Income Tax Severed Letters - 2002-09-13

Principal Issues:
1. Would a corporation be a qualified corporation where a non-resident who is a Canadian citizen controls it?

Position:
1. Involves a question of fact.

Reasons:
1. Reading of the relevant legislation.

Principal Issues:
What are the requirements under the Act regarding the number of arm's length members on the board governing a registered charity?

Position:
Provided a charity otherwise qualifies for registration, if 50% or more of its directors, trustees, officers or like officials deal with each other and with each of the other directors, trustees, officers and like officials at arm's length, the charity may be designated as either charitable organization or public foundation. Otherwise, it will be designated as a private foundation.

Reasons:
The wording of the definitions for "charitable organization", "public foundation" and "private foundation" in subsection 149.1(1) of the Act.

Principales Questions:
Est-ce que les récompenses suivantes seraient admissibles à la politique de l'ADRC sur les cadeaux et récompenses?
a) un chèque-cadeau non remboursable et non transférable;
b) un chèque-cadeau non-remboursable mais transférable;
c) un chèque-cadeau remboursable en partie et non transférable.

Position Adoptée: Non

Principal Issues:
1. Can the 24 month grandfathering relief in 206(2)(a)(iii) be applied by a trustee, in respect of property that was not foreign which becomes foreign property, to all of its registered plans?
2. How would tax that was incorrectly remitted by the trustee due to failure to apply the 206(2)(a)(iii) relief be claimed?
3. What are the trustee's responsibilities in applying the relief?

Position:
1. No.
2. Plan trustee must file tax return for the year in question, or if already filed, a request for reassessment.
3. Explained the usual filing and remittance requirements imposed on the plan trustee by the Act.

Reasons:
1. Wording in 206(2) is clear.
2. 164(1) and a telephone conversation with Kevin Stackhouse in the Trusts and Pension Section at IRPPD, confirming that they would not administratively provide any other faster method to claim the refund.
3. 207(1) and (2)

Principal Issues: Whether the cost of cancer treatments in the United States qualifies as a medical expense under subsection 118.2(2) of the Income Tax Act (the "Act").

Position: Payment to a public or licensed private hospital (i.e., licensed by the state in which the hospital operates) by an individual to obtain medical services qualifies as a medical expense under paragraph 118.2(2)(a) of the Act. Certain travel and transportation expenses qualify as medical expenses if the conditions in paragraphs 118.2(2)(g) or (h) are met.

Reasons: Definition of medical expenses in subsection 118.2.

Principal Issues:
A taxpayer is hired through a union hall to work in various locations away from his principal residence. The issue is whether the taxpayer is entitled to deduct employment expenses in respect of travel, board and lodging.

Position TAKEN:
Not deductible.

Reasons:
No deduction is available under section 8. Subsection 8(2) restricts deductions for employment expenses to those specifically contained in section 8. Travel between an employee's home and the employer's establishment where the employee ordinarily reports for work is personal in nature.

Principal Issues:
Follow-up inquiry to 2002-014329 on whether a retroactive lump-sum payment received as a result of a job classification process is a "qualifying amount" for the purposes of a deduction in the computation of taxable income under section 110.2 of the Income Tax Act (the Act). The follow-up specifically relates to whether the employer's job classification committee is a "competent tribunal" within the meaning of the definition of "qualifying amount".

Position:
No.

Reasons:
The words competent tribunal in the definition of qualifying amount in subsection 110.2(1) refers to a particular tribunal that has the legal jurisdiction to make the order or judgement.

Principal Issues: In a given fact situation involving related parties where ss. 84.1(1) applies, whether: (1) The purchaser corporation can make a ss. 83(2) election in respect of the dividend it is deemed to have paid to the taxpayer pursuant to paragraph 84.1(1)(b) ? (2) CCRA's position on the application of paragraph 129(1)(a) in document E9729855 could apply for the purpose of ss. 83(2) in this situation ?

Position: (1) No (2) No

Reasons:
(1) A dividend deemed to be paid pursuant to 84.1(1)(b) does not meet the requirement in 83(2) that the dividend becomes payable to shareholders of any class of shares of a corporation's capital stock. There is no deeming provision in the Act to that effect like there was in the original version of 84.1 under sub-paragraph 84.1(1)(c)(iii). The Department of Finance was informed of the situation.
(2) The opinion expressed in document E9729855 does not represent CCRA's position anymore.

Principal Issues: Can a medical doctor certify that an individual, who dies prior to having been disabled for a period of 12 months, qualifies for the disability tax credit after the individual has died?

Position: Certification will be accepted only if it is based on a prognosis made before the individual's death.

Reasons: Certification meets the requirements of paragraph 118.3(1)(a.2) if a qualified person made the prognosis before the individual dies and the impairment could reasonably be expected to last for a period of 12 months.