A borrower who receives a number of loans under the Quebec Immigrant Investor Program has a major investment project following the acquisition of capital assets or of laying hen quotas. Should a premium of $170,000 received under the Program, which reduces the overall financing cost of the borrower's project and covers the various costs inherent in the investment project, be applied against the acquisition cost of various of certain eligible capital property pursuant to s. 14(10)?
In a general response CRA indicated that if the premium does not reduce the cost of the eligible capital property, it must be included in the borrower's income under s. 12(1)(x), subject to a s. 12(2.2) election being made to reduce the amount of the expense and the amount of the income inclusion.