Would payments made to members of one branch of a credit union be considered payments to “members of the credit union of the same class” for purposes of the definitions of “allocation in proportion to borrowing” and “bonus interest payment” in s. 137(6)?
After noting that s. 137(2) “generally allows a credit union to deduct the total of (i) bonus interest payments, and (ii) payments pursuant to allocations in proportion to borrowing, made by the credit union within the year or within 12 months thereafter, to members of the credit union, to the extent that such payments were not deductible in the immediately preceding taxation year,” CRA referenced the “bonus interest payment” and “allocation in proportion to borrowing” definitions, and stated:
Subsection 137(6) of the Act defines a “member” of a credit union and includes a person who is recorded as a member on the records of the credit union and is entitled to participate in and use the services of the credit union. The Act does not provide any guidance as to what constitutes a class of taxpayer. However, it is our understanding that membership (including membership classes) in a credit union is generally governed by the credit union’s relevant incorporating documents/by-laws established in accordance with the relevant credit union statute.
… [W]here a particular class of member is determined, the deduction for a taxation year under subsection 137(2) of the Act by a credit union for bonus interest payments or payments pursuant to allocations in proportion to borrowing, as the case may be, requires such bonus interest payments or allocations in proportion to borrowing to be credited to all taxpayers who were members of that particular class in the year.