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.
XXXXXXXXXX
Dear XXXXXXXXXX
Subsection 80.4 of the Income Tax Act (the "Act")
This is in reply to your letter of March 8, 1993 and further to our telephone conversation of June 30, 1993, (XXXXXXXXXX/Larochelle) regarding your enquiry with respect to the Department's practice in calculating the number of days to be used to compute the benefit under subsection 80.4(1) of the Act. We regret the delay in providing a response.
In accordance with normal commercial practice and, as indicated in paragraphs 11, 28 and 29 of Information Circular 81-11R3 (and see, for example, the calculation in Appendix 8 of that circular), the Department's practice is to calculate interest commencing with the first day that a debt is incurred and excluding the day on which the debt is repaid. A running account with fluctuating balances would be calculated in the same manner, i.e., interest would be calculated on the increased balance on the day any new indebtedness was incurred for the period ending up to and including the day before there is another change in the balance. This same practice would apply to the calculation of an interest benefit under section 80.4 of the Act.
It is to be noted however, that a provision of the Act may otherwise specify the manner in which interest is to be calculated. For example, paragraph 30 of the above-mentioned circular describes the manner in which refund interest paid pursuant to the rules in subsection 164(3) of the Act is to be calculated up to and including the day the overpayment is refunded.
We trust our comments will be of assistance to you.
Yours truly,
P.D. Fuoco for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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