See Also
Tael One Partners Limited v. Morgan Stanley & Co International PLC, [2015] UKSC 12
Lord Reed stated (at para. 41):
The word "accrue" is generally used to describe the coming into being of a right or an obligation (as, for example, in Aitken v South Hams District Council [1995] 1 AC 262), so that the person in question then has an accrued right, or is subject to an accrued liability, as the case may be. That is the meaning which accrual usually bears, in particular, in relation to interest and other payments. The amount to which there is an entitlement may not be payable until a future date, but an entitlement may nevertheless have accrued. For example, under section 2 of the Apportionment Act 1870, rents, annuities, dividends and other periodical payments may be considered as accruing from day to day, although they may be payable at longer intervals (In re Howell [1895] 1 QB 844); and a bequest of an "accruing dividend" carried the dividend for the period during which the death occurred, although the dividend was not declared until a later date (In re Lysaght [1898] 1 Ch 115). Situations can readily be envisaged in which interest or fees might accrue, in that sense, by reference to the lapse of time: indeed, interest invariably accrues by reference to the lapse of time, as do recurring fees such as commitment fees. This is not however such a situation. An entitlement to a payment premium under the facility agreement accrues on a defined event.
Elm Ridge Country Club Inc. v. The Queen, 95 DTC 715 (TCC)
The interest accrual rule in s. 12(3) did not apply to interest income deemed to be earned by a non-profit club pursuant to s. 149(5).
Administrative Policy
11 June 2004 External T.I. 2004-0076291E5 F - Renonciation aux intérêts à recevoir
During the second year (2000-B) of a loan accruing interest at 5% per annum (which had been treated by the parties as requiring the interest to be paid annually, although the terms were silent on this point), the corporate lender renounced the interest that had accrued during that second year to the date of the renunciation. In finding that there was no inclusion, in the creditor’s income for that year, of such accrued interest (so that it was unnecessary of address s. 20(1)(p)(i) or 50(1)), CRA stated:
[A]n instrument for the renunciation of interest which is legally binding on the parties involved has the effect of extinguishing the creditor's right to interest. In the situation presented to us here, since the effect of the instrument for the renunciation of interest was to extinguish the Lender's right to any interest accrued on the Note for the year 2000-B that was not due at the time the instrument of renunciation was executed, then we are of the view that the provisions of subsection 12(3) and subparagraph 12(1)(c) do not apply.
92 C.R. - Q.4
The inclusion of accrued interest on a convertible debenture is required even, if as a result of a subsequent conversion of the debenture into shares, the entitlement to the accrued interest is lost.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 51 - Subsection 51(1) | no ACB increase for foregone interest | 36 |
17 August 1992, T.I. 921353 (April 1993 Access Letter, p. 135, ¶C20-1141)
In order for the forgiveness of accrued interest owing by a non-arm's length person to be effective, there must be an amendment to the original agreement. A unilateral forgiveness in a non-arm's length situation will not suffice. Where the forgiveness has legal effect, it is effective only from the date of the amendment.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | 41 | |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(p) - Subparagraph 20(1)(p)(i) | 88 |
1 August 1990 External T.I. 5-900756
"The term 'debt obligation', as used in subsection 12(3), is not defined in the Act and accordingly must be interpreted in its ordinary meaning. In Beament Estate v. MNR, 69 DTC 5016 (Ex Ct), Jackett, J., interpreted the word 'debt' to mean 'a sum payable in respect of a liquidated money demand, recoverable by action'.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(11) - Investment Contract | 60 |
86 C.R. - Q.57
In the year of foreclosure or repossession, the creditor is required to include interest income that accrued up to the due date immediately prior to the date of foreclosure or repossession.