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: Interest Expense
We are writing in response to your letter of June 11, 1993, in which you requested that we reconsider the position taken in our letter dated June 4, 1993.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R2 dated September 28, 1990 ("IC-70-6R2").
However, we offer the following general comments to your inquiry.
Where one income earning property has replaced another income earning property (eg. shares for other assets), interest will continue to be deductible provided the amount of the outstanding borrowing does not exceed the value of the substituted property.
The foregoing comments are given in accordance with the practice referred to in paragraph 21 of IC-70-6R2 dated September 28, 1990 and are not binding on Revenue Canada, Taxation.
Yours truly,
for DirectorFinancial Industries 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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