CTF - 1990 Conference Report
QUESTION I-6
LOANS TO RETIRED EMPLOYEES
Companies often provide low-interest or interest-free loans to their employees. Where these arrangements are permitted to exist beyond the date of an employee's retirement from employment, does subsection 80.4(1) continue to apply? Will the Department apply subsection 80.4(1) to a low-interest or interest-free loan granted to an employee who has retired from his office or employment?
DEPARTMENT'S POSITION
Subsection 80.4(1) refers to a situation in which "a person or partnership received a loan or otherwise incurred a debt by virtue of the office or employment ...". It is the capacity in which the individual received the loan at the time it was made that determines whether subsection 80.4(1) is applicable. Subsection 80.4(1) is applicable where an individual is an employee at the time the loan is granted and would remain applicable after the employment ceases. Where a retired employee receives a low interest or no interest loan from the former employer pursuant to an agreement entered into while the former was employed by the latter, the Department's position is that the loan would be received by virtue of the office or employment and subsection 80.4(1) would apply.
CTFNovember 1990Sandra ShortSection 24