| September 21, 1989 | |
| PUBLICATIONS DIVISION | FINANCIAL INDUSTRIES |
| Roy C. Shultis | DIVISION |
| Director | Blair P. Dwyer |
| 957-2744 | |
| Attention: J.E. Jacques Grisé | |
| File No. 7-3763 |
Subject: Interpretation Bulletin IT-164R
This is in reply to your memorandum dated March 20, 1989, in which you asked for our view on what portion of IT-164R would still be valuable without the position expressed in paragraph 8 thereof. it seems to use that the IT would be of little value unless we make some comments on the situation described in the earlier paragraphs.
While we intend to formulate a detailed position on leveraged investments in conjunction with a review of limited-recourse financing. we do not anticipate completing our deliberations in the near future. In the meantime, we suggest replacing paragraph 8 of the Bulletin by the following general comments:
8. Under the typical arrangement described above, an investor would not be required to reduce his capital cost of the property by the amount of the limited-recourse liability under the notes or certificates.
9. In other arrangements, the investor may be required to reduce his capital cost. for example, the capital cost would be reduced to the extent the purchase price of the property is represented by a contingent liability.
Replacement of paragraph 8 would allow the remainder of the Bulletin to be retained. Paragraph 9 incorporates the rationale of the decisions in Mandel 80 DTC 6148 (SCC) and Lipper 79 DTC 5246 (FCTD).
We do not anticipate including any comments on limited-recourse financing in the revision to IT-233R.
Director GeneralRulings Directorate