9 August 1990 Ministerial Correspondence 901584 F - Loans to Acquire a Dwelling

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.

SUBJECT:  Subparagraph 15(2)(a)(ii) Loans to Acquire a Dwelling

This is in reply to your Memorandum dated July 13, 1990 whereby further to our Memorandum to you dated June 22, 1990 you requested that we confirm that you are correct in your understanding that loans made to enable or assist an employee to acquire:

a)     a house in close proximity to his place of business;

b)     a summer cottage in Northern Ontario where he spends his holidays and weekends; and

c)     a condo in Florida or an apartment in the country of origin, e.g. Italy, which is visited once a year,

can be eligible for the exemption from subsection 15(2) by virtue of subparagraph 15(2)(a)(ii).

We confirm our advices of June 22 that a person may have more than one "dwelling for his habitation" for purposes of subparagraph 15(2)(a)(ii) and that a seasonal residence can be such a dwelling.

Eligibility for the exemption is based on the purposes for which the property is acquired, namely, for habitation by the employee, recognizing, however, that such habitation may be seasonal or temporary.  If, however, the property is acquired for some other purpose, e.g. as an investment, for occupation by friends, relatives or business associated, or for any purpose other than for occupation by the employee, the property will not be eligible.  The purpose for which the property is acquired is of course a question of fact.  In the case of an apartment visited by the employee only once a year, if in fact this is the use for which the property was acquired and no other use is made of the property, then it would be eligible for the exemption.  Use of the property for other purposes would be relevant evidence of the purpose for which it was acquired.

We note that section 80.4 will apply to loans made by a corporation to its employees and to its shareholders notwithstanding the application of the exemption provisions of subparagraph 15(2)(a)(ii) in respect of the principal amount of the loan.

Yours truly,

for DirectorReorganization and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch