Income Tax Severed Letters - 2014-04-09

Technical Interpretation - External

27 March 2014 External T.I. 2013-0504261E5 - attribution rules

CRA Tags
74.4

Principal Issues: Whether the purpose test in 74.4 would be satisfied.

Position: Question of fact.

Reasons: Depends on the facts of the particular situation.

18 March 2014 External T.I. 2013-0515631E5 - Criteria for Standard Convertible Debentures

CRA Tags
212(3), 212(1)(b), 214(8)(c), 214(7)
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(3) - Participating debt interest
no guidance provided on convertible debentures

Principal Issues: Whether the CRA can confirm its policy with respect to the application of Part XIII tax to "standard convertible debentures".

Position: No.

Reasons: The CRA cannot provide certainty regarding the very broad range of situations in which convertible debentures can be issued. The Income Tax Rulings Directorate encourages issuers and/or holders of convertible debts to request advance income tax rulings if they have concerns about the application of Part XIII of the Act to convertible debts in the context of proposed transactions.

5 March 2014 External T.I. 2013-0490641E5 - Pension Corp-Real Property Development

CRA Tags
149(1)(o.2)(ii)(A)
Summary Under
Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(o.2) - Subparagraph 149(1)(o.2)(ii)
excess land sale

Principal Issues: Where a pension corporation acquires land to develop a shopping centre and a portion of the land is subdivided and subsequently sold, cause the conditions of subclause 149(1)(o.2)(ii)(A)(I) to fail to be satisfied?

Position: Question of fact.

Reasons: Real property acquired by the pension corporation must be held, at all times, as capital property. The development of real property for the purpose of earning passive investment income is acceptable; however, developing real property for the purpose of reselling it at a profit would not be acceptable. All of the relevant facts in a particular situation would have to be known to make such a determination.

3 March 2014 External T.I. 2014-0518791E5 F - Réinstallation admissible

CRA Tags
248(1)
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Eligible Relocation
40-kilometre test is met if it is met going home from work but not to work

Principales Questions: Pour les fins d'une réinstallation admissible, si la distance entre l'ancienne résidence et le nouveau lieu de travail n'excède pas d'au moins 40 kilomètres la distance entre la nouvelle résidence et le nouveau lieu de travail mais que, dans le sens inverse, c'est-à-dire que la distance entre le nouveau lieu de travail et l'ancienne résidence excède la distance entre le nouveau lieu de travail et la nouvelle résidence d'au moins 40 kilomètres, est-ce que l'alinéa d) de la définition de « réinstallation admissible » est respecté ?

Position Adoptée: oui.

Raisons: Il est réaliste de s'attendre à ce que la distance entre deux points puisse être différente quand elle est mesurée dans une direction ou dans l'autre. En effet, la méthode de la route normale la plus courte sous-entend qu'un individu emprunte les voies publiques normales ce qui peut impliquer des sens uniques etc.

26 February 2014 External T.I. 2013-0510921E5 F - Remboursement de frais médicaux à un employé

CRA Tags
18(1)(a), 9(1)
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose
no need to demonstrate income production

Principales Questions: Un employeur peut-il déduire dans le calcul de son revenu d'entreprise, les montants qu'il a payés à un employé comme remboursement de ses frais médicaux dans le cadre d'un compte de frais médicaux lorsque ces frais ont été engagés par l'employé avant la mise en place du compte de frais médicaux? [TRANSLATION] In computing their business income, can an employer deduct amounts that they paid to an employee as a reimbursement for their medical expenses in the context of a health spending account (HSA), when such expenses were incurred by the employee prior to the employer putting in place the HSA?

Position Adoptée: Question de fait. La dépense doit être engagée ou effectuée en vue de tirer un revenu d'entreprise et elle doit être raisonnable dans les circonstances. [TRANSLATION] Question of fact. The expense must be incurred for the purpose of gaining or producing income from the business, and it must be reasonable in the circumstances.

Raisons: La portée large de l'alinéa 18(1)a). [TRANSLATION] The broad scope of paragraph 18(1)(a).

22 January 2014 External T.I. 2014-0517121E5 - T5 Information Slip Reporting Requirements

CRA Tags
121, ITR 201
Summary Under
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c)
3 requirements for "interest"

Principal Issues: Whether an amount paid as a bonus or incentive payment for holding a balance in an account should be reported on a T5 information slip.

Position: A question of fact - in this case, likely yes. However whether or not amounts are reportable on a T5, they would, nonetheless, be taxable income to the recipient.

Reasons: Payments appear to meet the definition of interest and therefore fall under the specific investment income amounts reportable under section 201 of the Income Tax Regulations.

Technical Interpretation - Internal

10 July 2013 Internal T.I. 2013-0478851I7 - Earned income for RRSP purposes

CRA Tags
6(1)(f), 146(1), 6(1)(f.1)
Summary Under
Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Earned Income
income loss payments included

Principal Issues: Whether Earnings Loss Benefit Payments and XXXXXXXXXX received by a taxpayer are considered earned income for RRSP purposes.

Position: Yes, provided the amounts are included in income from an office or employment.

Reasons: Where the ELB and XXXXXXXXXX payments received by taxpayers are included in income from an office or employment, they are considered earned income by reason of subparagraph (a)(i) of the definition of "earned income" in subsection 146(1) of the Act