May 2021 Newsletter

Direct use rule

If you borrow money, the interest you pay on the loan is normally deductible if the money is used for the purpose of earning income from a business or property. Income from business is fairly self-explanatory. Income from property includes dividends, rent, and interest income. 

We discussed this issue briefly in the March 2021 Tax Letter (under “Ten Most Common Tax Mistakes”). More details are provided here. 

If you carry on a business, the Income Tax Act requires you to include any amount that you receive in the year even if you have not “earned” it yet. In particular, you must include any amount received in the year that is consideration for services not rendered or goods not delivered before the end of the year. 

ADHD qualified for disability tax credit

The disability tax credit, as the name implies, is available to individuals who are physically or mentally disabled. However, the legal requirements to claim the credit are quite detailed and complex.