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.
Subject: XXX
We recently received a request for an advance income tax ruling from XXX XXX While we were unable to provide the requested ruling we did issue an opinion letter in which we discussed, in general, the various provisions of the Income Tax Act (the "Act") that could be applicable to both XXX and XXX with respect to the proposed transactions in the ruling request. A copy of the ruling request and our reply are enclosed for your reference.
XXX has requested that an officer from the district office contact him to arrange for a review of the tax consequences of the completed transactions.
In conjunction with our review of the ruling request we noticed several issues which you may wish to pursue. These issues are:
XXX
Analysis
In response to question 46 at the 1988 Round Table we stated:
It is the Department's view that all loans which a lender is committed to forgive if certain conditions are met fall within the ambit of subparagraph 12(1)(x)(iii) or (iv) of the Act. Only loans which are unconditionally repayable would be excluded.
XXX
IT-239R2 discusses the deductibility of capital losses from guaranteeing loans for inadequate consideration and from loaning funds at less than a reasonable rate of interest in non-arm's length circumstances. As you will note, the general position of the Department is that pursuant to subparagraph 40(2)(g)(ii), a taxpayer's loss from the disposition of a debt is nil unless the debt had been acquired by the taxpayer for the purpose of gaining or producing income from a business or property. Paragraph 6 (also paragraph 10) of the bulletin sets out conditions which must be satisfied for a taxpayer to obtain an exception to the general position. Three of the four conditions in that paragraph are identical to those found in paragraph 7 of IT-445, XXX
We hope our comments will be of assistance should you decide to pursue the potential issues we have identified. If you have any questions, please contact T. Murphy.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1990
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1990
Email this Content