Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Will the "reasonable expectation of profit" Department of Finance draft proposals apply to deny a loss that results from the deduction of interest on money borrowed to acquire common shares?
Position: CRA is not in a position to comment until the public consultation process is completed and the final amendments become law.
Reasons: Draft Legislation is the responsibility of the Department of Finance
CALU - Conference for Advanced Life Underwriting (2004)
Question 10
Will the CRA confirm that, if interest on borrowed money used to acquire common shares is otherwise deductible, the October 31, 2003 Release by the Department of Finance regarding the draft proposals dealing with "reasonable expectation of profit" would not apply to deny the recognition of any loss that results from the deduction of the interest?
Agency's Response
On March 23, 2004 the Department of Finance in its Budget Plan extended the period for written submissions in respect of the legislative proposals, contained in the Release, until the end of August 2004. As such, until the public consultation process is completed and the final proposed amendments become law, the CRA is not in a position to comment.
In the interim, the CRA will continue to administer paragraph 20(1)(c) of the Income Tax Act in accordance with the current comments contained in paragraph 31 of Interpretation Bulletin IT-533 dated October 31, 2003.
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