Provincial Income Allocation Newsletter

Gross Revenue – Exclusion of Interest

No.1
February 2010

This newsletter outlines the Canada Revenue Agency's technical opinion regarding the exclusion of interest amounts in relation to provincial income allocation and Part IV of the federal Income Tax Regulations.

Subsection 402(5) of the Regulations excludes interest amounts on various financial instruments from the “gross revenue” part of the income allocation formula.

It is the opinion of the Canada Revenue Agency that a broad interpretation of the excluded amounts is appropriate for the purposes of the Regulations. This broad definition includes interest on promissory and other notes, bankers' acceptances, intercompany loans, certificates, guaranteed investment certificates, and any unsecured debt instruments or other similar obligations, with the exception of interest on trade receivables and bank account interest.

Reference
Subsection 402(5) of the Income Tax Regulations