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I-3 - Taxation Act
Section 485.5
Disposition versions
485.5. Where a commercial obligation issued by a debtor is settled at any time, the applicable fraction of the remaining unapplied portion of a forgiven amount at that time in respect of the obligation shall be applied to reduce at that time, in the following order,
(a) the debtor’s non-capital loss for each taxation year that ended before that time, to the extent that the amount so applied
i. does not exceed the amount by which the relevant loss balance at that time for the obligation and in respect of the debtor’s non-capital loss for the year exceeds the debtor’s ordinary non-capital loss, within the meaning assigned by subparagraph i of paragraph a of section 485.4, at that time for the year, and
ii. does not, because of this section, reduce the debtor’s non-capital loss for a preceding taxation year; and
(b) the debtor’s net capital loss for each taxation year that ended before that time, to the extent that the amount so applied
i. does not exceed the relevant loss balance at that time for the obligation and in respect of the debtor’s net capital loss for the year, and
ii. does not, because of this section, reduce the debtor’s net capital loss for a preceding taxation year.
