29 November 1989 Ruling 89M11281 F - Interest-Free or Low Interest Loans

By services, 18 January, 2022
Official title
Interest-Free or Low Interest Loans
Language
French
CRA tags
56(4.1)
Document number
Citation name
89M11281
Severed letter type
Ruling
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
629572
Extra import data
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"field_external_guid": [],
"field_proprietary_citation": [],
"field_release_date_new": "1989-11-29 07:00:00",
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Main text

QUESTION 19

INTEREST-FREE OR LOW INTEREST LOANS

Will subsection 56(4.1) apply where property is sold by one individual to another to reduce taxes and the seller receives a money purchase obligation?

DEPARTMENT'S POSITION

The Department agrees that the provisions of subsection 56(4.1) will not normally apply where there is a bona fide sale of property (instead of property being loaned) by one individual to another non-arm's length individual in order to reduce the seller's income taxes and the seller receives a mortgage, agreement for sale or similar money purchase obligation as security for the loan of the unpaid purchase price.

G. ThornleySection 23 CTFNov 29, 1989