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: Are amounts paid by an employer for interest included in the calculation of a taxable benefit pursuant to section 80.4 deductible for the employer?
Position: Generally yes, if employee remuneration is otherwise deductible.
Reasons: Question of fact.
XXXXXXXXXX T. Young, CA
2004-007615
June 1, 2004
Dear XXXXXXXXXX:
Re: Employee Interest Benefit
We are writing in response to your email of May 13, 2004, wherein you asked us to confirm that an employer may deduct payments made to a third party to subsidize the interest an employee would have otherwise paid on a loan from the third party.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002, which may be found on our web site at www.cra.gc.ca. However, we are prepared to provide the following general comments, which may be of assistance to you.
In general terms, an employer can deduct payments made to a third party to subsidize the interest an employee would have otherwise paid on a loan from the third party.
We trust our comments will be of assistance to you.
Yours truly,
Randy Hewlett, B. Comm.
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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