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

Section 851.22.4r5 Disposition versions

2012-09-01

851.22.4R5. For the purposes of section 851.22.4R4, the level-yield method for allocating a taxpayer’s total return from a fixed payment obligation is the method that allocates, to each particular day in the period that begins on the day following the day on which the taxpayer acquired the obligation and that ends on the day on which the obligation matures, the amount determined by the formula

(A + B − C) × D.

In the formula in the first paragraph,

(a)  A is the cost of the obligation to the taxpayer expressed in the primary currency of the obligation;

(b)  B is the total of all amounts each of which is the portion of the taxpayer’s total return from the obligation that is allocated to a day before the particular day;

(c)  C is the total of all amounts each of which is a payment required to be made under the obligation after it was acquired by the taxpayer and before the particular day; and

(d)  D is the rate of interest per day that, if used in computing the present value, as of the end of the day on which the taxpayer acquired the obligation and based on daily compounding, of all payments to be made by the debtor under the obligation after it was acquired by the taxpayer, produces a present value equal to the cost to the taxpayer of the obligation, expressed in the primary currency of the obligation.

O.C. 390-2012, s. 64.