As a result of some of the coupons on a bond having been detached from a bond that was acquired on January 1, 20X0 by a resident of Canada, the first interest coupon (not detached) was paid to the bondholder until December 31, 20X3 and, in the meantime, the taxpayer had been required to accrue deemed interest under Reg. 7000. It would appear that there is no requirement for the issuer to report the deemed interest under Reg. 201(1), and conversely there would be a requirement to so report the full amount of the first interest coupon that was paid, even though the taxpayer had already been required to recognize a portion of such interest under s. 12(9) and Regs. 7000(1) and (2).
Would CRA remove the requirement to issue T5 slips where the interest is actually paid and deemed interest has already been recognized? In finding that the required T5 reporting corresponded to the timing of income recognition under ss. 12(4) and (9) and Reg. 7000, CRA stated:
The issuer of debt obligations from which a portion of the coupons have been detached can be required to file T5 slips by virtue of I.T.R. subsection 201(4) in respect of amounts required to be included in computing the income of taxpayers by virtue of subsection 12(4). …
The presumption in subsection 12(9) with respect to deemed interest is applicable for the purposes of subsection 12(4). …
The T5 Guide …states that the interest to be included in Box 13 is interest that has not previously been reported. Where there has been an interest payment, the amount of interest to be included in Box 13 does not include the portion of the payment for which T5 slips have already been filed by virtue of I.T.R.section 201 for a taxpayer's previous taxation years.