I-3 - Taxation Act

Section 485.27 Disposition versions

2017-02-08

485.27. Where a commercial debt obligation issued by a debtor is first deemed by section 485.25 or 485.26 to have been settled at a particular time, at a subsequent time a payment is made by the debtor of an amount in satisfaction of the principal amount of the obligation and it cannot reasonably be considered that one of the reasons the obligation became a parked obligation or became unenforceable, as the case may be, before the subsequent time was to have this section apply to the payment, in computing the debtor’s income for the taxation year, in this section referred to as the “subsequent year”, that includes the subsequent time from the source in connection with which the obligation was issued, the debtor may deduct the amount determined, subject to the fourth paragraph, by the formula

0.5 (A − B) − C.

For the purposes of the formula in the first paragraph,

(a)  A is the amount of the payment;

(b)  B is the amount by which the principal amount of the obligation exceeds the aggregate of

i.  all amounts each of which is a forgiven amount in respect of a particular portion of the obligation at any time in the period that began at the particular time referred to in the first paragraph and ended immediately before the subsequent time referred to therein, and at which a particular portion of the obligation is deemed by section 485.25 or 485.26 to be settled in respect of the particular portion, and

ii.  all amounts paid in satisfaction of the principal amount of the obligation in the period referred to in subparagraph i; and

(c)  C is the amount by which the aggregate of the following amounts exceeds the aggregate of the amounts described in the third paragraph:

i.  all amounts deducted by the debtor under section 346.2 in computing the debtor’s income for the subsequent year or a preceding taxation year,

ii.  all amounts added by the debtor because of section 485.13 in computing the debtor’s income for the subsequent year or a preceding taxation year in respect of a settlement under section 485.25 or 485.26 in a period during which the debtor was exempt from tax under this Part on its taxable income, and

iii.  all amounts added by the debtor because of section 485.13 in computing the debtor’s income for the subsequent year or a preceding taxation year in respect of a settlement under section 485.25 or 485.26 in a period during which the debtor, in the case of a corporation, had no establishment in Québec or, in the case of an individual, was not resident in Canada, other than any of those amounts added by the individual in computing his income, taxable income or taxable income earned in Canada as a consequence of the second paragraph of section 23 or section 26, as the case may be.

The aggregate to which subparagraph c of the second paragraph refers is the aggregate of

(a)  the amount deducted by the debtor because of paragraph c.1 of section 225 in computing the aggregate, determined immediately after the subsequent year, of the amounts deductible under sections 222 to 224 by the debtor; and

(b)  all amounts by which, because of subparagraph c of the second paragraph, the amount deductible by the debtor under this section in respect of a payment made by the debtor before the subsequent time referred to in the first paragraph in computing the debtor’s income for the subsequent year or a preceding year has been reduced.

Where the taxation year that includes the particular time referred to in the first paragraph began before 18 October 2000, the formula in the first paragraph is to be read as if “0.5” were replaced by the fraction in the first paragraph of section 231 that, with reference to section 231.0.1, applies to the debtor for that year.

1996, c. 39, s. 142; 1997, c. 3, s. 71; 2003, c. 2, s. 132; 2017, c. 1, s. 123.

2006-03-01

485.27. Where a commercial debt obligation issued by a debtor is first deemed by section 485.25 or 485.26 to have been settled at a particular time, at a subsequent time a payment is made by the debtor of an amount in satisfaction of the principal amount of the obligation and it cannot reasonably be considered that one of the reasons the obligation became a parked obligation or became unenforceable, as the case may be, before the subsequent time was to have this section apply to the payment, in computing the debtor’s income for the taxation year, in this section referred to as the “subsequent year”, that includes the subsequent time from the source in connection with which the obligation was issued, the debtor may deduct the amount determined, subject to the fourth paragraph, by the formula

0.5 (A − B) − C.

For the purposes of the formula in the first paragraph,

(a)  A is the amount of the payment;

(b)  B is the amount by which the principal amount of the obligation exceeds the aggregate of

i.  all amounts each of which is a forgiven amount in respect of a particular portion of the obligation at any time in the period that began at the particular time referred to in the first paragraph and ended immediately before the subsequent time referred to therein, and at which a particular portion of the obligation is deemed by section 485.25 or 485.26 to be settled in respect of the particular portion, and

ii.  all amounts paid in satisfaction of the principal amount of the obligation in the period referred to in subparagraph i; and

(c)  C is the amount by which the aggregate of the following amounts exceeds the aggregate of the amounts described in the third paragraph:

i.  all amounts deducted by the debtor under section 346.2 in computing the debtor’s income for the subsequent year or a preceding taxation year,

ii.  all amounts added by the debtor because of section 485.13 in computing the debtor’s income for the subsequent year or a preceding taxation year in respect of a settlement under section 485.25 or 485.26 in a period during which the debtor was exempt from tax under this Part on its taxable income, and

iii.  all amounts added by the debtor because of section 485.13 in computing the debtor’s income for the subsequent year or a preceding taxation year in respect of a settlement under section 485.25 or 485.26 in a period during which the debtor, in the case of a corporation, had no establishment in Québec or, in the case of an individual, was not resident in Canada, other than any of those amounts added by the individual in computing his income, taxable income or taxable income earned in Canada as a consequence of the second paragraph of section 23 or section 26, as the case may be.

The aggregate to which subparagraph c of the second paragraph refers is the aggregate of

(a)  the amount deducted by the debtor because of paragraph c.1 of section 225 in computing the aggregate, determined immediately after the subsequent year, of the amounts deductible under sections 222 to 224 by the debtor; and

(b)  all amounts by which, because of subparagraph c of the second paragraph, the amount deductible by the debtor under this section in respect of a payment made by the debtor before the subsequent time referred to in the first paragraph in computing the debtor’s income for the subsequent year or a preceding year has been reduced.

Where the subsequent year includes 28 February 2000 or 17 October 2000, or begins after 28 February 2000 and ends before 17 October 2000, the reference to “0.5” in the formula provided for in the first paragraph shall be read as a reference to the fraction in paragraphs a to d of section 231.0.1 that applies to the debtor for that year.

1996, c. 39, s. 142; 1997, c. 3, s. 71; 2003, c. 2, s. 132.