Income Tax Regulations

6209 For the purposes of the definition lending asset in subsection 248(1) of the Act,

• (a) a share owned by a bank is a prescribed share for a taxation year where it is a preferred share of the capital stock of a corporation that is dealing at arm’s length with the bank that may reasonably be considered to be, and is reported as, a substitute or alternative for a loan to the corporation, or another corporation with whom the corporation does not deal at arm’s length, in the bank’s annual report for the year to the relevant authority or, where the bank was throughout the year subject to the supervision of the relevant authority but was not required to file an annual report for the year with the relevant authority, in its financial statements for the year; and

• (b) a property is a prescribed property for a taxation year where

  • (i) in the case of a security held by a bank, the security is reported as part of the bank’s trading account in its annual report for the year to the relevant authority or, where the bank was throughout the year subject to the supervision of the relevant authority but was not required to file an annual report for the year with the relevant authority, in its financial statements for the year,

  • (ii) in the case of a security held by a taxpayer other than a bank, the security is at any time in the year a property described in an inventory of the taxpayer, or

  • (iii) the property is a direct financing lease, or is any other financing arrangement, of a taxpayer that is reported as a loan in the taxpayer’s financial statement for the year prepared in accordance with generally accepted accounting principles and an amount is deductible under paragraph 20(1)(a) of the Act in respect of the property that is the subject of the lease or arrangement in computing the taxpayer’s income for the year.