| 24(1) | 5-900872 |
| Sean Finn | |
| (613) 957-2746 | |
| EACC9400 |
19(1)
July 24, 1990
Dear Sirs:
Re: Deductibility of Capital Losses
This is in reply to your letter dated May 17, 1990 in which you requested our opinion on a situation involving the deductibility under paragraph 40(2)(g) of the Income Tax Act (Canada) (the "Act") of a capital loss realized on a disposition of a debt bearing interest at less than a reasonable rate.
As the situation described in your letter appears to involve an actual situation with identifiable taxpayers, we are unable to comment on it specifically except in the context of an advance ruling request. However, we offer the following general comments which may be of assistance to you.
The Tax Court of Canada decision in Scott v. Minister of National Revenue, 89 DTC 218 does not signify a change in the Department's positions as stated in Interpretation Bulletin IT-239R2 with respect to the deductibility of capital losses realized on the disposition of a debt bearing interest at less than a reasonable rate of interest, in situations where the conditions set out in paragraphs 6 and 10 of the Bulletin are met. Taxpayers may rely on statements contained in interpretation bulletins until they have been amended or changed by way of public statement.
The above comments are not an advance income tax ruling and accordingly are not binding on Revenue Canada, Taxation as stated in paragraph 24 of Information Circular 70-6R.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate