Section 142.3

Subsection 142.3(1) - Amounts to be included and deducted

Administrative Policy

14 November 2013 Internal T.I. 2013-0505111I7 - Mark-to-market property

overview of specified debt obligation rules

Sections 142.3 and 142.4…in broad terms… require a financial institution that holds an interest in a specified debt obligation to accrue income annually on such obligation on a yield to maturity basis (as prescribed by regulation). As with the mark-to-market provisions, the general intent of the specified debt obligation rules was to bring the income tax rules in line with the accounting rules for financial institutions (i.e., premiums or discounts are essentially amortized annually and gains or losses on the disposition of such obligations are generally included in income or deducted from income in full).