C. Robb (613)957-2744
February 27, 1990
Re: Paragraph 20(1)(e) of the Income Tax Act (the "Act")
We are writing in response to your letter of January 16, 1990 in which you requested our views concerning a testamentary trust continuing to deduct mortgage commitment fees paid by the deceased taxpayer while living. The trust would deduct the fees on the same basis as the deceased taxpayer.
In your view, the trust can deduct the unamortized fee pursuant to paragraph 20(1)(e) of the Act as the trust has assumed the mortgage to which the unamortized fees relate.
We do not agree with your view. In our view, the trust is not entitled to deduct the unamortized commitment fees because the trust was not the taxpayer who incurred the expense in the year or a preceding year as required by that paragraph. Also, the deceased taxpayer is not entitled to deduct the remaining unamortized commitment fee on his terminal return since the debt has not been settled or extinguished as required in subparagraph 20(1)(e)(v).
The opinions expressed in this letter are provided in accordance with the practice described in paragraph 24 of Information Circular 70-6R.
Yours truly,
for Director Financial Industries Division Rulings Directorate