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.
XXXXXXXXXX 964009
Attention: XXXXXXXXXX
February 11, 1997
Dear Sirs:
Re: Interest Bearing Post-Dated Cheques & Subsection 76(4)
This is in reply to your letter of November 27, 1996 regarding the above noted matter which was the subject of our July 16, 1996 technical interpretation (#962240). This technical opinion was issued in response to a request for our views in a situation when a "producer requests and receives post-dated cheques... in full settlement of a debt in respect of grain deliveries".
We would like to confirm that there has been no change in the Department's position with respect to post-dated cheques. As published in paragraph 6 of Interpretation Bulletin IT-433R, post-dated cheques are normally accepted as security for a debt without extinguishing the original debt and the value of a post-dated cheque is brought into income when it is cashable. This allows farmers who report on a cash basis and who receive cheques post-dated to January of the following year, to defer reporting the amount of the post-dated cheque as income until then. In rare cases, when a post-dated cheque is accepted in absolute settlement of a debt, such as described by the enquirer of the July 16, 1996 technical opinion, the value of the post-dated cheque is considered to be income at the time it is received.
We trust that our comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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