Principal Issues: Whether certain residential properties to which the deceased taxpayer held legal title are beneficially owned by the taxpayer's surviving daughters.
Position: None taken. Matter referred to Winnipeg Tax Centre for resolution.
Reasons: The matter concerned completed transactions involving questions of fact in relation to previously assessed T1 income tax returns. The tax centre is responsible for verifying, and processing T1 adjustment requests to previously filed income tax returns.
XXXXXXXXXX 2011-039888 Tim Fitzgerald, CGA
March 29, 2011
Dear XXXXXXXXXX ,
RE: T1 Adjustment Request for:
2009 Income Tax Return of XXXXXXXXXX ; and
Final 2009 Income Tax Return of the late XXXXXXXXXX
This is in reply to your letter of March 4, 2011, concerning the final 2009 income tax return of the late XXXXXXXXXX ("Ms. A"). This also confirms our telephone conversations of March 24 and 25, 2011, [Fitzgerald/XXXXXXXXXX ] and receipt of your faxed correspondence of March 24, 2011, containing a T1 ADJ E taxpayer adjustment request form for XXXXXXXXXX ("Mr. A") and, as well, the deceased, Ms. A, each being in respect of the 2009 taxation year.
Briefly, we understand that the deceased, Ms. A, together with Mr. A jointly owned two residential properties, "Property A" and "Property B", and that as a consequence of Ms. A's death, capital gains were reported in respect of these properties on a 50/50 basis on Ms. A's final income tax return and Mr. A's 2009 income tax return.
However, your view is that Property A is beneficially owned by Ms. A's daughter, XXXXXXXXXX ("Daughter 1") and Property B is beneficially owned by Ms. A's other daughter, XXXXXXXXXX ("Daughter 2"). Your position is that there is no capital gain in 2009 for Mr. A, and the late Ms. A. Accordingly, you would like the capital gains previously reported in respect of Property A and Property B by Mr. A on his 2009 income tax return and by the late Ms. A on her 2009 final income tax return to be reversed.
For this purpose you originally requested an advanced income tax ruling confirming that Property A is beneficially owned by Daughter 1 and that Property B is beneficially owned by Daughter 2. However, for reasons mentioned below, you have abandoned your request for an advanced income tax ruling and instead have submitted the above-noted T1 ADJ E forms for Mr. A and the late Ms. A requesting that the above-mentioned capital gains for 2009 be reversed.
As explained in Information Circular 70-6R5, Advance Income Tax Rulings, if a particular situation involves proposed transactions, all relevant facts and documentation can be submitted in the context of an advance income tax ruling request. If the situation involves completed transactions, the information can be submitted to the local tax services office for their views. A taxpayer's request to adjust a previously assessed T1 income tax return is made by sending completed form T1ADJ E, T1 Adjustment Request, to the Individual Client Services and Benefits Division of the tax centre indicated on the taxpayer's notice of assessment along with all relevant supporting documentation.
The situation you have raised involves several questions of fact and completed transactions of specific taxpayers and their respective previously assessed income tax returns. As we discussed on March 24, 2011, this Directorate does not issue advanced income tax rulings to adjust previously assessed T1 income tax returns.
As we discussed, since it is the Winnipeg Tax Centre that is responsible for reviewing and processing T1 adjustment requests for the above-mentioned taxpayers, we have forwarded the above-noted T1 ADJ E forms along with all correspondence and supporting documentation you sent to us to the attention of Ms. Darlene Muise, Taxpayer Request Manager, Individual Client Services and Benefits Division, Winnipeg Tax Centre, for review and resolution. As well, a copy of this letter has been sent to Ms. Muise.
For your information, the cheque for $535.00 that was enclosed with your letter of March 4, 2011 is being returned to your office under separate cover.
We trust this is satisfactory.
Yours truly,
Sandy Parnanzone
Manager
for Director,
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Division
cc.: Darlene Muise,
T1 Client Services,
Winnipeg Tax Centre