(3)-(29)

Subsection 20(3) - Borrowed money

Cases

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...

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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

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...

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Administrative Policy

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...

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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

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...

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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...

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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...

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Belle-Isle v. MNR, 64 DTC 5041 (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....

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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...

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IT-220R2 "Capital Cost Allowance - Proceeds of Disposition of Depreciable Property" under "Bad Debts"

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...

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Amesbury Distributors Ltd. v. The Queen, 85 DTC 5076, [1984] CTC 667, [1985] 2 CTC 186 (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...

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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...

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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...

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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...

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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...

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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...

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Words and Phrases
convention

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...

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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...

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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...

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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...

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Words and Phrases
convention

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...

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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...

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Words and Phrases
convention
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...

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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...

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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...

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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...

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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.

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...

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IT-506 "Foreign Income Taxes as a Deduction from Income" (Archived)

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...

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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...

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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...

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Subsection 20(12) - Foreign non-business income tax

Cases

FLSmidth v. The Queen, 2013 DTC 5118 [at 6147], 2013 FCA 160, aff'g infra

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....

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See Also

Emergis Inc. v. The Queen, 2021 TCC 23

The taxpayer (“Emergis”), a Canadian public company, financed its acquisition of an arm’s length U.S. operating company through a "tower...

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Words and Phrases
in respect of

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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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Words and Phrases
paid for the year

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...

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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...

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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...

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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...

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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...

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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...

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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...

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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....

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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...

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IT-506 "Foreign Income Taxes as a Deduction from Income" (Archived)

Interrelationship with s. 126(1)

8. Non-business-income tax that has been deducted by virtue of subsection 20(12) is excluded from...

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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...

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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...

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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...

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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...

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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...

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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...

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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

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...

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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...

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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...

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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...

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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...

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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 ......

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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...

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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...

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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...

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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...

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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...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense 556
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A 791
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property 218
Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) 275
Tax Topics - Income Tax Act - Section 13 - Subsection 13(28) 254
Tax Topics - Income Tax Act - Section 13 - Subsection 13(27) 222
Tax Topics - Income Tax Act - Section 13 - Subsection 13(29) 155
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2) 212
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.2) 351
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(3) 70
Tax Topics - Income Tax Act - Section 18 - Subsection 18(3.1) 166
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.5) 207
Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) 65
Tax Topics - Income Tax Act - Section 128.1 - Subsection 128.1(1) - Paragraph 128.1(1)(b) 230
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(c) 170
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e) 65
Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) 152
Tax Topics - Income Tax Act - Section 68 197
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.1) - Paragraph 13(21.1)(a) 75
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.1) - Paragraph 13(21.1)(b) 212
Tax Topics - Income Tax Act - Section 13 - Subsection 13(1) 431
Tax Topics - Income Tax Act - Section 8 - Subsection 8(2) 75
Tax Topics - Income Tax Act - Section 13 - Subsection 13(9) 229
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) 321
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 8 237
Tax Topics - Income Tax Act - Section 13 - Subsection 13(5) 317
Tax Topics - Income Tax Act - Section 13 - Subsection 13(6) 221

Subsection 20(21) - Debt obligation

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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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)...

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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...

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