Interest Deductibility

Interest deductions can reduce taxes significantly—but only if documented correctly. CRA audits disallow many claims for lack of proof. Mackisen CPA Auditors Montreal ensures your loan interest is properly tracked, documented, and compliant with CRA and Revenu Québec standards.

Legal and Regulatory Framework
Income Tax Act (Canada) Section 20(1)(c): Defines deductible interest on income-earning loans.
Taxation Act (Quebec) Section 34: Establishes documentation requirements for loan claims.
CRA Policy IT-533: Explains tracing rules for borrowed funds.
CPA Canada Handbook Section 3856: Provides accounting for financial liabilities.
Financial Administration Act (Quebec): Enforces record retention for loan audits.

Key Court Decisions
Beaudoin v. The Queen (2020): Denied deductions due to missing records.
Simard Beaudry Construction v. Canada (2019): Approved CPA-traced deductions.
Lincora Group v. Quebec (2019): Penalized misallocated interest.
Tremblay Holdings v. The Queen (2021): Recognized CPA oversight as sufficient evidence.
Royal Bank v. Canada (2019): Supported CPA certification for loan documentation.

Why CRA Reviews Loan Interest
Interest deductions require precise tracing. Mixed personal use disqualifies claims. Mackisen CPA Auditors Montreal provides CPA-certified records that guarantee accuracy and defend against audit.

Mackisen Strategy
Loan Verification — Match each borrowing to income-generating use.
Expense Separation — Distinguish business from personal interest.
Documentation — Retain contracts, statements, and CPA certification.
Tax Planning — Maximize deductible interest.
Audit Preparation — Create CRA-compliant verification reports.

Powering Client Needs and Tax Savings
A Montreal retailer recovered denied deductions. A Quebec firm prevented reassessment with CPA documentation. A Toronto manufacturer reduced taxable income by restructuring loans.
How Mackisen Clients Benefit

• Audit-proof interest deductions

• CPA-reviewed documentation

• Improved tax efficiency

• Complete CRA compliance

Common Questions
Can I deduct interest from mixed loans? Only business portions.
Does CRA check old loans? Yes, up to seven years.
Can Mackisen fix past filings? Yes, through adjustments.
Are interest claims audited often? Yes.
Do I need CPA verification? Always recommended.

Why Mackisen
Mackisen CPA Auditors Montreal ensures your interest deductions save taxes and withstand CRA audits.