u/Leather_Okra_2534

What are CRA's rules on interest deductibility with multiple loan accounts to fund an investment. For eg.

Account 1: a mixed use loan account currently 90% investment use, 10% personal use

Account 2: a 100% investment use account

The idea is to combine both 90% of fund in account 1 + 100% of fund in account 2 to purchase one single investment. The investment will generate monthly cash distribution (including some portion of ROC). The monthly distribution will deposit directly into account 2. Plan to move part of the monthly distributions from account 2 to account 1 since it also contributed 90% of the fund for the investment, so want to apply part of the monthly distributions to pay the interest incurred in account 1.

Question is - would withdrawing from account 2 and deposit into account 1 turn account 2 into a mix use account as well ? According to CRA rule, for interest expense to be deductible, the fund needs to either reinvest or pay down the debt. In this case, the fund withdraw from account 2 and deposit into 1 is effectively paying down part of the investment loan. Only thing is, account 1 already being a mix use account, so any deposit made will be split proportionally.

Hello,

What are CRA's rules on interest deductibility with multiple loan accounts to fund an investment. For eg.

Account 1: a mixed use loan account currently 90% investment use, 10% personal use

Account 2: a 100% investment use account

The idea is to combine both 90% of fund in account 1 + 100% of fund in account 2 to purchase one single investment. The investment will generate monthly cash distribution (including some portion of ROC). The monthly distribution will deposit directly into account 2. Plan to move part of the monthly distributions from account 2 to account 1 since it also contributed 90% of the fund for the investment, so want to apply part of the monthly distributions to pay the interest incurred in account 1.

Question is - would withdrawing from account 2 and deposit into account 1 turn account 2 into a mix use account as well ? According to CRA rule, for interest expense to be deductible, the fund needs to either reinvest or pay down the debt. In this case, the fund withdraw from account 2 and deposit into 1 is effectively paying down part of the investment loan. Only thing is, account 1 already being a mix use account, so any deposit made will be split proportionally.

Purchased an investment with 60% borrowed and 40% own fund. For simplicity, assume its 600 units with borrowed fund and 400 unit with own funds. The investment pays quarterly unit dividend (ie. non cash), and monthly cash dividend (including a ROC portion).

In the first quarter, the fund made a 5 unit dividend to the investment and three monthly cash dividend total $300, of which ROC is $0.05/unit, ie. total units become 1005, total cash dividend $300, including $50.25 ROC

Suppose all the 3 monthly cash dividends (including ROC) were withdrawn for personal use, the loan principal needs to be reduced by ROC to determine the correct eligible interest expense.

Question is - does loan principal get reduced by 600*$0.05 = $30 or [600+(5 units*60%)]*$0.05 = $30.15 ?

Purchased an investment with 60% borrowed and 40% own fund. For simplicity, assume its 600 units with borrowed fund and 400 unit with own funds. The investment pays quarterly unit dividend (ie. non cash), and monthly cash dividend (including a ROC portion).

In the first quarter, the fund made a 5 unit dividend to the investment and three monthly cash dividend total $300, of which ROC is $0.05/unit, ie. total units become 1005, total cash dividend $300, including $50.25 ROC

Suppose all the 3 monthly cash dividends (including ROC) were withdrawn for personal use, the loan principal needs to be reduced by ROC to determine the correct eligible interest expense.

Question is - does loan principal get reduced by 600*$0.05 = $30 or [600+(5 units*60%)]*$0.05 = $30.15 ?

Was wondering what are correct ways of reporting eligible interest expense for deductions. It is an overdraft account that's mainly set up for funding investments (with investment income), so the interest expenses are deductible. However, there are a few personal expenses that also came out of the same account.

Not sure what is the proper way to correctly report the eligible interest expense for deductions ?

Edit : this is from a HELOC loan. Not regular high interest overdraft account. There were some monthly deposits into the account as well as a few personal expense withdrawal.

In order for a benchmark to be valid, it must satisfy 3 criteria: transparent, rule based, investable.

Question is - is a benchmark constructed using derivatives considered as valid if all 3 criteria are met ?

I received a reassessment from CRA for 2024 return. On top of what they claim I owe, they added penalty and interests in arrears. I have submitted all the requested documentation. I want to stop the interest from accruing so will pay the amount by the due date on the letter.

My question is - can you ask CRA to refund the penalty and interest in arrears after its been paid ?

Thanks,

As title states - reported potholes on the street nearby.

Got a response saying the issue is resolved, with the following message:

"Your service request submitted to the pothole has been evaluated: The issue is part of a long-term project. It will be resolved when work on the project is performed."

So we are living with potholes for now ? What happened to the municipal taxes paid ?