When is the interest on a loan made by a creditor affiliate to a specified debtor treated as indebtedness for purposes of s. 90(6), for example, a loan where the interest is payable together with principal on maturity of the loan after three years? CRA stated:
[W]e would consider subsection 90(6) to apply to the full amount of the principal portion of the loan, as well as to any interest that accrued in year one. Provided the loan and accrued interest are paid in full immediately upon the maturity of the loan, the interest that accrues in years two and three would be excepted from subsection 90(6) by paragraph 90(8)(a). In any event, a deduction under subsection 90(14) would be available when the loan, including accrued interest, is finally repaid.