| August 4, 1989 | |
| TO - PENTICTON DISTRICT OFFICE | FROM - HEAD OFFICE |
| Specialty Rulings Directorate | |
| Attention: Mr. B. Sixsmith | D.Y. Dalphy |
| Chief of Audit | (613) 957-2117 |
SUBJECT: 24(1)
This is in reply to a memorandum of P.J. Kelly, Chief of Audit, dated April 8, 1988.
We agree with the taxpayer's argument that section 17 of the Income Tax Act is not applicable in respect of the interest-free advances to the subsidiaries because they are resident in Canada. The issue of interest deductibility was considered by the Policy Committee.
On the basis of the legal and technical advice received, it has been determined that the reassessment of the 24(1) should proceed.
D.Y. DalphyA/ChiefForeign SectionReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch