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Ottawa, November 14, 1997 Amendments Proposed to the Income Tax Treatment of Impaired LoansRelated document :
Finance Minister Paul Martin today released proposed amendments to the Income Tax Act and the Regulations dealing with the income tax treatment of impaired loans of financial institutions and other taxpayers in the money lending business. The Canadian Institute of Chartered Accountants has issued new standards for recognizing and measuring impaired loans. In 1995, the Office of the Superintendent of Financial Institutions endorsed these standards and has issued additional guidance as to their application to federally regulated financial institutions. These standards provide lenders with a consistent method of recognizing and measuring loan impairment. The Minister noted that the proposed amendments harmonize the tax treatment with the accounting treatment of impaired loans. This harmonization will reduce the compliance burden and lead to more equitable treatment of taxpayers under the Income Tax Act. The Minister also released proposed amendments to the Income Tax Regulations which ensure that holders of certain Mexican Collateralized Par or Discount Bonds due in 2019 issued in exchange for other debt issued by the government of Mexico receive the same reserve as they would have received for the other debt. Copies of the draft amendments to the Income Tax Act and the Income Tax Regulations as well as Explanatory Notes are available from the Department of Finance Distribution Centre (613 943-8665). These amendments are being released in order to obtain comments from taxpayers and their advisors. ___________________
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