Chapter History S3-F9-C1, Lottery Winnings, Miscellaneous Receipts, and Income (and Losses) from Crime

Introduction

The purpose of a Chapter History page is to highlight any amendments to the information contained in a chapter of an income tax folio, including amendments to the information originally contained in an interpretation bulletin that has been cancelled and replaced with a folio chapter. It outlines amendments that have been made as a result of legislative changes and proposed legislative changes, precedential court decisions, as well as new or revised interpretations of the Canada Revenue Agency (CRA).

Except as otherwise noted, all statutory references herein are references to provisions of the Income Tax Act, R.S.C., 1985, c.1 (5th Supp.), as amended and all references to a Regulation are to the Income Tax Regulations, C.R.C., c. 945, as amended.

Update July 3, 2020

¶1.41 of this Chapter is revised to refer to and reflect the publication of Income Tax Folio S3-F3-C1, Replacement Property, which replaced and cancelled Interpretation Bulletin IT-259R4, Exchange of Property.

¶1.44 of this Chapter is revised to refer to and reflect the publication of Income Tax Folio S4-F8-C1, Business Investment Losses, which replaced and cancelled Interpretation Bulletin IT-484R2, Business Investment Losses.

Update November 26, 2015

Minor changes have been made to improve the usability of the income tax folios:

• the Summary section has been moved to the top of each folio chapter to be more immediately visible and helpful to readers;
• the Application and Reference sections have been moved to the end of the Chapter which is more appropriate for administrative content of this nature. However, these sections now appear in the Table of contents for easy access;
• the statement that folios are only available in electronic format has been moved to the end of the Application section; and
• the words “as promulgated under the Act” in connection with the Income Tax Regulations have been removed from the Application section, in the interest of using plain language.

Update April 3, 2015

¶1.3 of the French version has been revised to clarify that it deals with the Court’s position regarding bona fide gifts under common law.

¶1.3.1 has been added to describe a gift pursuant to the Civil Code of Québec.

¶1.4 has been revised to delete the description of a gift under the common law from the second sentence so that the sentence applies in both the common law and civil law contexts.

¶1.8.1 and the new heading “Options to purchase” have been added to separate the content on deposits and options.

¶1.12 has been revised to include a reference to losses from a gambling business.

¶1.25 has been revised to delete the cross-reference to Interpretation Bulletin IT-470, Employees’ Fringe Benefits.

Update December 9, 2014

General

Income Tax Folio S3-F9-C1, Lottery Winnings, Miscellaneous Receipts and Income (and Losses) from Crime, replaces and cancels Interpretation Bulletins IT-185R (Consolidated), Losses from Theft, Defalcation, or Embezzlement; IT-213R, Prizes from Lottery Schemes, Pool System Betting and Giveaway Contents; IT-256R, Gains from Theft, Defalcation, or Embezzlement; and IT-334R2, Miscellaneous Receipts.

In addition to consolidating the content of the former interpretation bulletins, general revisions have been made to improve readability. Any substantive technical and interpretive changes to the information outlined in the former interpretation bulletin are described below.

Legislative and other changes

¶1.1 (formerly ¶1 of IT-334R2) remains unchanged; however, former ¶2 of IT-334R2 has been removed as the courts have seldom considered income from sources that are not specifically described in the Act.

¶1.3 (formerly ¶4 of IT-334R2) has been revised to describe a gift.

¶1.5 (formerly ¶4 of IT-334R2) has been expanded to provide an additional example of a taxable voluntary payment. In addition, the paragraph on fees received for entering into services contracts (formerly ¶7 of IT-334R2) has been removed as the content is covered in ¶1.1.

¶1.8 (formerly ¶8 of IT-334R2) has been revised to update the legislative reference for the definition of disposition to subparagraph 248(1)(b)(ii) which change was made by S.C. 2001, c. 17 (formerly Bill C-22). The definition was formerly found in subclause 54(c)(ii)(B).

¶1.11 to 1.15 (formerly ¶10 of IT-334R2) have been updated to reflect recent jurisprudence. In addition, the paragraph on hobbies (formerly ¶11 of IT-334R2) has been removed to reflect that the reasonable expectation of profit test is not supportable in law as a basis to determine if a taxpayer’s activities constitute a source of income under the Act.

¶1.16 (formerly ¶1 of IT-213R) has been expanded to include the income tax implications of lottery prize commissions.

¶1.19 (formerly ¶4 of IT-213R) has been revised to remove the reference to the Criminal Code.

¶1.20 (formerly ¶5 of IT-213R) has been revised to remove the reference to the Athletic Contests and Events Pools Act, which was repealed by S.C. 1985, c.22, s.5. The definition of pool system betting taken from the Athletic Contests and Events Pools Act continues to apply.

¶1.23 (formerly ¶8 of IT-213R) has been revised to generally define syndicate. In addition, the paragraph on free tickets in lieu of volume rebates or bonus (formerly ¶12 of IT-213R) has been removed as the income tax treatment follows the general concepts discussed in ¶1.1 and ¶1.21.

¶1.29 (formerly ¶13 of IT-213R) has been expanded to include the definition of annuity.

¶1.41 (formerly ¶9 of IT-185R) has been revised to update the legislative reference for the definition of proceeds of disposition to section 54.

¶1.42 to 1.45 have been added to discuss the income tax implications of fraudulent investment schemes.