| 19(1) | File No. 5-9261 |
| G. Ozols | |
| (613) 957-2139 |
January 12, 1990
Dear Madam:
Re: Employer subsidized Mortgages
This is in reply to your letter of December 7,1989, concerning home purchase loans received through a taxpayer's employment.
The criteria for determining whether a loan was made because of a taxpayer's office or employment remain substantially the same as set out in our letter of October 20, 1981, to your firm. The only change is that the fourth condition will apply whether the interest subsidy from the employer is paid directly to the lender or by way of reimbursement to the borrower.
As for the application of subsection 80.4(1) of the Income Tax Act (the "Act"), you gave an example of the deemed benefit under the subsection being less than the actual interest subsidy because of the loan interest rate being greater than the rate prescribed under the Act. Your understanding is that in such a case the difference between the deemed benefit and the actual benefit must be included in income under paragraph 6(1)(a) of the Act. This not our position. The only taxable benefit imputed to the employee will be the amount calculated under subsection 80.4(1) and included by virtue of subsection 6(9) of the Act. No further amounts are included in income under section 6 of the Act.
We trust the above is of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch