CRA reaffirms using FIFO to determine if debt repayments satisfy s. 15(2.6)
1 November 2015 - 10:01pm
CRA has indicated that it does not have the discretion to not apply s. 15(2), where the applicable statutory exceptions are not available, to amounts that become owing to Canco by a non-resident affiliated Finco in connection with a cash pooling or other centralized cash management arrangement for a multinational group. However, CRA states that
in the context of subsections 15(2) and (2.6), unless the facts indicate otherwise, the CRA generally accepts that repayments are applied to loans or indebtedness utilizing the method "first in first out"
i.e., unless the debtor otherwise specifically applies the repayment, it is applied to the oldest debt first.
Neal Armstrong. Q. 19 of 9 October 2015 APFF Roundtable under 2015 APFF Conference.