SAIT’s submission on the draft interpretation note regarding the meaning of a “reserve fund” under section 23(e) of the Income Tax Act questions the inclusion of insurance policies as reserve funds. SAIT argues that insurance premiums represent incurred expenses, not reserve transfers, and notes that such policies—particularly those related to death, disability, or illness—are explicitly disallowed under section 23(r). The submission emphasizes that a reserve fund typically involves a deliberate accounting provision, which is not the case with insurance premiums. SAIT recommends removing the draft’s reference to insurance-related reserve funds, as it misrepresents the accounting and legal nature of such expenditures.
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