I-3 - Taxation Act

Section 316.2 Disposition versions

2006-03-01

316.2. Notwithstanding any other provision of this Act, section 316.1 does not apply to any income derived in a particular taxation year, in respect of a loan or indebtedness, where the following conditions are met:

(a)  interest is charged on the loan or indebtedness at a rate equal to or greater than the lesser of the following rates:

i.  the prescribed rate of interest in effect at the time the loan was made or the indebtedness was incurred, and

ii.  the rate that would, having regard to all the circumstances, have been agreed on, at the time the loan was made or the indebtedness was incurred, between parties dealing with each other at arm’s length;

(b)  the amount of interest that is payable in respect of the particular taxation year in respect of the loan or indebtedness is paid not later than 30 days after the end of the particular taxation year; and

(c)  the amount of interest that was payable in respect of each taxation year preceding the particular taxation year in respect of the loan or indebtedness was paid not later than 30 days after the end of each such taxation year.

1990, c. 59, s. 147; 1993, c. 16, s. 131.