Where a taxpayer repays a policy loan and is thereby entitled to a deduction under s. 60(s) that exceeds the taxpayer’s income for the year, is such excess amount unavailable for deduction in any other taxation year? In responding negatively regarding its conclusion that “such excess amount cannot be deducted by the taxpayer in any other taxation year,” CRA stated:
Subdivision E of the Act includes the deductions permitted under section 60 … . Subject to certain exceptions under subsection 4(3) … subsection 4(2) … specifically denies the deduction of items in sections 60 to 64 … in determining income from a particular source. Consequently, a deduction allowed under paragraph 60(s) … is not tied to a particular source … .
The amount determined under paragraph 3(c) … which forms variable F of the “non-capital loss” definition in subsection 111(8) … will never be negative, and therefore deductions described in Subdivision E of the Act cannot create or increase the amount of a non-capital loss.