Income Tax Severed Letters - 2023-07-05

Technical Interpretation - External

13 April 2023 External T.I. 2021-0917041E5 - Northern residents travel deduction

Unedited CRA Tags
110.7(1)(a)

Principal Issues: Whether a travel allowance provided for in an amended employment contract would qualify as an amount received in respect of travel expenses incurred by the employee for purposes of paragraph 110.7(1)(a) of the Act.

Position: Question of fact and law.

Reasons: See below.

11 April 2023 External T.I. 2021-0920561E5 - Cost Recovery Method in IT-426R

Unedited CRA Tags
12(1)(g), 39(1)

Principal Issues: Whether the cost recovery method of reporting a capital gain on the sale of shares subject to an earnout agreement could be used where the proceeds of disposition are paid by the buyer to the seller by way of the issuance of publicly traded shares or shares of a private corporation.

Position: Whether the conditions set out in paragraph 2 of archived IT-426R are met in a particular situation is a question of fact that requires an analysis of all relevant facts in a particular situation. The mere fact that a portion of the POD is made in the form of the issuance of shares of a particular corporation to the vendor will not preclude the application of the cost recovery method of reporting a capital gain on the sale of shares.

Reasons: See below.

Technical Interpretation - Internal

8 November 2022 Internal T.I. 2022-0938431I7 - RPP Remedial Payments

Unedited CRA Tags
5(1), 6(1)(a), and 147.2(1)(a)

Principal Issues: Whether a remedial payment made by an insurer to a member’s defined contribution account of a registered pension plan is a contribution for purposes of paragraph 147.2(1)(a) and taxable to the member under section 5 or 6?

Position: Question of fact.

Reasons: A remedial payment made to a registered pension plan in respect of an actionable loss suffered by the plan does not constitute a contribution or gift to the plan and will not result in an income inclusion to the member.

8 November 2022 Internal T.I. 2022-0942701I7 - RCMP cadet training – service buyback

Unedited CRA Tags
5, 6, 147.1(11), 8501(2), 8503(3)(a)(i)

Principal Issues: In the circumstances, is the period of cadet training completed by an RCMP cadet eligible service for purposes of subparagraph 8503(3)(a)(i) of the Regulations?

Position: Yes.

Reasons: The period of cadet training is eligible service for purposes of subparagraph 8503(3)(a)(i) of the Regulations because the cadet is employed by and receives remuneration from an employer that has contributed to the RCMP pension plan.