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
Attention: XXXXXXXXXX
Dear Sirs:
RE: Subparagraph 74.5(1)(b)(ii) of the Income Tax Act ("Act")
This is in reply to your letter dated May 13, 1993 wherein you requested our opinion on the meaning of the words "particular year" in subparagraph 74.5(1)(b)(ii) of the Act (the "subparagraph").
Specifically, you have asked whether the particular year referred to in the subparagraph refers to the calendar year or the year ending on the anniversary date of the indebtedness.
The "particular year" in the subparagraph is the same "particular taxation year" referred to in the preamble to the subparagraph. It is our opinion that the "particular taxation year" referred to in the preamble to the subparagraph is in turn the same "taxation year" referred to in subsections 74.1(1) and 74.1(2) and section 74.2 of the Act.
The latter provisions referred to above are concerned with the attribution of income or losses between individuals for a "taxation year". Paragraph 249(1)(b) of the Act defines the taxation year of an individual to be the calendar year.
Consequently, the anniversary date of the indebtedness is irrelevant to the application of the subparagraph. The reference to interest payable "in respect of the particular year" means interest payable on the debt obligation in respect of that particular calendar year - i.e. December 31.
As mentioned in paragraph 22 of Information Circular 70-6R2, the above comments constitute an expression of opinion only and are not binding on Revenue Canada - Customs, Excise and Taxation.
We trust the foregoing is of assistance.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts 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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