Income Tax Act — I-3.3 20
ost of the loan to the taxpayer at the end of the year, and (II) the amount determined by the formula 0.9M - N where M is the amount that is the taxpayer’s reserve or allowance for impairment (other than any portion of the amount that is in respect of a sectoral reserve) for all loans that is determined for the year in accordance with generally accepted accounting principles, and N is the total of all amounts each of which is the specified reserve adjustment for a loan (other than an income bond or an income debenture) for the year or a preceding taxation year; Reserve for guarantees, etc. (l.1) a reserve in respect of credit risks under guarantees, indemnities, letters of credit or other credit facilities, bankers’ acceptances, interest rate or currency swaps, foreign exchange or other future or option contracts, interest rate protection agreements, risk participations and other similar instruments or commitments issued, made or assumed by a taxpayer who was an insurer or whose ordinary business included the lending of money in favour of persons with whom the taxpayer deals at arm’s length in the ordinary course of the taxpayer’s business of insurance or the lending of money, equal to the lesser of (i) a reasonable amount as a reserve for credit risk losses of the taxpayer expected to arise after the end of the year under or in respect of those instruments or commitments, and (ii) 90% of the reserve for credit risk losses of the taxpayer expected to arise after the end of the year under or in respect of those instruments or commitments determined for the year in accordance with generally accepted accounting principles, or such lesser amount as the taxpayer may claim; Reserve in respect of certain goods and services (m) subject to subsection 20(6), where amounts described in paragraph 12(1)(a) have been included in computing the taxpayer’s income from a business for the year or a previous year, a reasonable amount as a reserve in respect of (i) goods that it is reasonably anticipated will have to be delivered after the end of the year, (ii) services that it is reasonably anticipated will have to be rendered after the end of the year, (iii) periods for which rent or other amounts for the possession or use of land or of chattels or movables have been paid in advance, or (iv) repayments under arrangements or understandings of the class described in subparagraph 12(1)(a)(ii) that it is reasonably anticipated will have to be made after the end of the year on the return or resale to the taxpayer of articles other than bottles; Manufacturer’s warranty reserve (m.1) where an amount described in paragraph 12(1)(a) has been included in computing the taxpayer’s income from a business for the year or a preceding taxation year, a reasonable amount as a reserve in respect of goods or services that it is reasonably anticipated will have to be delivered or rendered after the end of the year pursuant to an agreement for an extended warranty (i) entered into by the taxpayer with a person with whom the taxpayer was dealing at arm’s length, and (ii) under which the only obligation of the taxpayer is to provide those goods or services with respect to property manufactured by the taxpayer or by a corporation related to the taxpayer, not exceeding that portion of the amount paid or payable by the taxpayer to an insurer that carries on an insurance business in Canada to insure the taxpayer’s liability under the agreement in respect of an outlay or expense made or incurred after December 11, 1979 and in respect of the period after the end of the year; Repayment of amount previously included in income (m.2) a repayment in the year by the taxpayer of an amount required by paragraph 12(1)(a) to be included in computing the taxpayer’s income from a business for the year or a preceding taxation year; (m.3) the unamortized amount at the end of the year in respect of the amount that was received in excess of the principal amount of a bond (in this paragraph