What is the tax treatment of interest on an investment contract that accrued but was not payable while the individual was a non-resident, and the individual immigrates to Canada before the maturity of the investment? After noting that Holzhey found that "the deemed receipt of the proceeds [under s. 128.1(4)b)] triggers the inclusion in income," CRA stated:
Even though we do not see a similar 'received' or 'receivable' implication in paragraph 128.1(1)(b)...for the purpose of deemed disposition on immigration, in our view, the accrued interest on the investment contract does not lose its character immediately after immigration. Accordingly, it becomes taxable pursuant to subsection 12(4) on the first anniversary date immediately after immigration.