Bifalgorithm post · Fuscalite · CRA comments on a s. 17(1) inclusion under a s. 17(2) B2B loan and the partially offsetting FAPI deduction under s. 17(1) – B(c)
Subsequent Year
Subsequent Year (Fuscalite · CRA comments on a s. 17(1) inclusion under a s. 17(2) B2B loan and the partially offsetting FAPI deduction under s. 17(1) – B(c))…
Ideas in this flowchart
- CRA explained the reduction available under B(c) for amounts included in Canco’s income under s. 91(1).
- The reduction may apply to amounts included in computing Canco’s income under s. 91(1).
- The amount may relate to the particular year or to a subsequent year of Canco.
- The amount must reasonably be attributable to interest on Loan 2 for the particular year.
- Year 1 illustrates how the reduction is calculated from net FAPI.
- Year 1 includes $200 of interest on Loan 2 and $100 of term deposits interest in Canco’s FAPI.
- Expenses on the term deposits reduce the related Year 1 net income to a loss of $50.
- Canco’s net FAPI, and therefore the reduction under B(c), is $150.
- Year 2 illustrates a further reduction attributable to the particular Year 1.
- After applicable expenses, $50 of term deposits interest is included in Canco’s Year 2 FAPI.
- Canco may claim the $50 as a further Year 1 reduction under B(c) by amending its return for that year.
