CRA affirms Penn Ventilator doctrine

In S3-F6-C1, para. 1.65, CRA accepts that, in accordance with Penn Ventilator, interest on a note issued in order to repurchase common shares may be deductible. When asked whether A.P. Toldo has changed this view, CRA stated:

The Court in A.P. Toldo suggested that the decision in Penn Ventilator should be applied narrowly. However, it is our view that those comments were obiter and somewhat ambiguous. Accordingly, A.P. Toldo has not caused us to change our position.

Neal Armstrong. Summary of 31 May 2016 Internal T.I. 2016-0638241I7 under s. 20(1)(c)(ii).