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.
Principal Issues:
Tax treatment of discount earned on a mortgage by a
trust co
Position TAKEN:
Situation should be discussed with the district
taxation office taxpayer's treatment of amortizing
discount over term of mortgage is appropriate
Reasons FOR POSITION TAKEN:
Appears to be completed factual transaction IT 114 is
currently under review the treatment of the discount
would be governed by section 9 which generally requires
the application of GAAP, which in this case, requires
the amortization over the term of the mortgage
XXXXXXXXXX 940253
Attention: XXXXXXXXXX
April 8, 1994
Dear Sirs:
This is in reply to your letter of January 27, 1994, wherein you requested our comments with respect to Interpretation
Bulletin IT 114 as it relates to the purchase of a mortgage at a discount.
Your situation appears to represent a factual situation and consequently you should deal directly with your local district taxation office which has the responsibility of evaluating completed transactions.
We note that Interpretation Bulletin 114 is currently under review. Generally, it is our view, that the amortization of the discount to income over the term of the mortgage, as required by generally accepted accounting principles, would be appropriate for income tax purposes.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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