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:
Clarification of statements made in document E9511205 regarding deduction of interest when the amount becomes payable in a year subsequent to the year of accrual.
Position:
Deductible in the year of accrual.
Reasons:
Notwithstanding that it became payable in a subsequent year, the year "....in respect of...." which the interest is payable is the year of accrual and therefore the interest is deductible only in the year of accrual.
970762
XXXXXXXXXX J.P. Dunn
Attention: XXXXXXXXXX
April 16, 1997
Dear Sirs:
Re: Deduction of Interest on Participating Loans
We are writing further to our correspondence of March 3, 1997 concerning the deductibility of interest pursuant to paragraph 20(1)(c) of the Income Tax Act (the "Act"). More specifically, you had requested clarification of certain statements made by this Directorate regarding the timing of interest expense deductions in circumstances in which interest which has accrued in one taxation year becomes payable in a subsequent taxation year.
In such a situation, it is the entitlement to the deduction which will arise in that subsequent year because the amount of interest became payable at that time. The deduction itself, however, would only be available in the year for which the interest expense initially accrued and not the year in which the amount became payable unless, of course, the interest accrues in respect of and becomes payable in the same year.
We trust that this is the information which you require.
Section Chief
Corporate Financing Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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