Twin Butte Energy Ltd TBTEF

Potential useful info for some vs accrued interest and taxes

[cigarbutt1]

From the official CRA 2016 documents :
Include on the T5 slip interest from:  a fully registered bond or debenture.
For investment contracts acquired after 1989, you have to report accrued interest every year.

Also :
Where interest income was receivable and reported on a T5 slip, a reserve pursuant to paragraph 20(1)(l) of the Act may be available. The reserve for doubtful debts under 20(1)(l) is based on the accrued portion of the interest not paid, not likely to be paid and not reimbursed by deposit insurance, if applicable. The reserve for doubtful debts claimed by a taxpayer under paragraph 20(1)(l) for one taxation year must be included in income in the next following taxation year pursuant to paragraph 12(1)(d) and a reserve may be taken again in that following year to the extent provided for under paragraph 20(1)(l) of the Act.
This "reserve" process could continue for several years, until such time as the amount of the bad debt with respect to receivable but unpaid interest is finally established, at which time a deduction for the bad debt is allowed pursuant to paragraph 20(1)(p). Alternatively, of course, a deduction may be claimed under paragraph 20(1)(p) for interest receivable which has become a bad debt in a year even if no reserve for doubtful debts has been previously claimed. It should be noted that, in either case, when a deduction is claimed under paragraph 20(1)(1) or 20(1)(p), the onus of proof rests on the taxpayer to establish that the debt is either doubtful for collection or a bad debt.

So judgement needs to be applied at the end of the fiscal year as to the recoverability of the interest accrued. My opinion is that the interest accrued on the TBE debentures(Jan 1, 2016 to Aug 31, 2016) is considered “substantially” recoverable. The final amount should be determined in the next few weeks/months maybe in a timely fashion to be more precise before filing.