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: Whether (1) businesses should be allowed to deduct interest on loans for investments and (2) CRA is obligated to provide advanced rulings and interpretations in writing?
Position: (1) As stated in Interpretation Bulletin IT-533; (2) As stated in Information Circular IC 70-6R5
Reasons: (1) The law; (2) procedures when making such a request
Signed on August 31, 2006
I am replying to your correspondence addressed to XXXXXXXXXX, concerning some of the issues XXXXXXXXXX. I received a copy of your correspondence from XXXXXXXXXX on July 11, 2006.
The XXXXXXXXXX questioned whether businesses should be allowed to deduct interest on loans for investment. I am pleased to inform you that interest is generally deductible if it was paid on borrowed money used for the purpose of earning income from investments. The Canada Revenue Agency (CRA)'s view concerning the deductibility of interest on loans for investments is outlined in detail in Interpretation Bulletin IT-533, Interest Deductibility and Related Issues.
The XXXXXXXXXX indicated that the CRA should be obligated to provide advanced rulings and interpretations in writing. I am also pleased to inform you that it is CRA policy to consider all requests and to issue the resulting ruling or technical interpretation in writing, if possible. Information Circular 70-6R5, Advance Income Tax Rulings, outlines in detail the procedures that businesses should follow when making such a request.
I am attaching a copy of the publications mentioned above. They are also available on the CRA Web site at www.cra.gc.ca and can be obtained at any local tax services office or tax centre.
I trust that the above information is helpful.
The Honourable Carol Skelton, P.C., M.P.
(613) 957 2100
August 16, 2006
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