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.
| |
June 30, 1989 |
| Policy & Systems Branch |
Legislation & Intergovernmental |
| J.M. Legault |
Affairs Branch |
| Director |
Leasing and Financing Section |
| Returns Processing Division |
K. Donnelly |
| |
957-3500 |
| Attention: Rick Sequin |
| |
File No. 7-3783 |
Subject: Reporting Requirements Stripped Bonds
We are replying to your memorandum of March 29, 19979, requesting that we reply to the following questions:
"1. What reporting requirements, if any, exist under the Income Tax Act and Regulations, for transactions involving the disposition of:
(a) coupons bonds in their entirety (bonds whose coupons are not stripped),
(b) coupons stripped from bonds and sold separately at a discount, and
(c) the bond residue, once the coupons are stripped?
2. Are the reporting requirements, is any, changed by the method of issue (bearer or registered form)?"
The reporting requirements that may under the Income Tax Act (the Act) and Regulations apply with respect to the transactions described in your questions can probably be found in one or more of the following subsections of the act and Regulations:
Subsection 234(1) and 234(3) of the Act
| Regulations: |
201(1)(b)(i)201(e)(d) 201(2), 201(3) 202(1)(a) 202(3), 202(6), 202(7)203(1), 204(1) 207(1), 207(3)220(1) |
Draft Regulation 230.(1)
Which provision described above applies at any time will depend on the precise details of each transaction. it is a question of fact in each situation whether or not transactions in strip coupons and strip bonds at a discount result in interest income and/or related reporting requirements.
We regret that we are unable to provide you with simple comprehensive answers. However, the law with respect to discounts is unclear. In addition there is a variety of details involving a bond and coupon dispositions.
Whether or not one or more of the above noted provisions would apply in all circumstances involving strip coupons or bonds, is uncertain. Consequently we would be prepared to review specific documents to determine what if any reporting requirement exist in the Act or Regulations.
ChiefLeasing and Financing SectionFinancial Industries Division
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