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:
Is T-5 required for a note payable for property acquired that has a contingent interest payment based on an unknown amount?
Position:
No.
Reasons:
An amount cannot be calculated under Reg 7000(2)(d) and Reg 201(4) not applicable.
December 12, 1996
Client Services Directorate Income Tax Rulings and
Interpretations
Attn: Sue Wormington Directorate
A/Manager Ghislain Martineau
Specialty Publications Section (613) 957-8962
7-963388
Variable Capital Notes
This is in reply to your request of October 8, 1996 concerning variable capital notes (the "Notes") issued by XXXXXXXXXX.
We are of the view that an information return (T-5) may be requested to be filed only to the extent that the Notes are debt obligations described in any of subparagraphs 201(1)(b)(i) to (v) of the Regulations.
In our view, the notes are prescribed debt obligations described in paragraph 7000(1)(d) of the Regulations. The amount of interest that could be payable in respect of 1996 for the purposes of paragraph 7000(2)(d) of the Regulations cannot be calculated before the Principal Payment Date which will not take place in 1996. In such a situation, there is no information return (T-5) to be filed for 1996 pursuant to subsection 201(4) of the Regulations as there is no amount to be included in the income pursuant to subsection 12(4) of the Act. As well, it appears the Notes are not described in any of subparagraphs 201(1)(b)(i) to (v) of the Regulations with the result there would be no requirement to file an information return.
Section Chief
Leasing and Deferred Income Plans Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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