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Category: Interest deductibility

EIFEL rules

Posted on: September 10, 2022 Last updated on: September 10, 2022 Written by: John Loukidelis
The new excess interest and financing expense rules (“EIFEL” for short) are set out in draft legislation released by Finance on February 4, 2022. The EIFEL rules do not apply to an “excluded entity”, which includes: (1) Canadian-controlled private corporations…
Continue reading “EIFEL rules”…

Novation and withholding tax

Posted on: May 15, 2021 Last updated on: May 15, 2021 Written by: John Loukidelis
CRA technical interpretation 2018-0757501E5 (September 29, 2020) states that the novation of a debt with accrued but unpaid interest results in the payment of the interest. The author notes that, if this is right (and he questions whether it is),…
Continue reading “Novation and withholding tax”…

Non-arm’s length interest

Posted on: November 5, 2019 Last updated on: May 10, 2021 Written by: John Loukidelis
The shareholders of Opco loaned it money to permit it to acquire inventory. The loans were unsecured and bore interest at 10% yearly. The Court of Quebec, in light of the Quebec equivalent of section 67 of the ITA, denied…
Continue reading “Non-arm’s length interest”…

Borrowing from RRSP to loan to Opco

Posted on: January 5, 2017 Last updated on: January 5, 2017 Written by: John Loukidelis
If the technical requirements of the Income Tax Act (Canada) are met, a taxpayer can mortgage her house to her RRSP and then deduct the interest on the loan from the RRSP, if the loan proceeds are on-loaned to Opco.…
Continue reading “Borrowing from RRSP to loan to Opco”…

Interest on debt to acquire land; bad debts

Posted on: September 16, 2015 Last updated on: September 16, 2015 Written by: John Loukidelis
Per Lyons J in Kokai-Kuun Estate v R, 2015 TCC 217: a taxpayer cannot add to the cost of vacant land interest and property taxes paid in respect of the land where it was acquired for “investment” purposes but never…
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Contributions to a testamentary trust

Contributions to an estate or testamentary trust (in this article, an “estate” for short) by anyone other than the testator can vitiate the estate’s status as such. See paragraph 108(1) “testamentary trust” (b) of the Income Tax Act (Canada). Such…
Continue reading “Contributions to a testamentary trust”…

Corporation attribution

With higher interests, corporate attribution (ITA 74.4(2)) becomes more of a concern. The rule doesn’t apply to a small business corporation, however. The attributed amount is also reduced by dividends or interest paid to the transferor in respect of the…
Continue reading “Corporation attribution”…

Association and trusts

The authors provide a helpful overview of the various rules that apply for the purposes of determining whether two corporations are associated where a trust is a shareholder of one or both of the corporations. Paragraph 256(1.2)(b) groups. A relevant…
Continue reading “Association and trusts”…

Over-contribution penalty hell

A taxpayer over-contributes to his TFSA, and then the investments in the TFSA become worthless so that he cannot withdraw the excess. Is the taxpayer entitled to relief from the over-contribution penalty? The Federal Court recently held that the CRA…
Continue reading “Over-contribution penalty hell”…

No more shortcuts for excess CDA elections

The CRA has “retired” the shortcut method for excess CDA elections. It is now necessary to wait for the Part III assessment and then file an election under subsection 184(3) of the Income Tax Act (Canada) in respect of the…
Continue reading “No more shortcuts for excess CDA elections”…

Recent Posts

Contributions to a testamentary trust

Contributions to an estate or testamentary trust (in this article, an “estate” for short) by anyone other than the testator can vitiate the estate’s status as such. See paragraph 108(1) “testamentary trust” (b) of the Income Tax Act (Canada). Such…
Continue reading “Contributions to a testamentary trust”…

Corporation attribution

With higher interests, corporate attribution (ITA 74.4(2)) becomes more of a concern. The rule doesn’t apply to a small business corporation, however. The attributed amount is also reduced by dividends or interest paid to the transferor in respect of the…
Continue reading “Corporation attribution”…

Association and trusts

The authors provide a helpful overview of the various rules that apply for the purposes of determining whether two corporations are associated where a trust is a shareholder of one or both of the corporations. Paragraph 256(1.2)(b) groups. A relevant…
Continue reading “Association and trusts”…

Over-contribution penalty hell

A taxpayer over-contributes to his TFSA, and then the investments in the TFSA become worthless so that he cannot withdraw the excess. Is the taxpayer entitled to relief from the over-contribution penalty? The Federal Court recently held that the CRA…
Continue reading “Over-contribution penalty hell”…

No more shortcuts for excess CDA elections

The CRA has “retired” the shortcut method for excess CDA elections. It is now necessary to wait for the Part III assessment and then file an election under subsection 184(3) of the Income Tax Act (Canada) in respect of the…
Continue reading “No more shortcuts for excess CDA elections”…

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Archives

Categories

Recent Posts

Contributions to a testamentary trust

Contributions to an estate or testamentary trust (in this article, an “estate” for short) by anyone other than the testator can vitiate the estate’s status as such. See paragraph 108(1) “testamentary trust” (b) of the Income Tax Act (Canada). Such…
Continue reading “Contributions to a testamentary trust”…

Corporation attribution

With higher interests, corporate attribution (ITA 74.4(2)) becomes more of a concern. The rule doesn’t apply to a small business corporation, however. The attributed amount is also reduced by dividends or interest paid to the transferor in respect of the…
Continue reading “Corporation attribution”…

Association and trusts

The authors provide a helpful overview of the various rules that apply for the purposes of determining whether two corporations are associated where a trust is a shareholder of one or both of the corporations. Paragraph 256(1.2)(b) groups. A relevant…
Continue reading “Association and trusts”…

Over-contribution penalty hell

A taxpayer over-contributes to his TFSA, and then the investments in the TFSA become worthless so that he cannot withdraw the excess. Is the taxpayer entitled to relief from the over-contribution penalty? The Federal Court recently held that the CRA…
Continue reading “Over-contribution penalty hell”…

No more shortcuts for excess CDA elections

The CRA has “retired” the shortcut method for excess CDA elections. It is now necessary to wait for the Part III assessment and then file an election under subsection 184(3) of the Income Tax Act (Canada) in respect of the…
Continue reading “No more shortcuts for excess CDA elections”…

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