13 March 1992 External T.I. 5-920029

Payments made by a credit union to non-members which were similar in nature to allocations in proportions to borrowing and bonus interest payments paid to members, might be deductible by the credit union pursuant to s. 135(1).

RC is not prepared to confirm that a payment made by a credit union to non-members is deductible under general principles given that there is some doubt as to whether a payment that, in essence, is paid after the determination of net income is made for the purpose of gaining or producing income.

Payments to non-members of a credit union may not be deductible under basic income tax rules because they are made after the determination of net income and are not necessarily made or incurred for the purpose of gaining or producing income.