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.
SUBJECT: ASSUMPTION OF DEBT SECTION: 20(1)(c)]
1992 Corporate Management Tax Conference
INTEREST EXPENSE - ASSUMPTION OF VENDOR'S DEBT
Question 3
Is it the Department's view that paragraph 20(1)(c) would allow a taxpayer to deduct interest paid on third party debt which the taxpayer has assumed as partial consideration for property acquired?
Department's Position
Assuming the other requirements of paragraph 20(1)(c) are met, interest paid on assumed indebtedness would be deductible under subparagraph 20(1)(c)(ii) where:
- i) A taxpayer purchases a property and either assumes the vendor's mortgage liability in respect of the property, or assumes other indebtedness of the vendor in satisfaction of the purchase price; or
- ii) A taxpayer had an amount payable to a vendor for property acquired from the vendor and the taxpayer assumes other indebtedness of the vendor in satisfaction of its obligation to the vendor.
Prepared by: Allan Nelson
June 11, 1992
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