27 July 2007 GST/HST Interpretation 95672 - PROPOSED LAW/REGULATION

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Further to a meeting between officials from the Canada Revenue Agency (CRA) and XXXXX, the purpose of this letter is to confirm the CRA's interpretation of the term "interest" for purposes of the de minimis financial institution rules under paragraph 149(1)(c) of the Excise Tax Act.

All legislative references are to the Excise Tax Act (ETA) and regulations made under that Act, unless otherwise specified.

Interpretation Given

For purposes of the definition of financial institution in paragraph 149(1)(c) of the ETA (commonly referred to as a "de minimis financial institution"), the term "interest" refers to amounts included as interest from making an advance, the lending of money or the granting of credit for purposes of computing income under the Income Tax Act (ITA).

XXXXX would generally not report interest income for ITA purposes from equipment leasing revenue, so that this income would generally not be included in determining whether they have exceeded the threshold and would be deemed to be a de minimus financial institution for ETA purposes under paragraph 149(1)(c).

If you require clarification with respect to any of the issues discussed in this letter, please call Dawn Weisberg, Manager, directly at 613-952-9210.

Yours truly,

Mr. Ivan Bastasic
Director
Financial Institutions and Real Property Division Division
Excise and GST/HST Rulings Directorate

2007/08/08 — RITS 96424 — Foreign Convention and Tour Incentive Program