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.
I 95 (REVISED)
TAX SHELTER REPORTING RULES
Question
Would interest expense incurred by an investor on money borrowed to purchase a unit in a limited partnership fall within the words "any other amount represented to be deductible in computing income or taxable income in respect of the interest in the property . . ." found in the definition of "tax shelter" in subparagraph 237.1(1)(a)(ii)? Would it make any difference if the financing was part of the "package" or independently obtained by the investor?
Answer
Subparagraph 237.1(1)(a)(ii) contemplates amounts that are deductible by a partner in respect of an interest. Accordingly, interest expense incurred on money borrowed to buy a partnership unit would be an amount deductible "in respect of" that interest because of the broad meaning of that phrase.
Whether an amount was "represented to be deductible" is a determination of fact, but it would seem that financing arrangements made available as a part of a tax shelter "package" would probably satisfy that condition. In other cases, consideration of all verbal and written representations made in connection with the particular offering would be necessary in order to determine the applicability of subparagraph 237.1(1)(a)(ii).
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