The Resource Deductibility of interest expense

Deductibility of interest expense

Deductibility of interest expense
Deductibility of interest expense
This article presents an overview of the basic structural aspects of the deduction of interest. It reviews the historical background to the current statutory rules, in particular paragraph 20(1)(c), and examines why interest expenses are different from other expenses. The central focus of the article is a discussion of the three major elements in the deduction of interest: 1) the definition of interest, 2) the direct use or tracing test, and 3) timing. This discussion forms the background for an analysis of several proposals for reform of the interest deduction, including the repeal of paragraph 20(1)(c), the adoption of a comprehensive statutory definition of interest, changes to the thin capitalization rules, the introduction of more extensive capitalization rules, and restrictions on the deduction of interest on borrowed money used to earn preferentially taxed income. The authors conclude that comprehensive reform of the interest deduction is both unlikely and ill advised. An ad hoc, incremental approach is preferable
Citation source
In: Canadian tax journal = Revue fiscale canadienne. - Toronto. - Vol. 43 (1995),
  • Arnold, B.J
  • Edgar, T
Geographic coverage
North America
Language note
interest deduction
Deductibility of interest expense

Library Locations

    • IBFD Library AmsterdamBorrow it
      Rietlandpark 301, Amsterdam, 1019 DW, NL
      52.3736660 4.9336932
Processing Feedback ...