Subsection 120(1) - Income not earned in a province
Administrative Policy
8 October 2014 Memorandum 2014-0539571I7 - NL tax vs Non-Res Surtax
Is employment income earned by a non-resident individual working in the Newfoundland offshore area (NOA) subject to provincial tax or the surtax in s. 120(1)? CRA stated:
[E]mployment income earned by the non-resident employees in the NOA is not income earned in the year in a province. Therefore, the income is subject to the surtax in subsection 120(1) and is not subject to NL provincial tax.
25 July 2014 Memorandum 2013-0513641I7 - Deemed resident trust under subsection 94(3)
The Estate of a Canadian resident, with two non-resident beneficiaries and a non-resident liquidator was deemed to be resident in Canada as described in s. 94(3)(a). Would s. 120(1) apply?
After noting that the 48% addition under s. 120(1) occurs for income of an individual that is not earned in a province (defined in Part XXVI of the Regulations), Head Office stated:
[Reg.] 2601(1)… provides that if an individual resides in a particular province on the last day of a taxation year and has no income for the taxation year from a business with a permanent establishment outside the province, the individual's income earned in the taxation year in the particular province is the individual's income for the taxation year. ... Therefore… the income of the Estate for the year is not income earned in a province…[and] consequently, subsection 120(1) is applicable to the income of the Estate for the year… .
27 March 2013 Folio S5-F1-C1
"An individual who is resident in more than one province on December 31 of a particular tax year will be considered to be resident only in the province in which the individual has the most significant residential ties, for purposes of computing his or her provincial tax payable."
IT-81R "Partnerships - Income of Non-Resident Partners"
Income that becomes subject to Part I as a result of an s. 216 election is not considered to be earned in any particular province.
Subsection 120(4) - Definitions
Administrative Policy
3 December 2003 T.I. 2003-003998 -
A trust whose beneficiaries are minor children of the shareholders of Corporation A (and who are assumed to be "specified individuals") is allocated income by a partnership which has lent funds received under a bank loan to customers of Corporation A who, in turn, use those funds to pay the premiums on insurance policies purchased from Corporation A. Such loans by the partnership would constitute the provision of property or services in support of a business carried on by a person related to the specified individuals.