In 2013-0506551E5, the CRA confirmed its view that a loan made after March 28, 2012 cannot benefit from the new regime for a “pertinent loan or indebtedness” (PLOI, s. 15(2.11)) if such loan were part of a “series of loans and repayments” which began before that time.
- Instead, the (original) loan made before March 29, 2012 would be caught by the deemed dividend rule in s. 15(2). The exception in s. 15(2.6) would not save this original loan from s. 15(2), because repayment of the loan would be part of the series of loans and repayments. Accordingly, any election later filed under s. 15(2.11) in these circumstances would be considered invalid.
- The CRA’s position applies only were there has been “a series of loans and repayments”. This latter concept is not satisfied where there is: (i) a bona fide loan for a genuine business purpose, (ii) a repayment of that loan from an independent source, and (iii) an unrelated subsequent loan for a wholly different purpose: see Meeuse v. The Queen, 94 D.T.C. 1397 (TCC), at paragraph 16.