CRA provides for expanded PLOI election disclosure and permits PLOI elections to be made on loan-by-loan basis

Where a pertinent loan or indebtedness (PLOI) election is made under s. 15(2.11) or 212.3(11) respecting an amount owing by a corporation resident in Canada (CRIC) to certain non-residents, the loan or indebtedness will be subject to notional interest imputation rules instead of potentially being treated as a deemed dividend paid by the CRIC to the non-resident debtor. Until about now, CRA required that separate elections be filed in respect of each amount owing to the same non-resident regardless of whether such amounts pertained to the same debt instrument.

Effective for elections filed after April 11, 2022, CRA will require only one election to be made in respect of a particular legal instrument where multiple amounts are owed under its terms. An election must be made in respect of each non-resident person that owes an amount under the terms of the legal instrument. In order to be eligible for this administrative policy, taxpayers will need to send to the CRA, along with the PLOI election, a copy of the agreement detailing the terms and conditions of the loan or indebtedness for which one single PLOI election is being filed for multiple amounts owing under that legal instrument.

CRA is also requiring expanded disclosure from the electing CRIC, including the total changes in the amount of the PLOI on a monthly basis showing total increases (including capitalized interest) and total decreases, and the total amount of deemed interest on the PLOI, the total amount of interest charged by the CRIC on the loan or indebtedness and the net adjustment to interest income required (if any).

These and related changes are reflected in the updated CRA Webpage on the “Pertinent loans or indebtedness (PLOI)” .

Neal Armstrong. Summary of Notice to Tax Professionals: Updates to filing process for a pertinent loan or indebtedness election, 25 March 2022 under s. 15(2.11).