Exceptions

There is no benefit to borrowers for the interest on loans they received because of an office, employment, or shareholding when either of the following occurs:

• The interest rate on the loan or debt equals, or is more than, the rate that two parties who deal with each other at arm's length would have agreed on when the debt arose. This is the rate that would apply on a commercial loan received other than through an office, employment, or shareholding. This exception does not apply if someone other than the borrower pays any part of the interest from the loan or debt.
• You include all or part of the loan (such as, a loan or debt forgiven in whole or in part) in the income of a person or partnership.

Date modified:

2015-12-17