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.
24(1) |
902991 |
|
L. Holloway |
|
(613) 957-2104 |
19(1)
November 30, 1990
Dear Sirs:
Re: RRSP interest and the Cumulative Net Investment Loss (CNIL) account
This is in reply to your letter date October 22, 1990 requesting our opinion as to whether interest expense on qualifying pre-November 13, 1981 RRSP loans is included in the CNIL calculation of investment expense.
The Draft Amendments to the Income Tax Act and Related Statutes (July, 1990) propose the following amendments to the definition of "investment expense" dealing with the issue you have raised as follows:
"(2) Paragraph (a) and (b) of the definition "investment expense" in subsection 110.6(1) of the said Act are repealed and the following substituted therefor:
"(a) the aggregate of all amounts each of which is an amount deducted in computing the individual's income for the year from property (except to the extent that the amount was otherwise taken into account in computing the individual's investment expense or investment income for the year) other than any such amount deducted under
(i) paragraph 20(1)(c), (d), (e), (e.1), or (k) in respect of borrowed money that was used by the individual to or that was used to acquire property that was used by the individual
(A) to make a payment as consideration for an income-averaging annuity contract,
(B) to pay a premium under a registered retirement savings plan, or
(C) to make a contribution to a registered pension fund or plan or a deferred profit sharing plan",
The Explanatory Notes to the Draft Income Tax Amendments go on to explain that:
"Paragraph (a) of this definition has also been amended to exclude from an individual's investment expense interest and other expenses deducted under paragraphs 20(1)(c), (d), (e), (e.1), or (k) in respect of indebtedness incurred for a purpose set out in subsection 18(11), irrespective of when the indebtedness was incurred".
These amendments to the Act, if enacted, will be applicable to the 1988 and subsequent taxation years, and will have the effect of excluding interest on RRSP loans from the calculation of CNIL.
We trust these comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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