12 May 2009 External T.I. 2008-0293561E5 - Income from Participating Loan -- summary under Paragraph 12(1)(c)

Respecting a loan made to an arm's length borrower where the terms of the loan include both a fixed rate of interest and a profit participation component, CRA stated that "a participation payment may be considered to be interest where:

  • the payment is limited to a stated percentage of the principal;
  • the limiting percentage reflects the commercial interest rates prevailing between arm's length parties at the time the loan is entered into; and
  • no other facts indicate the presence of an equity investment."
Topics and taglines
Topic
Income Tax Act - s. 12(1)(c)
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
319131
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
341935
Extra import data
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