29 January 1990 T.I. (June 1990 Access Letter, ¶1250)

Where an up-front fee is paid by a bank to another financial institution in respect of an interest-rate cap, no deduction may be made in the year of payment in respect of the portion of the fee which may be viewed as consideration for services to be rendered after the end of the year.

The portion of an up-front fee received by a bank in consideration for a granting in interest rate cap is included in its income under s. 12(1)(a)(i) and is deductible under s. 20(1)(m)(ii).