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:
Whether interest based on currency fluctuation falls
under the postamble to 212(1)(b)(vii)
Position TAKEN:
It is a question of fact, but it could be subject to
the postamble
Reasons FOR POSITION TAKEN:
We would have to examine the documentation , but ,
foreign currency fluctuation could be considered
"similar criterian" within the meaning of the postamble
to 212(1)(b)
XXXXXXXXXX 940497
Attention: XXXXXXXXXX
April 5, 1994
Dear Sirs:
This is in reply to your letter of February 22, 1994, wherein you requested a technical interpretation on the application of the postamble to paragraph 212(1)(b) of the Income Tax Act (the"Act").
The situation outlined in your letter appears to involve actual proposed transactions and consequently should be the subject of an advance income tax ruling.
The determination of whether interest is " computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion" within the meaning of paragraph 212(1)(b) of the Act is a question of fact. Consequently, a meaningful response to your question can only be made after a detailed review of all the pertinent facts and documents.
In our opinion, a fluctuation in a foreign currency could fall within the term "similar criteria" for purposes of the postamble to paragraph 212(1)(b) of the Act.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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