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 5-962241
June 28, 1996
Dear Sirs:
Re: Deductibility of Interest Expense
This is in reply to your letter of June 15, 1996 in which you request an opinion on the deductibility of interest on your "Home Equity Plan".
Written confirmation of the tax implications inherent in particular proposed transaction are given by this Directorate only where the transactions are outlined in an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R2. Questions concerning actual fact situations should otherwise be directed to your district tax services office. Although we cannot provide a specific answer to query, we offer the following general comments which are not binding on the Department.
Pursuant to the provisions of subsection 20(3) of the Income Tax Act, generally where money is borrowed to repay an existing indebtedness, the interest on the new borrowing is deductible to the extent that the interest on the original indebtedness was deductible.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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© Her Majesty the Queen in Right of Canada, 1996
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© Sa Majesté la Reine du Chef du Canada, 1996
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