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 the ceiling in 80.4(4) can apply to a loan granted by virtue of shareholdings
Position TAKEN: no
Reasons FOR POSITION TAKEN:
def'n of home purchase loan & home relocation loan are tied to employment
in addition, 80.4(4) only applies to a benefit determined under 80.4(1)
February 24, 1995
Toronto West Tax Services Rulings Directorate
Business Audit, 4th Floor A. Humenuk
957-8953
Attention: Karen Hill
943176
Home Purchase Loans/Home Relocation Loans
We are replying to your memorandum of November 30, 1994 concerning the prescribed interest rate to be used in determining the interest benefit under subsection 80.4(2) of the Act. We apologize for the delay in our response.
You ask for confirmation that there is no ceiling on the prescribed interest rate used in the calculation of the benefit derived by a shareholder or a person connected to a shareholder from a low-interest home purchase loan received by virtue of the shareholdings.
A loan will only qualify as a home purchase loan as defined in subsection 80.4(7) of the Act if, among other criteria, it is received by an individual in the circumstance described in subsection 80.4(1) of the Act; that is, by reason of a previous, current or intended office or employment of an individual or because of the services performed by a corporation carrying on a personal services business as defined in subsection 248(1) of the Act. Similarly, the definition of home relocation loan in subsection 248(1) of the Act is restricted to loans received as a result of a move arising from the commencement of employment at a new work location. Thus, a loan received by a shareholder or a person connected to a shareholder by virtue of the shareholdings and not by reason of the employment or services performed as a specified shareholder of a corporation, cannot be considered to be either a home purchase loan or a home relocation loan.
Furthermore, subsection 80.4(4), which limits the prescribed rate to be used for a home purchase or home relocation loan, only applies in respect of a benefit determined under subsection 80.4(1) of the Act. Thus, we confirm your view that the ceiling on the prescribed interest rate used in determining certain interest benefits does not apply to any benefit derived from a loan received by a shareholder or a person connected to a shareholder by virtue of the shareholdings.
P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995
Email this Content