ADM's Office (2)Section ChiefAuthorResearch FileCorporate Case Fileor Subject FileReturn to Rulings Directorate, Room 300, Met.
November 16, 1990
MEMORANDUM FOR MR. ROBERT ROY
SUBJECT: TAXABLE BENEFIT - INTEREST FREE OR LOW INTEREST LOANS
This is in reply to Mr. Venner's memorandum dated October 29, 1990 concerning your proposed memorandum to the Policy Committee on the above topic.
The interpretation of the provisions of the Act dealing with the computation of taxable benefits from interest free or low interest loans, as outlined in this memorandum is correct. During the past few years, we have received three written enquiries (copies of our replies are attached) and a few telephone calls on this topic.
Complaints only seem to arise during periods when interest rates are falling. While a few taxpayers feel that they are disadvantaged during these periods, they generally fail to recognize any corresponding advantages they obtain when interest rates are rising and the prescribed rate is lower than the market rates.
We also note that most complaints about this problem have been from employees of financial institutions where low interest loans are common practice
21(1)(b)
21(1)(b)
D. LefebvreAssistant Deputy MinisterLegislative and Intergovernmental Affairs
J. Szeszycki(957-2103)November 2, 1990