| 19(1) | File No. 5-9399 |
| F.L. Workman | |
| (613) 957-8963 |
February 1, 1990
Dear 19(1)
We are writing to provide the 24(1) with our views as to the application of subsection 153(4) of the Income Tax Act in respect of amounts of interest credited by banks to dormant accounts. A dormant account is account in respect of which the account holder has not made any deposits or withdrawals for a period of time, such as two years for example. It is our understanding that the balance in an account, including any interest credited thereto, will be paid to the Bank of Canada if the account is dormant for a period of ten years.
Where in a taxation year a taxpayer receives interest and the person beneficially entitled thereto is unknown to the taxpayer, the taxpayer is required to remit to the Receiver General an amount equal to 50% of such interest.
With respect to dormant accounts it is our view that provided the identity of the account holder is known to the bank such account holder would not be considered to be unknown to the bank for purposes of subsection 153(4). Accordingly the bank would not be required to remit an amount pursuant to subsection 153(4) in respect of interest credited to such dormant accounts.
We hope the above is of assistance to you.
Yours truly,
DirectorFinancial Industries DivisionRulings Directorate