Need A Source? KPMG tax/lawyers available for comment

    TORONTO, Jan. 7 /CNW/ - For legal beat reporters covering the latest on
the Supreme Court's decision on the Lipson interest deductibility/GAAR case,
KPMG has tax/legal professionals available to comment. Tax lawyers from
Moskowitz and Meredith (M+M) can comment on the controversy around the series
of transactions the Lipson's entered into which were designed to convert
non-deductible home mortgage interest payments into tax deductible interest
payments on money borrowed to purchase shares. The Supreme Court's decision
could have far reaching impacts on the deductibility of interest expense in
general and as importantly foreshadow how much certainty and predictability
(if any) taxpayers can rely on in their tax planning under the general
anti-avoidance rule or GAAR-

    Sources Across Canada:
    Evy Moskowitz, M+M Tax Law, Toronto, 416-861-1800
    Denis Lacroix, Montreal, 514-940-3871
    Mark Meredith, Vancouver, 604-257-4241

    Backgrounder on the case:

    In April 1994, the taxpayer Mr. L, and his spouse Mrs. L, agreed to
purchase a home for $750,000. As part of their tax plan, Mrs. L borrowed
$560,000 from a bank (the Share Loan) in August 1994 and gave the bank an
interest-bearing demand promissory note.
    Using the money from the Share Loan, Mrs. L purchased $560,000 worth of
shares in a family corporation from Mr. L. Next Mr. L. forwarded these funds
to the trust account of the solicitor handling the purchase of their home.
    In September 1994, Mr. L and Mrs. L borrowed $560,000 from the bank (the
Replacement Loan) secured by a mortgage on the new home. The Replacement Loan
was used to repay Mrs. L's Share Loan.
    Since Mr. L. did not elect out of the spousal rollover rule the transfer
was deemed to occur at Mr. L.s tax basis such that he realized no gain or loss
on the sale, even though Mrs. L purchased Mr. L's shares at fair market value.
Further, any income or loss on the shares realized by Mrs. L would be
attributed to Mr. L under the attribution rules designed to prevent income
    The CRA reassessed Mr. L for his 1994, 1995 and 1996 taxation years,
disallowing about $105,000 in deductions for interest expenses paid on the
Replacement Loan.

For further information:

For further information: To arrange an interview, please contact: Julie
Bannerjea, Senior Manager, Media Relations, KPMG LLP, (416) 777-3243 or

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890