19 January 2005 External T.I. 2004-0091601E5 F - Incitatif versé - taux d'intérêt réduit -- summary under Subparagraph 12(1)(x)(v)

In order to finance $400,000 of the $500,000 purchase price of a rental property, the taxpayer receives a 5-year mortgage loan from a financial institution, and also receives 5% cash back, or $20,000, which the taxpayer uses for, inter alia, the down payment. This cashback reflects that the mortgage bears the institution’s “posted” interest rate, rather than its most favourable rate. CRA indicated that, except to the extent of any election made under s. 12(2.2) to offset the higher interest in the first two years of the mortgage, there would be an inclusion under s. 12(1)(x) “[p]rovided the taxpayer has not already taken the amount of the rebate into account in computing income under section 9 ... .”