Swaps

Table of Contents

Administrative Policy

14 September 2004 External T.I. 2004-008091 -

The CRA position that all amounts payable or receivable pursuant to an interest rate swap agreement (including a termination payment) will be considered to be on income account, is consistent with the decision in Shell (99 DTC 5699).

2003 TEI Roundtable Q. 12, 2003-004855 -

All amounts payable or receivable, including termination payments, pursuant to a plain vanilla interest rate swap agreement will be considered to be on account of income.

13 July 2001 Internal T.I. 2000-005101 -

Swap payments deducted by the taxpayer under s. 9 were, in large part, incurred to acquire a right under a contract to purchase Japanese yen at the termination of the swap agreement at a rate which was more favourable than the exchange rate the market was predicting at the time the agreement was entered into. The cost of such a right would be included in the computation of the gain or loss on a hedge in respect of the principal amount of the loan. Whether that gain would be on income or capital account would depend on the characterization of the underlying debt obligation to which the hedge related.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) swap payments not interest 22

25 August 2000 External T.I. 2000-003604 -

The responses contained in Q.60 of the 1984 Revenue Canada Round Table continue to reflect the position of the CCRA.

7 September 1994 Memorandum 941594 (C.T.O. "Interest Rate Swap - Termination Payment/Receipts")

A receipt received by a taxpayer on the termination of a floating-to-fixed interest rate swap was not a capital receipt given that (applying the jurisprudence) the termination of such contract did not entail the destruction of its whole profit-making apparatus or even a serious dislocation of its normal commercial organization.

93 C.R. - Q. 11

All amounts payable or receivable pursuant to an interest rate swap agreement will be considered to be on account of income and will be included in or deductible from the income of the taxpayer pursuant to s. 9.