| July 7, 1989 | |
| TO - Non-Resident Taxation Division | FROM - Specialty Rulings |
| K. Hillier, A/Director | Directorate |
| T.B. Kuss | |
| Cheryl Charette | 957-2123 |
| File No. 7-3955 |
SUBJECT: Treaty Exempt Income and Charitable Donations Calculation
This is in reply to your memorandum dated May 23, 1989 in which you requested our views on the application of paragraph 110(1)(f) of the Income Tax Act ("the Act") as it pertains to treaty exempt income and the inclusion of this exempt income in the calculation of 20% of net income for charitable donations for sojourners who are employed in Canada.
We have reviewed the various attachments included with your memorandum and provide the following general comments.
We agree with the comments made in Mr. Thornley's memorandum dated January 22, 1987. Specifically, it is our opinion that a taxpayer who has been deemed resident in Canada throughout a taxation year by virtue of paragraph 250(1)(a) of the Act does not have a choice regarding the inclusion of treaty exempt income in the computation of his net income for Canadian tax purposes for that taxation year. The treaty exempt income should be included in the computation of net income and then deducted pursuant to subparagraph 110(1)(f)(i) of the Act in arriving at taxable income. This will of course impact on the charitable donation claim and other deductions and credits.
21(1)(a)
We hope our comments are of assistance.
D. Dalphyfor DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch