I-3, r. 1 - Regulation respecting the Taxation Act

Section 125.0.1r3 Disposition versions

2012-09-01

125.0.1R3. For the purposes of paragraph a of section 125.0.1 of the Act, where, at any time in a taxation year of a taxpayer, the taxpayer holds an interest in an indexed debt obligation, the amount determined in accordance with the second paragraph is deemed to be interest received or receivable by the taxpayer in the year in respect of the obligation.

The amount to which the first paragraph refers is equal to the aggregate of

(a)  the amount determined by the formula

A – B;

(b)  where the non-indexed debt obligation associated with the indexed debt obligation is an obligation that is described in any of subparagraphs a to d of the first paragraph of section 92.5R3, the amount of interest that would be determined in accordance with section 92.5R4 to accrue to the taxpayer in respect of the non-indexed debt obligation in the particular period described in the fifth paragraph if, for the purposes of that section 92.5R4, the particular period were a taxation year of the taxpayer and the taxpayer’s interest in the indexed debt obligation were an interest in the non-indexed debt obligation.

In the formula in subparagraph a of the second paragraph,

(a)  A is the aggregate of all amounts each of which is the amount by which the amount payable in respect of the taxpayer’s interest in an indexed payment under the indexed debt obligation, other than a payment that is an excluded payment with respect to the taxpayer for the year, has, because of a change in the purchasing power of money, increased over an inflation adjustment period of the indexed debt obligation that ends in the year, exceeds

(b)  B is the aggregate of

i.  the aggregate of all amounts each of which is that portion of the aggregate determined in accordance with subparagraph a that is required, otherwise than because of section 125.0.1 of the Act, to be included in computing the taxpayer’s income for the year or a preceding taxation year;

ii.  the aggregate of all amounts each of which is the amount by which the amount payable in respect of the taxpayer’s interest in an indexed payment under the indexed debt obligation, other than a payment that is an excluded payment with respect to the taxpayer for the year, has, because of a change in the purchasing power of money, decreased over an inflation adjustment period of the obligation that ends in the year.

For the purpose of determining the amount by which an indexed payment under an indexed debt obligation has increased or decreased over a period because of a change in the purchasing power of money, the amount of the indexed payment is determined using the method for computing the amount of the payment at the time it is to be made, adjusted in a reasonable manner to take into account the earlier date of computation.

The particular period to which subparagraph b of the second paragraph refers is the period that begins at the beginning of the first inflation adjustment period of the indexed debt obligation in respect of the taxpayer that ends in the year, and ends at the end of the last inflation adjustment period of the indexed debt obligation in respect of the taxpayer that ends in the year.

s. 125.0.1R3; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.