reasons:
* Asset Sales are acceptable.
* The provisions have commercial reality, are beyond the control of the lender and are not contrived.

2000 Ruling 1999-0008653 F - OSBL - Société de personnes

Unedited CRA Tags
149(11l) 103(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.

Principales Questions

1. L'OSBL risque-t-elle de perdre son statut en vertu de 149(1)l) si elle détient des parts dans une société en commandite qui possédera et administrera des biens de l'OSBL?

2000 Ruling 2000-0031583 - Reduction in PUC of Public Corp.

Unedited CRA Tags
84(4.1)

Principal Issues: Reduction of paid-up capital in a public corporation

Position: Amount paid not received as a dividend by recipient

Reasons: Reduction in paid-up capital made in the course of the reorganization of the public corporation's business

2000 Ruling 2000-0004763 - DISSOLUTION OF XXXXXXXXXX

Unedited CRA Tags
54

Principal Issues: Whether there is a "disposition" to the holders of debentures XXXXXXXXXX

Position: No

Reasons: XXXXXXXXXX

1999 Ruling 9929013 - EXCHANGEABLE SHARES

Unedited CRA Tags
86

Principal Issues:
Whether certain proposed transactions will constitute a reorganization for purposes of section 86
Whether the exchange of shares will result in a disposition of the related options

Position:
Yes.
No.

Reasons:
It meets the requirements as set out in section 86
No changes will be made to the agreements related to the options.

1999 Ruling 9929533 - PHANTOM STOCK, DIRECTORS PLAN

Unedited CRA Tags
REG 6801(d) 7(1)

Principal Issues: 1) Will the payment of Director fees in the form of deferred share units result in an SDA? 2) Will the issuance of treasury shares in satisfaction of the deferred share units result in the application of section 7 of the Act?

Position: 1) No. 2) Yes

Reasons: 1) 6801(d) satisfied 2) Where treasury shares are issued, section 7 would clearly apply.

1999 Ruling 9929883 - CREDIT UNION SHARES

Unedited CRA Tags
137(4.1)

Principal Issues: Are shares to be issued by a credit union shares or debt obligations for purposes of the ITA.

Position: They are shares for all purposes of the ITA

Reasons: The shares are equity shares as defined in the XXXXXXXXXX. Despite the fact that subsection 137(4.1) treats the dividends as being interest, there is nothing in the ITA that negates the form of the securities.

1999 Ruling 9804113 - WHETHER XXXXXXXXXX SETTLEMENT IS MUNICIPALITY

Unedited CRA Tags
149(1)(c) 149(1)(d.5) 81(3)

Principal Issues:
A. Whether XXXXXXXXXX are municipalities.

B. Whether XXXXXXXXXX can be considered to be a municipality in Canada for the purposes of paragraph 149(1)(c) of the Income Tax Act.

C. Whether a corporation the XXXXXXXXXX Settlements and XXXXXXXXXX own is exempt from Part I tax under paragraph 149(1)(d.5) of the Act.

D. Whether elected councilors of each Settlement and elected officers of the XXXXXXXXXX are elected officers of an incorporated municipality.

Position:
A. In the particular circumstances, Yes
B. In the particular circumstances, Yes
C. Unable to rule
D. Unable to rule

Reasons:
A. Councils have the authority to make by-laws respecting the geographic area of a Settlement and may make by-laws concerning a number of areas typical of municipalities including general governance; health, safety and welfare of Settlement residents; public order and safety; fire protection; nuisance and pest control; animal control; refuse disposal; public health; parks and recreation; regulation of businesses; and land use, water and sewer. Each of the Settlements have enacted a number of By-laws within their jurisdiction

B. The XXXXXXXXXX has created a number XXXXXXXXXX Policies with respect to the governance of the Settlements. Policies respecting utilization of Settlement resources and property taxation also have been implemented. The XXXXXXXXXX has also created various other policies containing model by-laws of general application to all of the Settlements.

C. Whether the corporation's income from activities carried on outside the geographical boundaries of the "municipality" for a particular period exceeds 10% of its income for the period is a question of fact on which we are unable to rule.

D. If the Settlement Councils and the XXXXXXXXXX are municipalities elected officers thereof are elected officers of an incorporated municipality for the purposes of determining whether an allowance is exempt from tax under paragraph 81(3)(a) of the Act.

1999 Ruling 9904843 F - TRANSFERT D'ACTIFS À SOCIÉTÉS LIÉES

Unedited CRA Tags
55 85(1)(e.2) 245(2)

Principal Issues: Voir sommaire des principales questions

Position:

Reasons:

1999 Ruling 9900393 - REPLACEMENT PROPERTY

Unedited CRA Tags
44

Principal Issues: Whether timber land being exchanged would qualify as former business property and replacement property for purposes of section 44 of the Act.

Position: Yes.

Reasons: The property being disposed of and the property being acquired are timber lands used in the same business of the taxpayer.

1999 Ruling 9923053 F - DEDUCTION POUR GAIN EN CAPITAL

Unedited CRA Tags
110.6(2) 110.6(1) 110.6(8)

Principales Questions:

Est-ce que M. X et Mme X pourront bénéficier de la déduction prévue au paragraphe 110.6(2) de la Loi et ce malgré le libellé du paragraphe 110.6(8) de la Loi?

Position Adoptée:

1999 Ruling 9910863 - NPO - XXXXXXXXXX

Unedited CRA Tags
149(1)(l)

Principal Issues:

Whether the non-profit status of XXXXXXXXXX would be jeopardized if it XXXXXXXXXX to generate revenue to offset the costs of providing a XXXXXXXXXX.

Position:

No, based on the facts presented.

Reasons:

1999 Ruling 9913713 - CONVERSION TO OPEN-ENDED UNIT TRUST

Unedited CRA Tags
108(2) 132(6)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition

Principal Issues: (a) Will certain broadening of the scope of the permissible investments for a particular trust or the addition of a redemption right to the Trust Units result in a disposition of such units for purposes of the Act?

(b) Will the proposed redemption right satisfy the requirements of subparagraph 108(2)(a)(i)?

Position: (a) No.
(b) Yes.

Reasons: (a) Based upon the facts of this situation and the position taken in a number of earlier rulings that the addition of such a redemption right would not cause a disposition.

1998 Ruling 9821433 - ROYALTY TRUST; MUTUAL FUND

Unedited CRA Tags
132(6)(b)

Principal Issues: reimbursement of Crown royalties paid by XXXXXXXXXX by Mutual fund trust and 132(6)(b)

Position: where reimbursement is required in order to acquire royalty, the trust is not offside the mutual fund trust rule in 132(6)(b)

Reasons: XXXXXXXXXX

1998 Ruling 9824483 - CORPORATE REORGANIZATION

Unedited CRA Tags
55(2) 55(3)(a)

Principal Issues: See Issue Sheet

Position: See Issue Sheet

Reasons: See Issue Sheet

1998 Ruling 9829193 - STOCK OPTION, CASH OUT

Unedited CRA Tags
7(1)(b)

Principal Issues: Is the proposed plan an agreement to issue shares for the purposes of section 7 of the Act?

Position: Yes.

Reasons: The plan provides employees with the ability to acquire shares of the parent corporation.

1998 Ruling 9806533 - PROTECTIVE TRUST

Unedited CRA Tags
104

Principal Issues:

Whether paragraph (e) of the definition of "disposition" in section 54 of the Act applies on a transfer of property to a trust.

Position:

Yes

Reasons:

1998 Ruling 9816513 - REVERSE REORGANIZATION

Unedited CRA Tags
84.1 84(2) 245

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
XXXXXXXXXX 981651
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

1998 Ruling 9818043 - MUTUAL FUND TRUST

Unedited CRA Tags
132(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.

XXXXXXXXXX
XXXXXXXXXX 981804
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1998

Dear Sirs:

Re: Advance Income Tax Ruling
XXXXXXXXXX

Ministerial Correspondence

13 December 2000 Ministerial Correspondence 2000-0020340 F - FISHERIES ALLOCATION PROGRAM

Unedited CRA Tags
81(1)a)

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.

Ministère des Pêches et des Océans
Programme de transfert des allocations (PTA)
Questions et réponses
pour les Services à la clientèle de l'Agence des douanes et du revenu du Canada

8 December 2000 Ministerial Correspondence 2000-0054214 - GUARANTEED INCOME SUPPLEMENT

Unedited CRA Tags
56(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.

December 8, 2000

XXXXXXXXXX

Dear XXXXXXXXXX:

22 November 2000 Ministerial Correspondence 2000-0050444 - RETIRING ALLOWANCE

Unedited CRA Tags
248(1) 8(1)(b)

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.

PRINCIPAL ISSUE Is a payment received in lieu of earnings for the period of notice of termination by virtue of the terms of the taxpayer's employment considered employment income or retiring allowance ?

Position It is an employment income.

Technical Interpretation - External

15 December 2000 External T.I. 2000-0029125 F - POMPIER VOLONTAIRE

Unedited CRA Tags
81(4)

Principales Questions:
Dans la situation présentée, est-ce que les pompiers volontaires de cette ville sont des pompiers volontaires au sens de la Loi de l'impôt sur le revenu ?

Position Adoptée:
Aucune

14 December 2000 External T.I. 2000-0033905 - Partnership Income Successor Pools

Unedited CRA Tags
66.7(3)(b)(i)(C) 66.7(10)(j) 96(1)(f)

Principal Issues: Whether CCRA's position regarding the inclusion of partnership production revenues in the calculation of successor income remains the same as in our reply to question 11 of the 1994 Round Table in the Canadian Petroleum Tax Journal.

Position: Yes.

Reasons: No change in position since then.

14 December 2000 External T.I. 2000-0059255 - Available for Use

Unedited CRA Tags
13(27)(a)

Principal Issues: When is property first used to earn income

Position: question of fact

Reasons: question of fact

14 December 2000 External T.I. 2000-0015595 - application of 69(11), farm property rollover

Unedited CRA Tags
69(11) 110.6(2)

Principal Issues: Would 69(11) apply in particular situations?

Position: purpose test depends on facts of situation. would not apply where subsequent disposition occurs after 3 year limit. potential application of GAAR depending on situation.

Reasons: wording of provision

14 December 2000 External T.I. 2000-0044105 - SHAREHOLDER LOANS & REPAYMENTS

Unedited CRA Tags
15(2) 15(2.6)

Principal Issues: Whether the exception in subsection 15(2.6) of the Act applies in the situation where a shareholder receives and repays more than one loan in within the time allowed in the subsection.

Position: Question of fact.

Reasons: The exception will only apply if the loans and repayments are not part of " a series of loans or other transactions and repayments".

14 December 2000 External T.I. 2000-0060545 - CHARITABLE DONATION V SETTLEMENT OF DEBT

Unedited CRA Tags
118.1

Principal Issues: Whether a taxpayer can claim charitable donations in a specific situation.

Position: Question of fact but no based on the information provided.

Reasons: A settlement of debt by a debtor is not a charitable donation

14 December 2000 External T.I. 2000-0029575 - section 126 of the Act

Unedited CRA Tags
126
Summary Under
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1)

Principal Issues: Meaning of for the year in paragraph 126(1)(a).

Position: Means the year for which the foreign income or profit tax is exigible in the foreign country.

Reasons: The law.

14 December 2000 External T.I. 1999-0011035 - section 55 - unrelated person

Unedited CRA Tags
55(5) 104(1) 251(2)

Principal Issues: Whether Mr. A is an "unrelated person" (within the meaning of paragraph 55(3.01)(a)) in respect of Bco.

Position: Yes.

Reasons: The law.

14 December 2000 External T.I. 2000-0057835 - CERT. ATHLETIC THERAPISTS-MED. EXPENSES

Unedited CRA Tags
118.2(4)(a)

Principal Issues: Whether certified athletic therapist qualifies as a medical practitioner for the medical expense tax credit

Position: Question of fact

Reasons: If such therapists are authorized by statute to provide services in jurisdiction in which services performed, they would qualify as medical practitioner.

13 December 2000 External T.I. 2000-0033715 - MUTUAL FUND DEF. SALES CHARGES

Unedited CRA Tags
40(1)

Principal Issues:
When a taxpayer pays a deferred sales charge (DSC) on the disposition of mutual fund units, is the DSC included in the calculation of the taxpayer's capital gain or loss?

Position TAKEN:
Yes.

Reasons:
Subparagraphs 40(1)(a)(i) and 40(1)(b)(i) (i.e., it is an outlay or expense made or incurred for the purpose of making the disposition).

12 December 2000 External T.I. 2000-0019105 - award for damages

Unedited CRA Tags
5 6

Principal Issues: Whether certain periodic amounts that a Canadian resident receives from TAD with respect to automobile accident in the Australia are taxable.

Position: General comments were provided.

Reasons: Completed transaction - need specific information to make a determination.

12 December 2000 External T.I. 2000-0017405 - tax credit on foreign dividends

Unedited CRA Tags
126(1) 90(1) 12(1)(k)

Principal Issues: Whether a foreign tax credit can be claimed on the franked dividend in respect of the underlying Australian taxes paid by the Australian corporation paying the dividend.

Position: No

Reasons: The law

11 December 2000 External T.I. 2000-0053165 - Calculation of safe income

Unedited CRA Tags
55(2)
Summary Under
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2)

Principal Issues:
If Holdco purchases Opco for full fair market value at a time when Opco has unrealized appreciation in certain assets, will gains realized on subsequent disposition of those assets result in "safe income on hand"?

Position:
Not to the extent gains were accrued prior to acquisition of Opco shares.

Reasons:
The subsequent realization of such accrued gains does not contribute to the gain in the Opco shares since their appreciation has already been reflected in the fair market value paid for the Opco shares.

11 December 2000 External T.I. 2000-0019515 - SUBSTIT. TEACHED MOTOR VEH. EXP.

Unedited CRA Tags
8(1)(h.1)

Principal Issues:
Whether a substitute teacher who is on call can deduct motor vehicle expenses between the home and the workplace and between schools.

Position:
No

Reasons:
Travel between the home and the place of work is personal. The occasional travel required between schools does not meet the requirement that the taxpayer is "ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places."

11 December 2000 External T.I. 2000-0053225 - XXXXXXXXXX & PAY EQUITY

Unedited CRA Tags
110.2(1)

Principal Issues: Union representatives and employer representatives are negotiating a pay equity plan. In the event the union representatives and the employer representatives do not agree with respect to a particular issue, the matter is referred to an arbitrator who must choose either the union position or the employer position. Would a lump sum payment made in respect of the pay equity plan be a payment (Income from employment) made "pursuant to an order or judgment of a competent tribunal, an arbitration award or a contract by which the payor and the individual terminate a legal proceeding?"

Position: General comments were provided to the effect that a payment made in such circumstances does not qualify.

Reasons: In the Canadian Law Dictionary, "arbitration" is defined as "The settling of a dispute by an arbitrator:" and states that "the decision of an arbitrator is known as an award." It seems likely that the payment is not made pursuant to an arbitration award (essentially a negotiated settlement is involved). Based on similar reasoning, it also seems likely that the payment is not made pursuant to a contract under which the payor and the individual terminate a legal proceeding.

11 December 2000 External T.I. 2000-0026705 - deemed residents & non-residents

Unedited CRA Tags
250(1)(a) 250(5)

Principal Issues: Are individuals deemed to be resident under paragraph 250(1)(a) able to rely on the coming into force rules for subsection 250(5)?

Position: No.

Reasons: The law.

11 December 2000 External T.I. 2000-0018495 - MEAL EXPENSES FOR TRANS. EMPLOYEES

Unedited CRA Tags
8(1)(g)

Principal Issues:
Whether employees of a company that transports passengers can claim a deduction under paragraph 8(1)(g) of the Act.

Position:
No

Reasons:
Consistent with case law and prior positions.

8 December 2000 External T.I. 2000-0033125 - Meaning of "agent" - section 253

Unedited CRA Tags
253(b)

Principal Issues: Whether an independent contractor would be included in the term "agent" for purposes of section 253(b).

Position: Question of Fact.

Reasons: We have not been provided with sufficient information to determine whether an independent contractor is acting as an agent for purposes of section 253 of the Act.

8 December 2000 External T.I. 2000-0056195 - REASONABLE MOTOR VEH. ALLOW.

Unedited CRA Tags
6(1)(b)(vii.1) 8(1)(h.1)

Principal Issues: Whether position has changed with respect to reasonableness of vehicle allowances paid to employees where employees incur expenses in excess of such allowances.

Position: Our position has not changed. It is a question of fact whether an allowance is reasonable.

Reasons: Consistent with paragraph 41 of IT-522R and previous opinions issues.

8 December 2000 External T.I. 2000-0050515 - PRIVATE HEALTH SER. PLAN

Unedited CRA Tags
6(1)(a) 20.01

Principal Issues: We have been provided with a specific scenario and asked for comments on a number of issues.

Position: Some general comments were provided on the basis of the limited information available. The comments relate to H & W trusts, PHSPs, and section 20.01 of the Act.

Reasons: See position.

8 December 2000 External T.I. 2000-0051535 - Definition of dividend recipient - 55(3)(a)

Unedited CRA Tags
55(3)(a)

Principal Issues: Whether an individual can be considered a "dividend recipient" in applying the tests in subparagraph 55(3)(a) of the Act.

Position: No

Reasons: Dividend recipient means the corporation that is the recipient of the particular dividend in question. It does not include an individual.

7 December 2000 External T.I. 2000-0059145 - Business Reserve Carrying Business Canada

Unedited CRA Tags
34.2(6)

Principal Issues: Whether partner of partnership that carries on business in Canada through a PE does the same.

Position: yes

Reasons: nature of partnership

7 December 2000 External T.I. 2000-0055715 - FOREIGN PROPERTY BUMP AVERAGING

Unedited CRA Tags
206(2)

Principal Issues: Where an RRSP is entitled to hold additional foreign property because of the "3 for 1" bump allowed in respect of small business investment amounts under paragraph 206(2)(c) of the Act, does the bump cease to exist on the disposition of the small business property or does the bump phase out over a three month period?

Position: Bump is phased out over three month period.

Reasons: This is how the provision applies which is confirmed in the example provided by the Department of Finance in its Technical Notes issued in November of 1985.

7 December 2000 External T.I. 1999-0009805 - foreign merger

Unedited CRA Tags
87(8.1)

Principal Issues: Application of paragraph 87(8.1)(c) to US merger where one predecessor ceases to exist.

Position: 87(8.1)(c) requirements met.

Reasons: Surviving corporation is considered a "new" corporation.

7 December 2000 External T.I. 2000-0050805 - LEVERAGED RCA

Unedited CRA Tags
248(1) 20(1)(c)

Principal Issues: Can we provide interpretations regarding various provisions of the Act as they would relate to a proposed leveraged retirement compensation arrangement scheme?

Position: No.

Reasons: Without all of the facts and proposed transactions, we are not in a position to provide any meaningful comments. This should be handled as a ruling request.

7 December 2000 External T.I. 2000-0032685 - QUALIFIED DISPOSITION SEGREGATED FUNDS

Unedited CRA Tags
138.1 107.4 248(25.1) 248(1)
Summary Under
Tax Topics - Income Tax Act - 101-110 - Section 107.4 - Subsection 107.4(3)

Principal Issues: We are asked for comments on the application of the draft trust provisions set out in the notice of ways and means motion of June 5, 2000 (the draft legislation) to a proposed transfer of securities from the general segregated fund of a life insurance corporation to a newly created specific segregated fund of the same life insurance corporation established for the benefit of the same persons followed by a subsequent transfer of those securities from the specific segregated fund of that life insurance corporation to a newly-created specific segregated fund of a second life insurance corporation created for the benefit of the same persons. As a result of the subsequent transfer, the specific segregated fund of the first life insurance corporation would cease to exist.

Position: It is our view that the first step of the transaction would probably not constitute a qualified disposition as there would be a change in beneficial ownership that is not within the deeming rule set out in paragraph 107.4(2). The second step of the transaction may be within the exception set out in paragraph (f) of the proposed definition "disposition" in subsection 248(1). The transaction raises anti-avoidance issues in that it tries to achieve a rollover of interests indirectly that could not be achieved directly. Whether or not a qualified disposition of trust assets causes the policyholders to realize a disposition depends upon the formality of the transaction.

Reasons: In order for a transaction to constitute a qualified disposition, it is necessary that there be no change in beneficial ownership of the assets transferred. The proposed legislation provides a deeming rule that, in our view, would have very narrow application, as it requires that a beneficiary retain its proportionate interest in "each particular property" of the transferor trust. We note, in this respect, that a single share is a particular property for the purposes of the Act.

6 December 2000 External T.I. 2000-0058175 - NOT FOR PROFIT ORGANIZATION

Unedited CRA Tags
149(1)(l)

Principal Issues:
Is the association a non-profit organization as described in paragraph 149(1)(l) of the Act and thus exempt from tax.

6 December 2000 External T.I. 2000-0056385 F - Interactions entre 120.4 et 104(14)

Unedited CRA Tags
120.4 104(14)

Principales Questions: Les dispositions de l'article 120.4 de la Loi s'appliquent-elles au montant inclus dans le revenu d'un bénéficiaire privilégié qui est un particulier déterminé?

Position Adoptée: non

6 December 2000 External T.I. 2000-0001345 F - POLICES FONDS DISTINCTS

Unedited CRA Tags
138.1

Principales Questions: Le traitement fiscal pour un particulier relativement à l'exercice d'une garantie qui excède la prime payée pour acquérir la police à fonds réservé.

Position Adoptée: Aucune.

1 December 2000 External T.I. 2000-0011895 - back to back loans - section 1717

Principal Issues: Application of 248(28) to a back-to-back lending arrangement where subsection 17(1) applies to the direct loan and subsection 17(2) applies to the subsequent loan.

Position: Subsection 248(28) does not apply.

Reasons: The law.

30 November 2000 External T.I. 2000-0002855 F - Emigration disposition réelle convention

Unedited CRA Tags
128.1(4)b) 128.1(6) 220(4.5)

Principales Questions:

Est-ce qu'une garantie acceptée par le ministre en vertu du nouveau 220(4.5) relativement à une disposition réputée d'un bien selon 128.1(4)b) est remboursable lorsque, au moment de la disposition, le cédant est considéré comme un résident américain au sens de la convention?
Would a garantee under the proposed 220(4.5) related to a deemed disposition under 128.1(4)b) be refunded where, at the time of the disposition of the property, the vendor is a U.S. resident under the treaty?

Position Adoptée:

19 September 2000 External T.I. 2000-0018505 F - COMPENSATION DE XXXXXXXXXX

Unedited CRA Tags
49(1) 44(2)

Principales Questions:
1. Comment traiter l'indemnité reçue pour avoir accordé une option d'acquérir des droits de servitude sur un terrain ?
2. Si le gain résulte en un gain en capital, est-ce qu'il sera possible d'utiliser la déduction pour gains en capital pour les biens agricoles admissibles ?

Position Adoptée:
1. un gain en capital sauf s'il s'agit d'un bien en inventaire
2. possiblement, si bien agricole admissible

Technical Interpretation - Internal

6 December 2000 Internal T.I. 2000-0020047 - TERMINAL CREDIT-VEHICLE LEASE

Unedited CRA Tags
6(1)(e)

Principal Issues:
1 ) did the company receive a terminal credit
2 ) can a terminal credit be deducted dollar for dollar from the automobile standby charge.
3 ) in the situation, is the credit a gain on disposition of an automobile or a reduction in automobile leasing costs.

Position:
1 ) Yes, 2 ) No 3 ) reduction in leasing costs

Reasons:
1 ) In a series of transactions where a lessee purchases a leased vehicle at the NBV of the lease and then immediately sells it to an employee for FMV, a lessee can be considered to have received a terminal credit.
2 ) as per the employer's guide: taxable benefits, employer can either deduct the terminal credit from the lease costs in the year the lease is terminated or amend the T4 slips of the individual who used the automobile.
3 ) Since it's a terminal credit, it is a reduction in the current year's vehicle leasing costs.

1 December 2000 Internal T.I. 2000-0051587 - SOCIAL ASSISTANCE PAYMENTS

Unedited CRA Tags
81(1)(h)

Principal Issues: What is the tax implication of payments to a corporation from the BC Ministry for Children & Families for the care of two mentally challenged individuals who reside in the home of the corporation's shareholder?

Position: The payments would be taxable in the hands of the corporation. A salary paid by the corporation for the care of the two individuals could be exempt.

Reasons: The payments are pursuant to a contract between the corporation and the B.C ministry. Paragraph 81(1)(h) of the Act does not apply to a corporation. Providing the salary paid for the care of the two individuals fall within paragraph 81(1)(h) of the Act the salary would be exempt to the extent the salary does not exceed the amount received by the corporation for the care of the individuals.

December 1, 2000

29 November 2000 Internal T.I. 2000-0051437 F - PROGRAMME SPRINT

Unedited CRA Tags
118.62

Principales Questions:
Est-ce que les intérêts payés à l'égard d'un prêt reçu aux termes du programme S.P.R.I.N.T. donnent droit au crédit d'impôt pour intérêts sur les prêts aux étudiants de l'article 118.62 de la Loi de l'impôt sur le revenu ?

Position Adoptée:
non.

23 November 2000 Internal T.I. 2000-0047877 - WITHDRAWALS UNDER HOME BUYERS' PLAN

Unedited CRA Tags
146.01(2)(d)(iii)

Principal Issues: If a taxpayer withdraws an amount under the Home Buyers' Plan in year 1, then a second amount in January of year 3, will the second amount be an "excluded withdrawal" by virtue of subparagraph 146.01(2)(d)(iii)?

Position: No

Reasons: Subparagraph 146.01(2)(d)(iii) deems the amount received in January of year 3 to have been received in year 2. But the receipt in year 2 would still have to meet the requirements of section 146.01 in and of itself.

17 November 2000 Internal T.I. 2000-0051577 - SHARECROPPING INCOME

Unedited CRA Tags
9(1)

Principal Issues: Whether a share of the crop received by a taxpayer is rent or business income. Some of the expenses of raising the crop are also paid for by the taxpayer.

Position: Question of fact. However, it may be that the taxpayer is carrying on a farming business in partnership or as a joint venture.

Reasons: The payment of the farming expenses by a landlord is not typical of a sharecropping/rental arrangement.

25 October 2000 Internal T.I. 2000-0044547 F - REGIME DE PRESTATIONS AUX EMPLOYES

Unedited CRA Tags
6(1)a) 6(1)g) 248(1)

Principales Questions:
Quelle est la nature des paiements reçus d'un fonds de sécurité d'emploi précis.

Position Adoptée:
Dans ce cas, il s'agit d'un «régime de prestations aux employés» et les montants sont imposables pour les travailleurs selon l'alinéa 6(1)g) de la Loi.

18 October 2000 Internal T.I. 2000-0050787 - Deductibility of bonus Accruals

Unedited CRA Tags
78(4) 67 18(1)(a)

Principal Issues:

Deductibility of year-end bonus accruals. Whether amount is to be based on actual employee-by-employee calculation or on an estimated aggregate, best efforts basis, if amount is paid within 180 days of the year end.

Position:

Accruals based on an employee-by-employee calculations would be preferred. However, estimated amount based on an aggregate and best efforts basis can be used if the amount is paid with 180 days of the year-end. The best efforts basis should take into account the reasonableness of the amount in the circumstances and the history of bonus accruals and payments made in previous years.

Reasons:

21 September 2000 Internal T.I. 2000-0046180 F - Remboursement de dépenses

Unedited CRA Tags
12(1)(x)

Principales Questions:
Révision des conclusions tirées dans les dossiers 1999-000270 et 2000-002757 concernant un montant reçu de XXXXXXXXXX $.

Position Adoptée:
Nous sommes d'accord avec les conclusions données dans ces dossiers à l'effet qu'il s'agit d'un remboursement de dépenses et que ce remboursement est imposable en vertu de l'alinéa 12(1)x) de la Loi.