| 19(1) | File No. 5-8957 |
| S. Leung | |
| (613) 957-2116 |
November 15, 1989
Dear Sirs:
Re: Subsection 15(2) of the Income Tax Act (the "Act")
We are writing in response to your letter of October 25, 1989 in which you requested our opinion as to whether the loan described in the following hypothetical situation would qualify as a loan made pursuant to subparagraph 15(2)(a)(ii) of the Act.
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2. 24(1)
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The situation outlined in your letter appears to involve an actual proposed transaction with identifiable taxpayers. Assurance as to the tax consequences of proposed transactions can only be given in the context of an advance income tax ruling. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R, dated December 18, 1978, and the Special Release thereto. However, we are prepared to offer the following general comments.
It is our opinion that the provisions of subparagraph 15(2)(a)(ii) of the Act do not apply to loans to an employee in respect of a house already owned and occupied by him even if the existing ownership is partial, as the loan is not "to enable...the employee...to acquire a dwelling for his habitation". As the individual was already using the dwelling for his habitation, the loan would be considered to have been made for some other purpose.
We trust these comments will be of assistance.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch