Income Tax Severed Letters - 2001-08-03

Miscellaneous

2001 2000-0057901 - EMPLOYEE/SHAREHOLDER LOANS

Unedited CRA Tags
6(9) 84.1 15 6(1)(a)

Principal Issues:

2001 2001-0072221 - EMPLOYEE/SHAREHOLDER LOANS

Unedited CRA Tags
6(9) 80.4 15

Principal Issues:
Impact of changes to investment mix, interest rate and eligibility requirements in proposed transactions.

Ruling

30 July 2001 Ruling 2001-0091313 - BOOKS AND RECORDS

Unedited CRA Tags
230(1)

Principal Issues:

Do the requirements of subsection 230(1), specifically, that the person "shall keep records and books of account ... at the person's place of business or residence in Canada or at such other place as may be designated by the Minister", prohibit a person from relying on an outside agency, thee taxpayer, to retain electronic records at a location other than the persons place of business?

Position TAKEN:

Refused to rule.

Reasons:

2001 Ruling 2000-0042353 - split-up butterfly

Unedited CRA Tags
55(3)(b)

Principal Issues: Split-up butterfly-one wing

Position: routine

Reasons:

2000 Ruling 2000-0044773 - EMPLOYEE/SHAREHOLDER LOANS

Unedited CRA Tags
6(9) 84.1 15

Principal Issues:
Are the conditions in paragraph 15(2.4)(f) 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 2000-0045853 - Substituted Property

Unedited CRA Tags
88(1)(c.3) 245(2)

Principal Issues: Application of subparagraph 88(1)(c.3)(ii) - meaning of "substituted property" for the purposes of subparagraph 88(1)(c)(vi)

Position: Shares acquired by the specified shareholder will not be "substituted property" as defined in subparagraph 88(1)(c.3)(ii)

Reasons: Fair market value of the shares acquired by the specified shareholder will not be determinable primarily by reference to the fair market value or proceeds of disposition of distributed property

Technical Interpretation - External

3 August 2001 External T.I. 2001-0085545 - DEDUCTION OF LEGAL FEES

Unedited CRA Tags
8(1)(b)

Principal Issues:
Deductibility of legal fees in computing employment income given a specific situation.

Position:
General comments provided; it is necessary to review all the relevant facts and documentation surrounding the case.

Reasons:
Paragraph 8(2) and 8(1)(b).

3 August 2001 External T.I. 2001-0086185 - employee adop. exp. paid by employer

Unedited CRA Tags
6(1)(a)

Principal Issues:
Where an employer pays all or part of the cost of an employee to adopt a child:
(1) Are the amounts a taxable benefit to the employee?
(2) Is the employer entitled to a deduction in computing its business income for the amount?

Position:
(1) Yes.
(2) Qualifies for purposes of 18(1)(a); some other provision may restrict the deductibility, such as section 67 for reasonableness.

Reasons:
(1) Paragraph 6(1)(a).
(2) Paragraph 18(1)(a).

3 August 2001 External T.I. 2001-0086265 - EXPENSES-PROF. SINGER

Unedited CRA Tags
18(1)(a) 18(1)(g)

Principal Issues:
What portion of rent expense for a studio and piano are deductible by an individual that is a professional singer and music teacher, where there is a personal element to the expense.

Position:
To establish the amount of an otherwise deductible expense, whether referring to the calculation of employment income or business income, an allocation must first be made on a reasonable basis between the personal and income-earning elements.

Reasons:
Paragraphs 18(1)(a) and 8(1)(q).

30 July 2001 External T.I. 2001-0091465 - Shares Exchange Arrangement

Unedited CRA Tags
256(7)(e)
Summary Under
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(e)

Principal Issues: Where shares of a Targetco are exchanged for the shares of a Purchaseco ("shares exchange arrangement") in which a right to dissent is conferred on the shareholders of Targetco under the Canada Business Corporations Act ("CBCA"), whether the shares of Targetco held by the dissenting shareholders are not considered to be outstanding shares of Targetco for the purpose of the transactions constituting the shares exchange arrangement under paragraph 256(7)(e) of the Income Tax Act ("Act")?

Position: Yes

Reasons: The dissenting shareholders of Targetco, when exercising the statutory right to dissent, cease to have any rights as a shareholder of Targetco under subsection 190(11) of the CBCA.

30 July 2001 External T.I. 2001-0084105 - EMPLOYMENT AT A SPECIAL WORKSITE

Unedited CRA Tags
6(6)

Principal Issues:
Whether the application of subsection 6(6) would exclude from employment income the value of transportation, and board and lodging, provided to a group of employees seconded for a term of employment from a non-resident parent company to a Canadian subsidiary.

Position:
Question of fact, a determination cannot be made for a group of employees as whole. Each individual employee may have varying circumstances.

Reasons:
Subsection 6(6) and IT-91R4

27 July 2001 External T.I. 2001-0084745 - EMPLOYER CONTRIBUTION TO AN EMPLOYEE RRSP

Unedited CRA Tags
6(1)(a0 REG 100(3)

Principal Issues:
Are employer contributions to an employee RRSP exempt from withholding tax?

Position:
Yes.

Reasons:
Paragraph 100(3)(c) of the Income Tax Regulations.

26 July 2001 External T.I. 2001-0083295 - INTERACTION OF QST

Unedited CRA Tags
12(1)(x)
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x)
input tax refund

Principal Issues: Should Quebec Sales Tax Input Tax Refunds (QST-ITR) be considered income for the purposes of ITA 12(1)(x)?

Position: Yes when received

Reasons: ITA 12(1)(x)

26 July 2001 External T.I. 2001-0091595 - EXEMPTION FROM TAXATION FOR CAREGIVER

Unedited CRA Tags
81(1)(h)

Principal Issues:
Whether certain payments to an individual from a program funded by the Province of British Columbia's Ministry of Children and Families are taxable.

Position:
Question of fact; insufficient information provided. General comments on the application of paragraph 81(1)(h) of the Act.

Reasons:
Requirements of paragraph 81(1)(h) of the Act must be met.

17 July 2001 External T.I. 2001-0082505 - COMMENCEMENT OF BUSINESS OPERATIONS

Unedited CRA Tags
18(1)(a)

Principal Issues:
Taxpayer contemplating establishing a business and expects to incur various costs outside Canada, including transportation, living costs, research costs with respect to suppliers and merchandise, and feasibility costs. Taxpayer wishes to know if the costs are deductible.

Position TAKEN:
Question of fact. Insufficient information provided to determine if the business had commenced business operations.

Reasons:
Insufficient information.

17 July 2001 External T.I. 2001-0091525 - PARISH NURSE

Unedited CRA Tags
8(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.

Principal Issues

Does a parish nurse qualify for the 8(1)(c) deduction?

Position TAKEN
No

REASON FOR POSITION TAKEN
Not a regular minister of a religious denomination, and IT 141R

11 July 2001 External T.I. 2001-0082495 - TRAVEL ALLOWANCES

Unedited CRA Tags
6(1)(b)

Principal Issues:
(a) Is an allowance for the use of a motor vehicle in connection with the duties of an office or employment, based on a per-kilometer amount, a taxable benefit when it is adjusted to a minimum amount per round trip?
(b) Is an allowance for the use of a motor vehicle in connection with the duties of an office or employment, based on a per-kilometer amount, a taxable benefit when in the previous month an employee may have received a fixed amount plus a per-kilometer amount allowance?
(c) Is an allowance based on a per-kilometer amount for the use of a motor vehicle in connection with the duties of an office or employment, for travel outside the employment district, a taxable benefit when a fixed amount allowance is received per month for travel inside the employment district?

Position:
(a) Not if the amount is a reimbursement of actual expenses incurred.
(b) Not if the requirements of paragraph 6(1)(b) of the Act are otherwise met.
(c) The per-kilometer amount for travel outside of employment district is not taxable if the requirements of paragraph 6(1)(b) of the Act are otherwise met. The fixed rate amount for travel within the employment district is a taxable benefit by virtue of paragraph 6(1)(b)(x) of the Act.

Reasons:
(a) Paragraph 51, IT-522R.
(b) The amounts are separate allowances; the tax implications would be determined independently.
(c) The amounts are separate allowances; the tax implications would be determined independently.