Dear Sirs:
Re: IT-138R
This is in reply to your letter of February 13, 1991 concerning paragraphs 13 to 15 of Interpretation Bulletin IT-138R .
These paragraphs deal with partners who are required to personally pay certain partnership expenses. Paragraph 14 provides the option for an individual partner to claim such expenses based on the fiscal year of the partnership or, alternatively, on the calendar year. Paragraph 15 of the bulletin indicates that this alternative is not available for interest expense on money borrowed to acquire the partnership interest.
We agree with your opinion that the "alternative" referred to in paragraph 15 is the alternative method of claiming expenses in the second sentence of paragraph 14. Thus, interest on a loan to acquire a partnership interest, when paid by an individual, is deducted for tax purposes on a calendar year basis.
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch