10 February 1994 External T.I. 9402055 - PARTIAL PAYMENT ON LOAN

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

RULINGS DIRECTORATE
CORRESPONDENCE SUMMARY

DOCUMENT TYPE:

Opinion

Principal Issues:

Characterization of partial payment made by a financial institution to an uninsured depositor

Position TAKEN:

Unless the facts indicate otherwise, partial payments are first applied to discharge interest

Reasons FOR POSITION TAKEN:

Determined under debtor/creditor law

LEGAL:

FINANCE OPINION:

JURISPRUDENCE:

RCT PUBLICATIONS:

HAA NUMBER:

XXXXXXXXXX 940205

Attention: XXXXXXXXXX

February 10, 1994

Dear Sirs:

This is in reply to your letter of January 25, 1994, wherein you requested our comments concerning the characterization of a partial payment made by a financial institution which is in liqidation to an uninsured depositor.

The determination of whether a partial payment on a deposit represents interest or principal can only be determined by an examination of the specific facts. Generally, it is our view that, unless the facts indicate otherwise, partial payments are applied to first to discharge interest.

The above comments are an expression of opinion only and are not binding on the Department.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch