Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Discussion of the income tax treatment of a premium on a corporate bond purchased in the secondary market
Position TAKEN: Income/Capital gain depending on investor's activities
Reasons FOR POSITION TAKEN: Previous opinions
XXXXXXXXXX 2001-010850
G. Moore
April 22. 2002
Dear XXXXXXXXXX:
Re: Premium on Corporate Bond
This is in reply to your enquiry of November 1, 2001, wherein you requested our comments concerning an investor who purchases a corporate bond at a premium on the secondary market and holds it to maturity.
It is the view of the Canada Customs and Revenue Agency that where a taxpayer holds an investment as a capital property (i.e., not a trader or dealer), the amount of any loss on a disposition caused by having paid a premium for the investment is a capital loss. It is also our opinion that where a taxpayer holds an investment on income account, any loss on a disposition caused by having paid a premium for the investment would be a loss on account of income.
We trust that these comments will be of assistance.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
??
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2002
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2002
Email this Content