CRA states that the simplest way for a supplier to demonstrate that its supply of contact lenses or eyeglasses was made to a consumer pursuant to a valid prescription or assessment record, as required by ETA s. VI-II-9 (see also Contact Lens King) in order for there to be zero-rating, is to retain a copy of those documents. Alternatively, the supplier could obtain and retain details in order to make that demonstration. After receiving representations regarding its previous listing of required details, CRA has now provided a revised list (pared down from the previous one), namely:

• the issue date of the prescription or assessment record;
• the name of the issuing eye care professional; and
• the details of the prescription or assessment record, such as the sphere, cylinder, axis, base curve, or pupillary distance values.

Neal Armstrong. Summary of Excise and GST/HST News – No. 119, April 2025 under ETA s. VI-II-9.

After being asked inter alia whether the "duties … of a temporary nature" condition in s. 6(6)(a)(i) is satisfied where an employee is assigned successively to two projects in the same region or city, CRA indicated “that the place where an employee performs work of a temporary nature (i.e., a special work site) is a particular place of work and not a general geographical area such as a city.” Thus, in the above examples, the second site in the same region or city would be tested separately as to whether the duties to be performed at that special work site were "of a temporary nature."

Neal Armstrong. Summary of 4 January 2022 External T.I. 2016-0644861E5 F under s. 6(6)(a)(i).

CRA has issued a new Folio on the rules for imputing interest on shareholder loans, contained principally in s. 80.4. Points made by it include:

• CRA lists factors that it considers relevant to determining whether a shareholder received a loan qua shareholder or qua employee (relevant inter alia to whether the imputed benefit is from employment).
• Once a loan becomes subject to the s. 80.4 rules, it remains subject to those provisions for all taxation years as long as any part of it remains unpaid even if, for example, the taxpayer ceases to be a shareholder
• Where a borrower did not include a loan in income because it was expected that the s. 15(2.6) exception would apply, and an interest benefit was included under s. 80.4(2) in the borrower's tax return for the year in which the loan was received, then if the loan in fact is not repaid within the s. 15(2.6) time period, the borrower should amend the tax return for that year to remove the deemed interest benefit amount from income and to include the loan amount in income.
• Where s. 80.4(2) results in a deemed interest benefit to a non-resident borrower, s. 80.5 applies to deem the amount of the benefit to be interest payable in respect of the year pursuant to a legal obligation to pay interest on the borrowed money for purposes of s. 20(1)(c). Accordingly, a deduction under s. 20(1)(c) may be claimed where the proceeds of the loan were used by the non-resident to earn income in Canada that is taxable under Part I.

Neal Armstrong. Summaries of Income Tax Folio S3-F1-C2 Deemed Interest Benefit on Shareholder Loans and Debts, April 10, 2025 under s. 80.4(2). s. 80.4(3)(a), s. 80.4(3)(b), s. 80.4(3)(c). s. 80.4(1) and s. 80.5.

CRA has issued a new Folio on the shareholder loan rules in s. 15(2) et seq. A few of the points covered include:

• Although a loan made for the purpose of refinancing an existing indebtedness that was previously incurred by an employee to acquire a dwelling will generally not meet the requirement under s. 15(2.4)(b) of having been made to enable or assist the acquisition of the dwelling, there is an exception for where the lender made a commitment to an individual on or before the individual's acquisition of the dwelling to provide permanent financing and in the interim, the individual used interim financing, such as construction financing, to construct or otherwise acquire the building.
• Regarding the requirement for bona fide repayment arrangements in s. 15(2.4)(f), at the time the loan is made, the arrangements for repayment must be such that it is possible to determine, with some certainty, the period within which the loan will be repaid.
• However, when trade debts are not paid according to the creditor's normal payment terms but they are settled within 12 months of being incurred, bona fide arrangements are considered to have been made at the time the debt arose for purposes of s. 15(2.3).
• CRA has carried forward most or all of its positions regarding the s. 15(2.6) rule including regarding when there is series of loans or other transactions and repayments, for instance that:
  • repayments are applied on a first-in, first-out basis (i.e., to the oldest loan first) when a shareholder has more than one loan outstanding at the time of repayment, unless the facts clearly indicate otherwise;
  • repayments can be made by applying dividend, salary, or bonus payments against an outstanding loan; and
  • a repayment may be considered to have been made as part of a series of loans or other transactions and repayments where the proceeds of a new loan are used to repay an existing shareholder loan.
• CRA has also carried forward its generous policies on the deferred timing for the recognition of a Part XIII remittance obligation on a benefit subject to such tax under s. 214(3)(a).
• Furthermore, if a PLOI election is available in respect of a loan but has not yet been filed, the CRA will assess Part XIII withholding tax only after the time period described in s. 15(2.6) has elapsed.
• In a situation where a loan amount that is owed by a non-resident borrower has been assigned by the original lender to a new lender and the borrower subsequently repays the loan to the new lender, the borrower may still be entitled to a refund of the Part XIII tax previously assessed.

Neal Armstrong. Summaries of Income Tax Folio S3-F1-C1, Shareholder Loans and Debts, April 10, 2025 under s. 15(2), s. 15(2.17), s. 15(2.3), s. 15(2.4)(b), s. 15(2.4)(c), s. 15(2.4)(a), s. 15(2.4)(f), s. 15(2.4)(e), s. 15(2.6), s. 20(1)(j) and s. 214(3)(a).