![]() This Chapter does not address other tax consequences arising from transactions that are not directly related to the deductibility of interest expense. Where an amount is payable for property acquired, the property must have been acquired for the purpose of earning income (other than exempt income or to acquire an interest in certain life insurance policies). The term use refers to the current use of the borrowed money and in certain situations may include indirect use. Borrowed money used to acquire a life insurance policy or property the income from which would be exempt will not qualify. Where money is borrowed, the use of the money must be established and the purpose of that use must be to earn income. an amount be paid in the year or be payable in respect of the year under a legal obligation to pay interest and. ![]() Among other specific requirements is the requirement that: Generally, interest expense is considered to be a capital expenditure and is not deductible unless it meets specific requirements of the Act, such as those contained in paragraph 20(1)(c). it is referable to a principal sum and. ![]()
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