Income Tax Severed Letters - 2010-03-12

Ruling

2010 Ruling 2009-0347271R3 - Foreign Affiliate Restructuring Financing

Unedited CRA Tags
95(2)(a)(ii)(B) and (D), 95(6)(b), 17(14)(b), 5907(1) definition of "exempt earnings"
Summary Under
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share
unnecessary for ownership interest to be divided into shares

Principal Issues: 1. Is Forco1, a XXXXXXXXXX cooperative, established under the laws of the XXXXXXXXXX , a corporation for the purposes of the Act. 2. Where a foreign entity is considered to be a corporation for the purposes of the Act but ownership in the entity is not divided into units entitled shares, can an ownership interest in such an entity be considered to be shares in the capital stock of that entity for the purposes of the Act. 3. Does paragraph 95(6)(b) apply in the case of a proposed new double-dip financing arrangement or in the case of a proposed rearranging of an existing financing arrangement to take advantage of a double-dip arrangement.

Position: 1. Yes. 2. Yes. 3. No.

Reasons: 1. It is the CRA's position that where a XXXXXXXXXX cooperative established under the laws of the XXXXXXXXXX meets certain specific criteria it will be considered to be a corporation for the purposes of the Act and Forco1 meets all those criteria. 2. Even though IT 392 Meaning of the term "share" [Reference: Section 91 (also sections 92. 93, and 95) and Regulations Part LIX] issued September 26, 1977 has been archived (2002-06-09) it still represents the CRA's position. 3. The CRA's position that paragraph 95(6)(b) does not apply is set out in example 2 of ITTN No.36 issued July 27, 2007 and in substance the rearranging of existing debt is no different.

2010 Ruling 2009-0347891R3 - Classification of a Dutch closed FGR

Unedited CRA Tags
215

Principal Issues: Whether a Dutch closed FGR would be classified as a co-ownership arrangement rather than a corporation, a partnership or a trust?

Position: As a co-ownership arrangement.

Reasons: The FGR is being established such that each investor has an undivided co-ownership interest in the assets of the FGR.

2010 Ruling 2009-0347901R3 - Classification of a Dutch closed FGR

Unedited CRA Tags
215

Principal Issues: Whether a Dutch closed FGR would be classified as a co-ownership arrangement rather than a corporation, a partnership or a trust?

Position: As a co-ownership arrangement.

Reasons: The FGR is being established such that each investor has an undivided co-ownership interest in the assets of the FGR.

2010 Ruling 2009-0350471R3 - Distribution of Retained Earnings by ULC

Unedited CRA Tags
84(1); 53(1)(b); 245; Article X(2) and Article IV(7)(b) of the Canada-United States Tax Convention (1980)

Principal Issues: Whether Article IV(7)(b) applies to deemed payment of dividend under s. 84(1) by Canadian-resident unlimited liability company that is fiscally transparent for United States tax purposes to its United States-resident shareholder.

Position: No.

Reasons: United States tax treatment of the dividend income deemed to arise in Canada under s. 84(1) is the same whether or not the unlimited liability company is fiscally transparent for United States tax purposes.

2010 Ruling 2009-0350921R3 - Distribution of Retained Earnings by ULC

Unedited CRA Tags
84(1); 53(1)(b); 245; Article X(2) and Article IV(7)(b) of the Canada-United States Tax Convention (1980)

Principal Issues: Whether Article IV(7)(b) applies to deemed payment of dividend under s. 84(1) by Canadian-resident unlimited liability company that is fiscally transparent for United States tax purposes to its United States-resident shareholder.

Position: No.

Reasons: United States tax treatment of the dividend income deemed to arise in Canada under s. 84(1) is the same whether or not the unlimited liability company is fiscally transparent for United States tax purposes.

Technical Interpretation - External

10 March 2010 External T.I. 2009-0349531E5 - Northern residents deduction

Unedited CRA Tags
110.7

Principal Issues: Meaning of the term "member of a taxpayer's household". Does it only include related persons?

Position: No.

Reasons: Question of fact. However, where individuals are not related and living in the same SCDE they must be living together as a family unit (i.e., they must have some close connection to each other) so that it is reasonable to conclude that such persons are members of the taxpayer's household.

8 March 2010 External T.I. 2009-0334031E5 - Whether subsection 96(1.01) applies.

Unedited CRA Tags
96(1.01)

Principal Issues: Whether subsection 96(1.01) should be applied in a particular situation even though the former partner retains a 0.1% interest.

Position: No.

Reasons: The preamble to subsection 96(1.01) describes a taxpayer that ceases to be a member of the partnership.

8 March 2010 External T.I. 2009-0345111E5 - Subsection 110.2(2) and Earned Income

Unedited CRA Tags
110.2 and 146(1), definition of "earned income"

Principal Issues: Does a deduction under subsection 110.2(2) of the Act result in a retroactive adjustment to an individual's earned income for RRSP purposes?

Position: No.

Reasons: The law.

4 March 2010 External T.I. 2009-0348411E5 F - Bâtiment non-résidentiel admissible

Unedited CRA Tags
1101(5b.1); 1100(1)a.2); 1102(23); 1102(24); 1104(2)
Summary Under
Tax Topics - Income Tax Regulations - Regulation 1101 - Subsection 1101(5b.1)
separate classes and separate letter elections for separate additions to the same non-eligible non-residential building

Principales Questions: 1.Un second ajout effectué en 2009 à un bâtiment, qui n'est pas un bâtiment non résidentiel admissible selon le paragraphe 1102(4) du Règlement de l'impôt sur le revenu ( le "Règlement"), peut-il faire l'objet d'une catégorie 1 distincte de celle où est compris un premier ajout effectué au cours de l'année 2008 au même bâtiment?
2. Une lettre indiquant le choix d'une catégorie distincte quant à l'ajout effectué au cours de l'année 2009 doit-elle nécessairement jointe à la déclaration de revenu de 2009 ou peut-elle être jointe à la déclaration de 2008 ?

Position Adoptée: 1. Oui. L'ajout effectué au bâtiment au cours de l'année 2009 peut être compris dans une catégorie distincte de celle de l'ajout de 2008, si toutes les conditions du paragraphe 1101(5b.1) du Règlement sont respectées.
2. Le contribuable devra joindre une lettre exprimant son choix d'appliquer le paragraphe 1101(5b.1) du Règlement quant au second ajout de 2009 à sa déclaration de revenu de l'année d'imposition 2009 avant la date limite de production de la déclaration.

Raisons: 1. Interraction du paragraphe 1102(23) et du paragraphe 1101 (5b.1) du Règlement.
2. Application du paragraphe 1101(5b.1) du Règlement.

2009-034841
XXXXXXXXXX Lucie Allaire, avocate,
CGA, D. Fisc.
Le 4 mars 2010

4 March 2010 External T.I. 2009-0343851E5 F - Remboursement des cotisations à un club

Unedited CRA Tags
6(1)a); 18(1)(l)
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a)
reimbursements of employee fitness facility fees are considered principally for employees’ benefit if membership merely improves their performance through increased health

Principales Questions: Lorsqu'un employeur rembourse les frais pour la pratique d'activités physiques engagés par ses employés, y a-t-il un avantage imposable à inclure dans le calcul du revenu de ces derniers?

Position Adoptée: Question de fait qui ne peut être répondue qu'à la lumière de toutes les circonstances pertinentes d'une situation donnée.

Raisons: Généralement, nous ne considérons pas que le paiement ou le remboursement des frais pour la pratique d'activités physiques soit principalement effectué au profit de l'employeur lorsque la pratique d'activités physiques par l'employé ne fournit qu'un avantage indirect à l'employeur. Ceci est le cas lorsque la santé de l'employé s'améliore suite à la pratique d'activités physiques entraînant une amélioration dans la performance de ses tâches (par exemple, l'employé est malade moins souvent). Dans un tel cas, l'ARC considère que l'employé bénéficie principalement du paiement ou du remboursement et qu'il reçoit un avantage imposable aux fins de l'alinéa 6(1)a).

3 March 2010 External T.I. 2009-0347091E5 - Home Buyers' Plan

Unedited CRA Tags
146.01

Principal Issues: Whether an individual who jointly owned a home with her separated or former husband qualifies as first-time home buyer.

Position: No, if the individual inhabited the residence at any time during the 4-year period.

Reasons: Application of the Act.

2009-034709
XXXXXXXXXX Andrea Boyle
(613) 957-8971
March 3, 2010

3 March 2010 External T.I. 2009-0348831E5 - HRTC - Expenditures covered by insurance

Unedited CRA Tags
Subsection 118.04(1) of the ITA

Principal Issues: Whether home renovation expenditures covered by an insurance company will qualify for the HRTC

Position: It depends on who made the outlay or incurred the expense.

Reasons: Qualifying expenditures must be made or incurred by the individual or a qualifying relation in respect of the individual.

XXXXXXXXXX 2009-034883
A. Mahendran
March 3, 2010

Dear XXXXXXXXXX :

2 March 2010 External T.I. 2009-0322501E5 - Payment in Settlement of Grievance

Unedited CRA Tags
6(1)(a); 3

Principal Issues: Whether a payment made by an employer in settlement of a grievance concerning life insurance benefits is taxable.

Position: Not taxable insofar as the amount can be established as reasonable compensation for damages due to the employer's negligence. Any amount in excess of the resulting financial loss suffered is a taxable benefit.

Reasons: Damages for personal losses are non-taxable.

2009-032250
XXXXXXXXXX Rita Ferguson
519-645-5261
March 2, 2010

24 February 2010 External T.I. 2009-0342701E5 - Flexible Benefit Plan Issues

Unedited CRA Tags
5, 6(1)(a), 248(1) "private health services plan"

Principal Issues: What are the tax implications concerning an employer's flexible benefit plan and health care spending account plan?

Position: General discussion, but it appears that the employer's flexible benefit plan would not be an acceptable flex benefit plan described in IT-529.

Reasons: We don't have all facts but the allocated flex credits under the flexible benefit plan appear to have a redemptive value (i.e., they can be exchanged for additional salary).

XXXXXXXXXX 2009-034270
Michael Cooke, C.A.
February 24, 2010

24 February 2010 External T.I. 2009-0350931E5 - Status Indians and Film Tax Credit

Unedited CRA Tags
125.4, Regulation 1106(2), 81(1)(a)

Principal Issues: Whether a corporation would be disqualified from the definition of a "Prescribed Taxable Canadian Corporation" under subsection 1106(2) of the Regulations solely by reason that the corporation is controlled by status Indians whose income is exempt from tax by virtue of section 87 of the Indian Act and paragraph 81(1)(a) of the Income Tax Act.

Position: No.

Reasons: 1106(2) of the Regulations precludes a corporation from the definition of a prescribed taxable Canadian Corporation where it is controlled directly or indirectly in any manner whatever by one or more persons all or part of whose "taxable income" is exempt from tax under Part I of the Act. The income of a status Indian that is not included in the computation of income by virtue of paragraph 81(1)(a) (Division B) is not "taxable income" under Part I.

24 February 2010 External T.I. 2009-0352781E5 - Class 43.2

Unedited CRA Tags
Class 43.2, Regulation 1100(24) to (29)

Principal Issues: 1) Whether a ground mount solar tracker is eligible for inclusion in Class 43.2; and 2) whether the specified energy property rules would apply to deny a deduction for CCA in excess of income generated from the sale of electricity

Position: 1) Yes, 2) Yes

Reasons: 1) the solar tracker should qualify as a support structure, 2) legislation

19 February 2010 External T.I. 2010-0355531E5 - Sojourn Rule

Unedited CRA Tags
250(1)(a)

Principal Issues: 1. If the taxpayer, in discharging other duties unrelated to any activity or business in Canada, arrives by air from the UK with a several hour layover in Toronto departing for another destination outside of Canada, would this be considered a day for the purposes of paragraph 250(1)(a) of the Act?
2. If the taxpayer were to land in Canada at Toronto Pearson Airport in the morning and leave on a return flight to the UK that evening, would this be considered a day for the purposes of paragraph 250(1)(a) of the Act?

Position: 1. No 2. No

Reasons: The taxpayer is not considered to be sojourning for the purposes of paragraph 250(1)(a).

18 February 2010 External T.I. 2010-0357731E5 - Exploration expenses incurred by sole proprietor

Unedited CRA Tags
66(5); 66.1

Principal Issues: Whether the exploration expenses incurred by a sole proprietor would be Canadian exploration expense?

Position: Where the sole proprietor is a trader or dealer in rights to explore for minerals, the expenses would not qualify as Canadian exploration expense. The determination of whether a taxpayer is a trader or dealer is a factual one.

Reasons: The application of subsection 66(5).

13 January 2010 External T.I. 2009-0333601E5 - Overseas Employment Tax Credit

Principal Issues: Does an individual qualify for the OETC if they are involved in a traffic accident and hospitalized in Canada during the qualifying period? .

Position: Whether an individual qualifies for the OETC during a period on sick leave is a question of fact.

Reasons: Section 122.3 requires that "all or substantially all" of the duties of employment be performed outside of Canada for the qualifying period of more than six consecutive months. An individual's entitlement to the OETC will not be denied only because the individual was not actually outside of Canada or at the work location outside Canada for the entire qualifying period. The employee will be eligible provided that throughout the qualifying period substantially all of the employment duties are performed outside of Canada.

15 December 2009 External T.I. 2009-0323661E5 - 88(1)(d) and 87(11) Amended and Late Designations

Unedited CRA Tags
88(1)(d)

Principal Issues: Whether a taxpayer is entitled to make a late-filed or amended designation under paragraph 88(1)(d) and subsection 87(11).

Position: Technically no, but administratively yes, in certain circumstances. More precisely, the CRA would administratively accept a late-filed paragraph 88(1)(d) designation provided that: 1) the parent (or the amalgamated entity where subsection 87(11) is applicable) agrees to allocate the "bump amount", computed under paragraph 88(1)(d), on a pro rata basis among all capital properties that are eligible to increase their cost amount, subject to the maximum bump that is allowed under subparagraph 88(1)(d)(ii); or, 2) the parent (or the amalgamated entity where subsection 87(11) is applicable) accepts the CRA's discretionary allocation of the bump amount amongst any eligible properties. Furthermore, the CRA would also permit, on an administrative basis, a parent (or the amalgamated entity where subsection 87(11) is applicable) to amend a designation previously filed in accordance with paragraph 88(1)(d), in very limited circumstances. For example, where the CRA would not be in agreement with the total bump amount calculated by the parent (or the amalgamated entity where subsection 87(11) is applicable) pursuant to paragraph 88(1)(d) or with the parent's allocation of the bump amount to a specific eligible capital property pursuant to subparagraph 88(1)(d)(ii), the CRA may permit the corporation to amend a previously filed designation. The CRA may also permit a parent (or the amalgamated entity where subsection 87(11) is applicable) to file an amended designation where the parent (or amalgamated entity) would notify the CRA in writing that certain bona fide errors would have been made in the calculation or allocation of the bump amount in the original designation, filed in accordance with 88(1)(d). Under no circumstances, will the CRA accept a late-filed or amended designation if it involves retroactive tax planning or is part of a tax avoidance scheme, or if it is necessary in order to give effect to the designation, to issue a notice of assessment or reassessment for a year that is statute-barred. In all cases, the decision to accept a late-filed or an amended designation will be at the CRA's discretion, based upon the facts of the particular taxpayer's situation. A taxpayer should submit a written request for approval of a late-filed or an amended designation to the Director of the local Tax Services Office.

Reasons: CRA's administrative position.

Conference

8 December 2009 Roundtable, 2009-0347491C6 - 2009 TEI - Eligible Dividend Designations

Unedited CRA Tags
89(14)

Principal Issues: Would the CRA consider as valid notification in writing for the purposes of subsection 89(14) of the ITA, a directors' resolution of a subsidiary wholly-owned corporation declaring a dividend and containing a designation that such a dividend is an eligible dividend paid to its parent (a public corporation or a corporation controlled by a public corporation)?

Position: Yes, provided that the directors' resolution is delivered to the parent on a timely basis. In circumstances where the Boards of Directors of the subsidiary and the parent are the same, the CRA would normally consider the directors' resolution as being effectively delivered to the parent upon signature.

Reasons: It is our view that this position is consistent with the position adopted in respect of valid methods of notification for non-public corporations, wherein such a corporation can notify their shareholders of an eligible dividend by way of a notation in the corporate Minutes, where all of the shareholders are directors of the corporation. Furthermore, we feel that this position is reasonable considering the powers and duties of directors and their significant role in the corporate and business context. Finally, we believe that this position is in accordance with the tax policy objectives underlying subsection 89(14) and that it provides an appropriate balance between the entitlement of dividend recipients to certainty with respect to the tax consequences of corporate distributions and the administrative burdens of the notification requirements as experienced by dividend payers.

9 October 2009 Roundtable, 2009-0327031C6 F - REER et CR - art. IV(7)(b) Conv. Canada - É.-U.

Unedited CRA Tags
Articles IV(7)(b) et XVIII Convention Canada-É.-U.
Summary Under
Tax Topics - Treaties - Income Tax Conventions - Article 4
RRSPs and RCAs not treated as flow-through entities under Art. IV(7)(b) of Canada-U.S. Treaty

Principal Issues: 1- Comment concilier les dispositions du 5e Protocole avec l'article XVIII de la Convention Canada-É.-U. ?
2- Est-ce que la présomption prévue à l'Article IV(7)(b) de la Convention Canada-É.-U. s'appliquera à un versement provenant d'un REER effectué en faveur d'un résident américain, empêchant ce-dernier de bénéficier des avantages de la convention ?
3- Est-ce que la présomption prévue à l'Article IV(7)(b) de la Convention Canada-É.-U. s'appliquera à un versement provenant d'une convention de retraite effectué en faveur d'un résident américain, empêchant ce-dernier de bénéficier des avantages de la convention ?

Position: 1- Commentaires généraux.
2- Généralement non.
3- Généralement non.

Reasons: 1- Principes d'interprétation des conventions fiscales internationales.
2 et 3- Application des principes d'interprétation et analyse technique des dispositions de la Convention Canada-É.-U.

9 October 2009 APFF Roundtable Q. 5, 2009-0327001C6 F - Succession canadienne - dividende en capital

Unedited CRA Tags
212(1)c), 212(11); Articles X, XXII Convention Canada-US
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(c)
allocation of capital dividend between estate duties and NR distribution
Summary Under
Tax Topics - Income Tax Act - Section 212 - Subsection 212(11)
allocation of capital dividend between estate duties and NR distribution

Principales Questions: Diverses questions.

Position Adoptée: Commentaires généraux.

Raisons: Libellé de la LIR et de la Convention Canada-US

Technical Interpretation - Internal

4 March 2010 Internal T.I. 2009-0337381I7 F - Sens du mot divertissement

Unedited CRA Tags
67.1(1)
Summary Under
Tax Topics - Income Tax Act - Section 67.1 - Subsection 67.1(1)
s. 67.1 limitation does not apply to gifts of equipment used to entertain the recipient
Words and Phrases
entertainment
Summary Under
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a)
gifts of entertainment equipment by taxpayer to an employee of a customer responsible for purchases are includible in that individual’s income

Principales Questions:
Est-ce que les dépenses relatives à l'achat de biens tel un instrument de musique, un lecteur Blu Ray et une console de jeu électroniques sont comprises dans la notion de " divertissement ", ce qui aurait pour effet qu'elles soient assujetties au paragraphe 67.1(1) de la Loi de l'impôt sur le revenu?

Position Adoptée:
Nous sommes d'avis que le paragraphe 67.1(1) ne s'applique pas à de telles dépenses.

Raisons:
La Loi et la jurisprudence ne définissant pas le mot divertissement, le sens usuel du mot doit être adopté.

3 March 2010 Internal T.I. 2010-0354731I7 - Notice of Determination to Partnerships

Unedited CRA Tags
s. 152(1.4) to (1.7), Reg. 229

Principal Issues: Whether a notice of determination can be issued to a partnership where such determination is statute-barred, and where the partnership has never filed information returns.

Position: Nothing prevents the Minister from issuing a determination or requires the Minister to issue one. However, in this case, given that the amounts are immaterial, it would be reasonable to decline the invitation to make the determination.

Reasons: The partnership determination rules are designed to give the Minister, and not the taxpayers, flexibility in auditing partnerships.

March 3, 2010

26 February 2010 Internal T.I. 2009-0351631I7 - Disclosure of Taxpayer Information to a Trustee

Unedited CRA Tags
s. 241 ITA; s. 2, 16(5), 71, 164(1) BIA.

Principal Issues: Whether a copy of a set-off notice may be disclosed to a trustee.

Position: Yes.

Reasons: Under paragraph 241(4)(k) of the Act, the trustee is legally entitled to it.
February 26, 2010

Business Returns Directorate HEADQUARTERS
Business Accounting Programs Division Income Tax Rulings
Directorate
Attention: Darryl Rutz Lindsay Frank
Manager, Accounting Adjustments (613) 948-2227
Field Enquiries Section
2009-035163

17 February 2010 Internal T.I. 2009-0348461I7 F - Transfert d'une PCMC à une société mère

Unedited CRA Tags
13(21)b), 18(1)a), 18(1)b),125.4, 87(2)(j.94), 88(1)e.2), 1101(5k.1), 1106, 69(1)a).
Summary Under
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 10 - Paragraph 10(x)
full cost of CFVPs acquired by parent from production sub (which claimed the credits) added to Class 10(x)
Summary Under
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Current expense vs. capital acquisition
fully claimed films productions acquired from production sub on capital account

Principales Questions: Comment qualifier les sommes versées par Canco à sa filiale Imageco à l'égard d'une production cinématographique et magnétoscopique canadienne (PCMC) ?

Position Adoptée: Question de fait. Dans la Situation Donnée, les sommes versées à l'égard des PCMC par Canco pourraient constituer des dépenses de nature capitale pour l'acquisition de biens amortissables de la catégorie 10x de l'annexe II du Règlement de l'impôt sur le revenu. Le coût d'acquisition des PCMC pour Canco n'est pas limité aux coûts de production d'Imageco, la société admissible au crédit d'impôt pour la production cinématographique.

Raisons: Les PCMC pourraient être des biens amortissables pour Canco, car selon les faits présentés, entre autres, les PCMC créent un avantage durable pour Canco qui gagne du revenu d'entreprise provenant de leur utilisation.

22 December 2009 Internal T.I. 2009-0343331I7 F - Determination of CCPC Status

Unedited CRA Tags
125(7) "Canadian-controlled private corporation; 256(5.1); 251(5)(b)
Summary Under
Tax Topics - Income Tax Act - Section 220 - Subsection 220(2.2)
s. 220(2.2) precluded accepting a late amendment
Summary Under
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Canadian-Controlled Private Corporation
shareholder agreement affecting how the majority of directors exercised their rights was not a USA
Summary Under
Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1)
de facto control given control of financing and significant influence on decisions

Principal Issues: Status of a corporation as a CCPC where a disqualifying shareholder holds shares of the corporation and rights to acquire additional shares of the corporation such that it is deemed to own more than 50% of the voting shares, where a shareholders' agreement provides a particular process of nomination and replacement of directors and where such agreement also provides the disqualifying shareholder a veto right on important decisions taken by the Board of Directors.

Position: In the particular case, the corporation is not a CCPC because the disqualifying shareholder has de jure and de facto control.

Reasons: The shareholders' agreement does not constitute a unanimous shareholders' agreement (USA) for corporate law purposes. Even if this is not the case, we would consider only the provisions restricting or transferring the powers of the directors in determining de jure control. In this file, the disqualifying shareholder had de jure control over the corporation during the relevant period. Moreover, the disqualifying shareholder had de facto control over the corporation during the relevant period because, inter alia, of the economic dependence of the corporation combined with a veto right on many decisions of the Board and the casting vote of the director designated by the disqualifying shareholder. NOTE: View original document in Word.

Le 22 décembre 2009

19 January 2006 Internal T.I. 2005-0130461I7 - Meaning of "Paid or Payable"

Unedited CRA Tags
92(2)(a)(ii)

Principal Issues: In subparagraph 95(2)(a)(ii) of the Income Tax Act, does the term "payable" refer to an amount accrued during the period, or to an amount for which there is an immediate legal obligation to pay, but has not yet been paid?

Position: "Payable" refers to amounts accruing during the relevant period.

Reasons: It is the interpretation that best fits the context and policy of the provision.