1996 Tax Executive Institute Round Table, Q. X (Draft, No. 963906)

"When a loan is made to a shareholder in the ordinary course of the creditor's business with the same terms and conditions as offered to the public at large, the terms of repayment will normally be considered reasonable for the purpose of proposed subsection 15(2.3) of the Act. In particular, the minimum payments required under the terms of most commercial revolving credit sources will be considered to meet the requirement that bona fide arrangements be made for repayment of the debt or loan within a reasonable time ... ." By way of contrast, RC requires that specific terms of repayment for the full amount of indebtedness be set out in a loan in order to qualify for the exclusion in s. 15(2.4)(f) or 15(2.5)(d).

"With respect to a loan which is excluded from a shareholder's income by reason of proposed subsection 15(2.4) or (2.5) of the Act, we expect that the specific terms of repayment of the full amount of the indebtedness will be set out at the time the loan is made. As a result, a demand loan or a revolving credit source will not ordinarily be accepted ... ."