Subsection 20(3) - Borrowed money
Cases
Grenier v. Minister of National Revenue, [1998] 3 CTC 243, [1998] DTC 6439
The taxpayer used the proceeds of a mortgage loan for $65,625 to make an interest-free advance to a corporation of which he was the principal...
The Queen v. Shore, 92 DTC 6059, [1992] 1 CTC 34 (FCTD)
The taxpayer and his wife gave a mortgage on their Thamesford home to raise approximately $42,000 for use in their new business. They then sold...
See Also
Brown v. The Queen, 2020 TCC 84 (Informal Procedure)
Wong J accepted that interest was deducible by an individual on personal lines of credit (mostly secured on one of his two homes) drawn down by...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) | wholly-owned corporations that currently could not legally pay dividends were a source of income for s. 20(1)(c) purposes | 333 |
Administrative Policy
21 November 2002 External T.I. 2002-0156565 F - INTERETS HYPOTHEQUE SUR RESIDENCE
On a sale of the taxpayer's home, the mortgage loan for which the interest was deductible pursuant to s. 20(1)(c) because the loan proceeds had...
2018 Ruling 2018-0740931R3 F - deductibility of interest – convertible debentures
A Canadian public company (ACo ) will force the conversion of its outstanding convertible debentures, by issuing a notice to redeem them for their...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) | interest on borrowed money used to pay a premium on the cash redemption of convertible debentures is deductible | 446 |
S3-F6-C1 - Interest Deductibility
1.99 Refinancing. Subsection 20(3) provides a deeming rule where a taxpayer uses borrowed money to repay money previously borrowed, or to repay an...
31 October 2006 External T.I. 2006-0173731E5 F - Paragraphe 20(3) de la Loi
CRA indicated that where a corporation borrows money from an arm's length financial institution to repay a non-interest bearing loan that it had...
24 August 1994 Internal T.I. 9420517 - INTEREST DEDUCTIBILITY
Where the assets of a proprietorship are transferred to a corporation for consideration including a note payable, interest on money borrowed by...
5 January 1993 T.I. (Tax Window, No. 28, p. 10, ¶2395)
Where a loan subject to s. 20.2(2) is refinanced, s. 20(3) will apply to treat the new loan as a continuation of the old loan.
Subsection 20(4) - Bad debts from dispositions of depreciable property
Cases
Picadilly Hotels Ltd. v. The Queen, 78 DTC 6444, [1978] CTC 658 (FCTD)
It was found that some default in payments by a purchaser of depreciable property, and some doubts by the taxpayer-vendor as to the purchaser's...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Disposition of Property | 50 | |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(l) | 48 |
Belle-Isle v. MNR, 64 DTC 5041, [1964] CTC 40 (Ex Ct), briefly aff'd 66 DTC 5100, [1966] R.C.S. 354
After finding that the taxpayer has sold depreciable property for proceeds of disposition in excess of the original capital cost, Dumoulin J....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Proceeds of Disposition | 82 |
Administrative Policy
4 September 1991 T.I. (Tax Window, No. 10, p. 17, ¶1473)
A parent corporation is not entitled to a deduction under s. 20(4) to which a subsidiary would have been entitled if it had not been wound-up into...
IT-220R2 "Capital Cost Allowance - Proceeds of Disposition of Depreciable Property"
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 68 | 8 |
Subsection 20(5) - Sale of agreement for sale, mortgage or hypothecary claim included in proceeds of disposition
Administrative Policy
IT-323 "Sale of Mortgage Included in Proceeds of Disposition of Depreciable Property"
Subsection 20(7) - Where para. (1)(m) does not apply
Paragraph 20(7)(a)
Cases
Sears Canada Inc. v. The Queen, 86 DTC 6304, [1986] 2 CTC 80 (FCTD), aff'd 89 DTC 5039 (FCA)
It was found that an obligation to indemnify can exist where the obligation is not to pay monetary compensation but rather is one to perform an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Accounting Principles | 28 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | 166 | |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | reserve can be for contingent amounts | 46 |
Amesbury Distributors Ltd. v. The Queen, 85 DTC 5076, [1984] CTC 667 (FCTD)
It was found, obiter, that a deduction under s. 20(1)(m)(ii) in respect of the estimated future costs of providing after-sales servicing of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | 105 |
Mister Muffler Ltd. v. The Queen, 74 DTC 6615, [1974] CTC 813 (FCTD)
In consideration of charging a customer $1.00 more for the replacement of a muffler, the taxpayer undertook to replace a defective muffler free of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | 22 |
See Also
Redhead Equipment Ltd. v. The Queen, 2001 DTC 429 (TCC)
As part of a warranty program provided by the manufacturer of graders, the taxpayer, which was a distributor, was required to inspect graters sold...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | reserve for future inspection costs down adjustable based on hindsight | 134 |
Dubawn Holdings Inc. v. The Queen, 94 DTC 1252, [1994] 1 CTC 2527 (TCC)
A MURB project promoter who, at the time of sale of MURBs to investors by its subsidiary, received promissory notes of the investors in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(e) | deducted if factually deducted | 81 |
Administrative Policy
89 C.R. - Q.21
No reserve is available to a developer under 20(1)(m) in respect of cash flow guarantee fees.
Subsection 20(10) - Convention expenses
Cases
Graves v. The Queen, 90 DTC 6300 (FCTD)
Business meetings which the taxpayers, who carried on business in partnership as Amway distributors, attended in the United States along with...
See Also
Shaver v. The Queen, 2003 DTC 2112, 2004 TCC 10
Expenses incurred by the taxpayer, an Amway distributor, in attending "business training seminars" in Canada and the U.S. were found to be capital...
Administrative Policy
25 May 2004 External T.I. 2003-0051291E5 F - Formation et croisière
Are expenses incurred by members of an Association respecting conventions, symposia and seminars held during a cruise deductible from their...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Know-How and Training | deducible cost of cruise that included seminars would not exceed the cost of a comparable domestic course | 199 |
6 October 2017 APFF Roundtable Q. 12, 2017-0709111C6 F - Dépenses relatives à un congrès
The two-convention limitation in s. 20(10) applies only to capital expenditures. Are expense of attending conventions which were incurred for...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Know-How and Training | convention expenses "historically" viewed as capital expenditures | 71 |
1 March 2013 External T.I. 2013-0477911E5 - Expenses to host employees and spouses at a resort
A taxpayer intends to offer employees and their spouses an all-expenses-paid week-long trip to a resort located outside of North America, in which...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(l) - Subparagraph 18(1)(l)(i) | 77 |
30 May 2011 External T.I. 2011-0393731E5 F - Congrès
Before finding that the annual meeting of the members of the Corporation of Master Pipe Mechanics of Quebec (the "CMMTQ") and the MCEE trade show...
28 April 2010 External T.I. 2009-0347581E5 F - Frais de formation
When asked whether expenses for attending a convention, seminar, luncheon meeting or other meeting incurred by an individual in the course of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | expense incurred in course of operating real property need not have a direct effect on profit | 386 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Know-How and Training | distinction between training and convention expenses/ luncheon seminar fees on case law generally are professional deductions | 329 |
7 April 2006 External T.I. 2005-0132981E5 F - Avantages imposables à des employés
Does a convention for s. 20(10) purposes include a symposium, conference, information session or formal meeting? CRA responded:
[A]s stated in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(b) | measuring 3 hours of overtime to justify meal allowance | 140 |
Articles
Novek, "Convention Expenses Are Subject to Territorial Limitations", Taxation of Executive Compensation and Retirement, February 1992, p. 557.
Subsection 20(11) - Foreign taxes on income from property exceeding 15%
Administrative Policy
31 January 2018 External T.I. 2016-0676431E5 - foreign tax credit on employees profit sharing
If foreign taxes allocated from an employees profit sharing plan to an individual on a T4PS are limited to 15% for foreign tax credit purposes, is...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125 - Subsection 125(1) | $200 basket for NBIT for which country-by-country reporting is not required includes flow-through EPSP taxes | 153 |
| Tax Topics - Income Tax Act - Section 144 - Subsection 144(8.1) - Paragraph 144(8.1)(b) | 15% limitation on FTC credit | 93 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) | no s. 20(12) deduction to EPSP beneficiary | 108 |
3 February 2016 External T.I. 2014-0548111E5 - U.S. tax paid in respect of an LLC's income
Mr. A, Canadian resident and citizen, was a member of an LLC carrying on a U.S. active business and which was treated as a partnership for Code...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(3) - Paragraph 88(3)(d) | no deemed dividend | 133 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | LLC tax paid by Cdn member not re business | 169 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) | s. 20(14) deduction for US operating-income taxes imposed on Cdn LLC member even where his only Cdn income from LLC is taxable capital gain | 439 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | FTC for US operating-income taxes imposed on Cdn LLC member even where his only Cdn income from LLC is taxable capital gain | 331 |
| Tax Topics - Treaties - Income Tax Conventions - Article 24 | Treaty sourcing rule does not trench on domestic FTC | 215 |
10 June 2013 STEP CRA Roundtable, 2013-0480301C6 - 2013 STEP CRA Roundtable Question 4
A U.S. citizen is required to pay U.S. tax on dividends and capital gains at a 20% rate (increased from the previous 15% rate). Does this mean...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Treaties - Income Tax Conventions - Article 24 | Art. 24(5) of US treaty a complete code for US citizens | 117 |
10 June 2013 STEP Roundtable, 2013-0480371C6 - 2013 STEP Question 13 - US LLCs and 20(11)
US tax is paid on the income of an LLC by an individual resident in Canada to which the LLC is not a controlled foreign affiliate (so that its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | 103 |
3 March 1997 Internal T.I. 9641327 - SUBSECTION 20(11) AND TAX TREATIES
Discussion of the interaction of s. 20(11) and paragraph 5 of Article XXIV of the U.S. Convention.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Treaties - Income Tax Conventions - Article 24 | 20 |
84 C.R. - Q.34
Income received by beneficiaries of a Canadian resident trust earning income from foreign real property is income from a "property that is an...
IT-506 "Foreign Income Taxes as a Deduction From Income" 5 January 1987
S. 20(11) deduction is excess of the gross property income over 15% thereof
3. An individual (including a trust) who in a taxation year earns...
Articles
Tim Barrett, Kevin Duxbury, "Corporate Integration: Outbound Structuring in the United States After Tax Reform", 2018 Conference Report (Canadian Tax Foundation), 18:1-76
Timing mismatches if an LLC distributes only a portion of its profits (pp. 18:23–25)
Timing mismatches can arise if an LLC distributes only a...
Manjit Singh, Andrew Spiro, "The Canadian Treatment of Foreign Taxes", 2014 Conference Report, (Canadian Tax Foundation), 22:1-37
Non-deductibility on general principles (p.6)
Subsections 20(11) and 20(12) specifically override the limitation in paragraph 18(l)(a) which would...
Subsection 20(12) - Foreign non-business income tax
Cases
Emergis Inc. v. Canada, 2023 FCA 78
Emergis financed a U.S. acquisition through a tower structure under which:
- it made an interest-bearing loan to a subsidiary Canadian partnership...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Ownership | s. 20(12) did not displace the general rule that the assets and income of a corporation are not the assets and income of its shareholders | 440 |
FLSmidth Ltd. v. Canada, 2013 FCA 160, 2013 DTC 5118 [at 6147]
In order to finance the acquisition of U.S. companies, the taxpayer utilized a tower structure:
- The taxpayer held a 98.9% interest in a U.S....
See Also
Emergis Inc. v. The Queen, 2021 TCC 23, rev'd 2023 FCA 78
The taxpayer (“Emergis”), a Canadian public company, financed its acquisition of an arm’s length U.S. operating company through a "tower...
FLSmidth Ltd. v. The Queen, 2012 DTC 1052 [at 2745], 2012 TCC 3, aff'd 2013 DTC 5118 [at 6147], 2013 FCA 160
In order to finance the acquisition of U.S. companies, the taxpayer set up a tower structure. See above for details.
For U.S. tax purposes, GL&V...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 16 - Subsection 16(1) | regard to economic substance | 138 |
| Tax Topics - Income Tax Act - Section 68 | 138 | |
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 42 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 24 | no double taxation engaging Art.2(a) of U.S. Treaty | 258 |
Kaiser v. MNR, 91 DTC 1057, [1991] 2 CTC 2168 (TCC)
Subsection 20(12) was found to be limited to the computation of income from a business or property, and did not permit a deduction from employment...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Headings | headings have higher status than marginal notes | 50 |
Administrative Policy
29 May 2018 STEP Roundtable Q. 13, 2018-0744161C6 - 75(2) and Foreign Tax Credit
CRA noted that the attribution of foreign source income (e.g., U.S. dividend income) to a settlor under s. 75(2) does not entail the attribution...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | U.S.-dividend income attributed under s. 75(2) does not generate FTCs for the related withholding tax | 181 |
31 January 2018 External T.I. 2016-0676431E5 - foreign tax credit on employees profit sharing
If foreign taxes allocated from an employees profit sharing plan to an individual on a T4PS are limited to 15% for foreign tax credit purposes, is...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125 - Subsection 125(1) | $200 basket for NBIT for which country-by-country reporting is not required includes flow-through EPSP taxes | 153 |
| Tax Topics - Income Tax Act - Section 144 - Subsection 144(8.1) - Paragraph 144(8.1)(b) | 15% limitation on FTC credit | 93 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(11) | no s. 20(11) deduction for foreign taxes respecting EPSP income allocated to beneficiary | 107 |
3 February 2016 External T.I. 2014-0548111E5 - U.S. tax paid in respect of an LLC's income
Mr. A, Canadian resident and citizen subject to a Canadian marginal rate of tax of 50%, was a member of an LLC carrying on a U.S. active business...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(3) - Paragraph 88(3)(d) | no deemed dividend | 133 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | LLC tax paid by Cdn member not re business | 169 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(11) | only income was taxable capital gains | 136 |
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | FTC for US operating-income taxes imposed on Cdn LLC member even where his only Cdn income from LLC is taxable capital gain | 331 |
| Tax Topics - Treaties - Income Tax Conventions - Article 24 | Treaty sourcing rule does not trench on domestic FTC | 215 |
15 December 2015 Internal T.I. 2014-0560371I7 - Subsection 20(12) deduction
Taxpayer, a U.S. citizen and Canadian resident, owns a portion of the shares of a Canadian unlimited liability company (“ULC”), which is...
7 March 2016 Internal T.I. 2015-0572461I7 - Foreign tax deduction
A Canadian-resident individual owns an interest in a Canadian LP (“LP”), that owns an interest in a U.S. LP (“Holding LP”), which has...
S5-F2-C1 - Foreign Tax Credit
S. 20(12) can provide a deduction to the extent the s. 126(1) proportionate limitation applies
1.24 If CTOP(FNBI) [Canadian tax otherwise payable...
11 June 2013 STEP Roundtable, 2013-0480321C6 - 2013 STEP Question 6 US LLCs - FAPI, FAT and FTCs
Is the US tax paid by a Canadian-resident taxpayer on the income (which also is foreign accrual property income) of an LLC which is owned by it...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 113 - Subsection 113(1) - Paragraph 113(1)(c) | 176 | |
| Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Accrual Tax | 326 |
28 May 2013 Internal T.I. 2013-0476381I7 - Deemed Resident Trusts & Foreign Tax Credit
A deemed-resident s. 94 trust realized a capital gain and incurred gains tax of $10,000 for U.S. purposes on disposing in the U.S. of marketable...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) | no pro-ration of FTC by s. 94 trust where Canadian gain was smaller than US gain | 295 |
| Tax Topics - Income Tax Act - Section 94 - Subsection 94(3) - Paragraph 94(3)(b) | 295 |
18 July 2011 Internal T.I. 2011-0394631I7 - Foreign non-business income tax
Canco, and its wholly-owned subsidiary, Cansubco, are the 99.9% and 0.1% partners of USLP, which is a partnership for Canadian purposes and has...
1 October 2008 T.I. 2006-0174701E5
A U.S. citizen immigrates to Canada having previously established a U.S. grantor trust, whose investments are not taxable Canadian property and...
22 July 2008 Internal T.I. 2008-0284351I7 - Subsection 20(12)
A Canadian resident individual taxpayer reported the income (which was not distributed) of a wholly-owned S Corporation in his U.S. tax return in...
10 January 2005 External T.I. 2004-0075931E5 - adjusted cost base - partnership interest
A member of a partnership has been allocated a proportionate share of the non-business income tax paid to a foreign government with respect to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(c) | 39 |
19 March 2004 External T.I. 2003-0037301E5 - IRA transfer to RRSP; foreign tax credits
"Amounts received out of an IRA are treated as pension income under paragraph 56(1)(a) of the Act and under the Treaty and not as income from a...
29 May 2003 External T.I. 2002-0160795 F - Crédit d'impôt étranger et pertes
A corporation with taxable income in Year 01 of $2,000,000 claimed a non-business foreign tax credit of $25,000. In Year 03, the corporation...
10 April 2003 External T.I. 2003-0003095 - Foreign non-business income tax
May foreign tax attributable to a taxable capital gain be deducted under s. 20(12), notwithstanding that capital gains are not income from...
21 February 2000 T.I. 1999-0010295
A Canadian-resident individual holds all the shares of a Nova Scotia ULC which, in turn, owns all the shares of a U.S. LLC. The ULC and LLC are...
10 February 1993 Memo 9300776
After noting that under the "current" (pre-1992) version of s. 20(12) "a subsection 20(12) deduction does not have to be sourced against a...
20 November 1992 T.I. 123456 (September 1993 Access Letter, p. 410, ¶C20-1160)
A Canadian exporter that exports to a particular country without carrying on business there and is subject to an income tax of that country, will...
October 1992 Central Region Rulings Directorate Tax Seminar, Q. J (May 1993 Access Letter, p. 231)
Because the deduction is only available in the computation of income from a business or property, foreign tax paid on the disposition of a foreign...
25 March 1991 Memo 7-4727
US withholding taxes paid on the redemption of preference shares of a US subsidiary qualified as income or profits taxes within the meaning of s....
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | US withholding on share redemption was income tax | 81 |
88 C.R. - Q.57
As s. 20(12) provides for a deduction from income and not from tax, Conventions which provide for "a deduction from the tax on the income of that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 126 - Subsection 126(7) - Non-Business-Income Tax | 34 |
IT-506 "Foreign Income Taxes as a Deduction From Income" 5 January 1987
Interrelationship with s. 126(1)
8. Non-business-income tax that has been deducted by virtue of subsection 20(12) is excluded from...
16 July 1985 Memo 7-4095
After noting that "U.S. consent dividends are not dividends received for purposes of section 90, that "where a U.S. corporation withholds and...
Articles
Tim Barrett, Kevin Duxbury, "Corporate Integration: Outbound Structuring in the United States After Tax Reform", 2018 Conference Report (Canadian Tax Foundation), 18:1-76
High effective tax rate if LLC does not distribute its earnings currently (pp. 18:24-25)
[T]o the extent that the US tax [of an LLC] is not used...
Subsection 20(14) - Accrued bond interest
Cases
Canada v. Antosko, 94 DTC 6314, [1994] 2 S.C.R. 312, [1994] 2 CTC 25
On March 1, 1975 the taxpayers acquired all of the common shares of the New Brunswick Industrial Finance Board in a company that manufactured...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Ordinary Meaning | 121 | |
| Tax Topics - Statutory Interpretation - Resolving Ambiguity | 121 |
See Also
Mitchell v. R., [1996] 2 CTC 2659, 97 DTC 607
Accrued but unpaid interest on bonds of the taxpayer that it purchased in the open market was not deductible by it under s. 20(14) because "a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(1) - Paragraph 53(1)(e) - Subparagraph 53(1)(e)(iv) | 115 | |
| Tax Topics - Income Tax Act - Section 80 - Subsection 80(1) | set-off | 130 |
Badshah B. Husain v. Minister of National Revenue, 91 DTC 278, [1991] 1 CTC 2266 (TCC)
In finding that the taxpayer was not entitled to a deduction under paragraph 20(14)(b) in respect of interest that had accrued on a bond while it...
Administrative Policy
27 November 2018 CTF Roundtable Q. 14, 2018-0779911C6 - Foreign exchange
CRA indicated that where an FX-denominated debt is assigned between interest coupon dates, the amount of the accrued interest translated at the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) - Paragraph 261(2)(b) | accrued interest under both ss. 20(14)(a) and (b) is translated at the transfer date spot rate | 135 |
22 December 2003 External T.I. 2003-0000125 F - TITRE DE CREANCE INDEXE
On November 1 of a year, 1991, an individual acquires, at par, a $1,000 bond issued on that date and that was indexed to the Consumer Price Index...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 7001 - Subsection 7001(1) | detailed illustration | 15 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Indexed Debt Obligation | stripped indexed coupons were indexed debt obligations but would not give rise to excluded payments | 34 |
| Tax Topics - Income Tax Regulations - Regulation 7001 - Subsection 7001(7) - Excluded Payment | stripped indexed coupons did not give rise to excluded payments because no single fixed rate | 52 |
| Tax Topics - Income Tax Regulations - Regulation 201 - Subsection 201(4.1) | reporting of inflation adjustments on indexed bonds | 144 |
16 May 2003 External T.I. 2002-0178685 F - CALCUL DU COUT D'UN TITRE DE CREANCE
In the course of confirming that the accrued interest component of a debt obligation is included in its cost amount and ACB to registered plans or...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 53 - Subsection 53(2) - Paragraph 53(2)(l) | accrued interest initially included in ACB | 183 |
14 May 2001 Internal T.I. 2001-0065687 F - VENTE CREANCE A ESCOMPTE
An individual (Mr. C) acquired a mortgage (at a significant discount to its principal) from another individual (Mr. B) between due dates fro the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition - Paragraph (b) - Subparagraph (b)(i) | blended monthly payments of interest and principal received pursuant to a mortgage acquired at a discount each gave rise to a capital gain | 135 |
| Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) | apportioned ACB of discounted mortgage that is disposed of with each blended payment is determined by apportioning the discount | 143 |
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | holder on income account of a mortgage can choose to recognize the discount only after he has recovered his purchase price through the blended principal payments | 169 |
92 C.R. - Q.1
Where a taxable transferee acquires a debt obligation from a non-taxable transferor, a deduction may be available to the transferee if the accrued...
90 C.R. - Q.13
The transferee will be entitled to deduction of interest pursuant to s. 20(14)(b) only to the extent that the interest is included in the income...
Articles
Ewens, "Debt-for-Debt Exchanges", 1991 Canadian Tax Journal, p. 615
Ulmer, "Taxation of Interest Income", 1990 Conference Report, pp. 8:19-20
Paragraph 20(14)(a)
Articles
Jim Samuel, Byron Beswick, "Selected Issues in Transactions Involving Debt", 2019 Conference Report (Canadian Tax Foundation), 18:1 – 27
Apply s. 52(1) basis increase to avoid double-taxation of s. 20(14)(a) income inclusion (p. 18:14)
If an amount is included in computing a...
Subsection 20(16) - Terminal loss
Cases
May Bros. Farm Ltd. v. The Queen, 92 DTC 6342, [1992] 1 CTC 358 (FCA)
On December 13, 1977 a corporation ("Bell") leased 200 acres of cranberry lots from another corporation ("Wingly") under a lease which expired on...
See Also
Benedict v. The Queen, 2012 DTC 1170 [at 3419], 2012 TCC 174 (Informal Procedure)
When the taxpayer filed his 2007 return, the capital cost allowance schedule attached to his return showed a terminal loss arising in the year...
Greater Toronto Airports Authority v. International Lease Finance Corp. (2004), 69 OR (3d) 1 (CA)
S.55(2) of the Civil Air Navigation Services Commercialization Act (Canada), which provided that "'owner', in respect of an aircraft, includes ......
Administrative Policy
11 June 2010 External T.I. 2010-0354881E5 F - Traitement fiscal de la FNACC
Where a Canadian film and video production ("CFVP") that was included in Class 10 no longer generates income, how is the balance of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) | application of s. 45(1)(a) to film production that ceased to generate income, resulting in a terminal loss under s. 20(16) | 43 |
8 June 2004 Internal T.I. 2004-0067401I7 F - Dépenses d'une entreprise illégale
The RCMP conducted a search of the business premises of the taxpayer, whose activity was illegal, and seized all equipment related to that...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | onus on taxpayer, who did not keep records, to displace the net worth assessment method results | 177 |
| Tax Topics - General Concepts - Onus | onus on taxpayer, who did not keep records, to displace the net worth assessment results, with documentation or other “acceptable evidence” | 130 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Disposition of Property | disposition when illegal equipment was forfeited to the Crown by court order, rather than when it was seized by the RCMP | 167 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees | legal fees incurred to defend criminal charges for carrying on an illegal drug business were non-deductible | 138 |
93 C.P.T.J. - Q.25
The words "where at the end of a taxation year" keep the UCC of a particular class open during the year in the event of additional purchases of...
13 May 1991 T.I. (Tax Window, No. 3, p. 15, ¶1231)
Where a taxpayer, whose only leasehold improvements (Class 13) were with respect to office space in a building, moves to a new building in which...
Subsection 20(16.1)
Administrative Policy
S3-F4-C1 - General Discussion of Capital Cost Allowance
overview
1.106 Subsection 20(16.1) of the Act provides that an excess of the UCC increases over the decreases as of the end of a tax year is not...
Subsection 20(21) - Debt obligation
See Also
K & D Logging Ltd. v. The King, 2023 TCC 23
The taxpayer (K & D), which along with three other lenders, advanced funds in 1996 to a Uruguay farming corporation (Interan) of which the...
Administrative Policy
31 May 2004 External T.I. 2004-0074381E5 F - Créance: calcul des intérêts
In the course of a general discussion, CRA stated:
[W]here accrued interest has been included in the transferor's income and the debt obligation...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | discount is not interest where its rate is “similar” to yield on similar bonds | 155 |
19 March 1992 Memorandum (Tax Window, No. 18, p. 6, ¶1820)
S.20(21) does not apply in cases of bankruptcy as it is only meant to apply to over-accruals.
Articles
Ewens, "Debt-for-Debt Exchanges", 1991 Canadian Tax Journal, p. 615: Discussion of potential deduction to holders of debentures in a target corporation for arrears of interest realized under s. 76(1).
Subsection 20(24) - Amounts paid for undertaking future obligations
Administrative Policy
2015 Ruling 2015-0601441R3 - XXXXXXXXXX Partnership - winding up
Current structure
Sub1 and Sub2 (both taxable Canadian corporations and wholly-owned subsidiaries of Parent) are currently the sole partners of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 98(5) wind-up through s. 85 transfer of partnership interest of one partner to the other and preceded by debt assumptions | 292 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | interest deductible following assumption of interest-bearing internal debt on s. 98(5) wind-up | 297 |
| Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(11) | continuation of s. 34.2(11) reserve following partnership wind-up | 339 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | continued availability of s. 20(1)(m) reserve following s. 98(5) wind-up | 296 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) | flow-through of s. 20(1)(n) reserve on s. 98(5) wind-up | 289 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(9) | s. 18(9) deduction claimable by transferee former partner following s. 98(5) wind-up | 241 |
| Tax Topics - Income Tax Act - Section 147.2 - Subsection 147.2(8) | s. 147.2 continuity following s. 98(5) wind-up | 368 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(i) | no income inclusion on assumption on s. 98(5) wind-up of DSUs and RSUs | 356 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement - Paragraph (k) | no income on RSU/DSU assumption | 22 |
2015 Ruling 2014-0552871R3 - Split-Up Butterfly
In connection with the butterfly split-up of DC equally between the family holding companies for two unrelated families, the assumption of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution | post-butterfly sale of distributed shares by TC1 to TC2/disproportionate split of CDA/assumption of prepaid rent (for which a 20(24) election) treated as boot | 773 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) | post-butterfly sale of distributed shares by one TC to the other | 63 |
8 December 2010 External T.I. 2010-0375921E5 - Subsection 20(24)
A Canadian-resident Vendor agreed to sell all the assets of its business, having a fair market value of $1,000, to the Canadian-resident...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) - Subparagraph 12(1)(x)(iv) | deferred revenue oblgation assumption was s. 12(1)(x) income | 52 |
2009 Ruling 2008-0304371R3 - Single-Wing Butterfly
In a single-wing butterfly of a company whose assets consisted of cash and cash equivalents, tenant receivables and a revenue producing rental...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution | net receivables and prepaids of rental company reclassified as business property | 151 |
2008 Ruling 2008-0279671R3 - Partnership Wind-up
Background
The limited partner and general partner units in the Partnership are held by Holdco II and by a wholly-owned subsidiary of Holdco II...
7 March 2005 External T.I. 2005-0114981E5 - Subsection 20(24) of the Act
"We are of the view that subsection 20(24) of the Act may also apply to a transferred obligation for which an amount has been included in the...
23 November 2004 External T.I. 2004-0094101E5 F - IT-474R Administrative Relief
The taxpayer referenced the statement in IT-474R, para. 10 that “[w]here the provisions of paragraph 87(2)(a) produce unintended consequences...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) | IT-474R, para. 10 provides no administrative relief from short taxation year from amalgamation | 159 |
20 November 2003 External T.I. 2003-0033545 - partnership dissolution
As a partnership may be regarded as a taxpayer for purposes of s. 20(24), where a partnership that is being dissolved pays to the surviving...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | continuity under s. 98(5) | 80 |
15 November 1999 External T.I. 9924585 - PREPAID RENT&SALE OF BUILDING
Discussion of the application of s. 20(24) where one corporation that has received prepaid rent on a leased building transfers the building to a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) | lowering of sale price | 86 |
June 1991 Memorandum (Tax Window, No. 4, p. 18, ¶1274)
Discussion of different ways to handle the assumption of take-or-pay obligations on the sale of a resource property.
22 April 1991 Memorandum (Tax Window, No. 2, p. 24, ¶1192)
A vendor is not permitted to deduct an amount paid by it to compensate the purchaser for the assumption of contingent liabilities of the vendor...
5 June 1990 TI File 7-4678
In the normal case where the sale of a business occurs on capital account, the vendor would not be able to deduct a payment described in s. 20(24)...
Articles
Ron Choudhury, "Non-Resident Issues in Acqusition Transactions", 2005 Conference Report (Canadian Tax Foundation), 42:9-16.
Bergen, "Purchase and Sale of Assets: An Update", 1996 Corporate Management Tax Conference Report, pp. 3:6-8.
Subsection 20(29) - Idem [Deduction before available for use]
Administrative Policy
13 April 1992 T.I. (Tax Window, No. 18, p. 13, ¶1843)
Where a taxpayer incurs soft costs in respect of an addition to an existing building, the deduction under s. 20(29) is restricted to the...