Lender Taxation Issues - February 1998

 At the February 7, 1998 General Meeting of Lenders, we received the tax related questions set out below. We have posed these questions to our tax specialists and are in the process of determining whether it is possible to provide general responses to the questions. We will post responses to the questions on this site as soon as they are available.


How do we treat losses resulting from investments in Eron mortgages for tax purposes? Are they considered "allowable business investment loss" or "capital losses" ?

If the losses are considered "allowable business investment losses" can they only be offset with capital gains or can they be deducted from other sources of income ? If they can be deducted from other sources of income, would this be 100% deductible?

Can I treat any interest income received in 1997 as a return of investment/capital as opposed to interest income?

Can I reduce taxable income for 1997 due to expected future losses?

How do I treat a loss if it is on an investment held in my RRSP ?

Given that losses will not be quantified for several years on certain projects when can tax losses be recognized?

Given that interest payments stopped in mid 1997 will there be losses declared for loss of interest past this time?

Will lender fees (or referral fees) that have been accrued (but not paid) be listed as income on our T5 slips?

Can the court administration costs which will be deducted from principal distributions be deducted from income or will they be treated as a reduction in capital? Is the treatment the same in respect of both RRSP and non RRSP investments?


Please note that we are not in a position to respond to inquiries specific to your personal tax situation but we will endeavour to provide responses to the above general questions and any others of a general nature.


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