Income Tax Act — I-3.3 20
e total of all amounts already deducted under this paragraph in respect of the payment for the year or any previous year, and (B) the amount of the foreign ordinary income, and (ii) the amount that is deductible under this paragraph is deemed to be deductible in respect of the payment. Application of s. 13(21) (1.1) The definitions in subsection 13(21) apply to any regulations made under paragraph 20(1)(a). Application of s. 12.2(11) (1.2) The definitions in subsection 12.2(11) apply to paragraph 20(1)(c). Borrowed money (2) For the purposes of paragraph 20(1)(c), where a person has borrowed money in consideration of a promise by the person to pay a larger amount and to pay interest on the larger amount, (a) the larger amount shall be deemed to be the amount borrowed; and (b) where the amount actually borrowed has been used in whole or in part for the purpose of earning income from a business or property, the proportion of the larger amount that the amount actually so used is of the amount actually borrowed shall be deemed to be the amount so used. Limitation of expression “interest” — 10/8 policy (2.01) For the purposes of paragraphs (1)(c) and (d), interest does not include an amount if (a) the amount (i) is paid, after March 20, 2013 in respect of a period after 2013, in respect of a life insurance policy that is, at the time of the payment, a 10/8 policy, and (ii) is described in paragraph (a) of the definition 10/8 policy in subsection 248(1); or (b) the amount (i) is payable, in respect of a life insurance policy, after March 20, 2013 in respect of a period after 2013 during which the policy is a 10/8 policy, and (ii) is described in paragraph (a) of the definition 10/8 policy in subsection 248(1). Limitation of expression “interest” (2.1) For the purposes of paragraphs 20(1)(c) and 20(1)(d), “interest” does not include an amount that is paid after the taxpayer’s 1977 taxation year or payable in respect of a period after the taxpayer’s 1977 taxation year, depending on the method regularly followed by the taxpayer in computing the taxpayer’s income, in respect of interest on a policy loan made by an insurer except to the extent that the amount of that interest is verified by the insurer in prescribed form and within the prescribed time to be (a) interest paid in the year on that loan; and (b) interest (other than interest that would, but for paragraph 20(2.2)(b), be interest on money borrowed before 1978 to acquire a life insurance policy or on an amount payable for property acquired before 1978 that is an interest in a life insurance policy) that is not added to the adjusted cost basis (within the meaning given that expression in subsection 148(9)) to the taxpayer of the taxpayer’s interest in the policy. Limitation of expression “life insurance policy” (2.2) For the purposes of paragraphs 20(1)(c) and 20(1)(d), a “life insurance policy” does not include a policy (a) that is or is issued pursuant to a pooled registered pension plan, a registered pension plan, a registered retirement savings plan, an income-averaging annuity contract or a deferred profit sharing plan; (b) that was an annuity contract issued before 1978 that provided for annuity payments to commence not later than the day on which the policyholder attains 75 years of age; or (c) that is an annuity contract all of the insurer’s reserves for which vary in amount depending on the fair market value of a specified group of properties. Sectoral reserve (2.3) For the purpose of clause 20(1)(l)(ii)(D), a sectoral reserve is a reserve or an allowance for impairment for a loan that is determined on a sector-by-sector basis (including a geographic sector, an industrial sector or a sector of any other nature) and not on a property-by-property basis. Specified Percentage (2.4) For the purpose of clause 20(1)(l)(ii)(D), a taxpayer’s specified percentage for a taxation year is (a) where the taxpayer has a prescribed reserve amount for the year, the percentage that is the