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I-3 - Taxation Act
Section 485.4
Disposition versions
485.4. Where a commercial obligation issued by a debtor is settled at any time, the 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, in section 485.5 referred to as the debtor’s “ordinary non-capital loss at that time for the year”, that would be the relevant loss balance at that time for the obligation and in respect of the debtor’s non-capital loss for the year if subparagraph iii of paragraph a of section 728.0.1 were read without reference to “the taxpayer’s allowable business investment losses for the year,”, and
ii. does not, because of this section, reduce the debtor’s non-capital loss for a preceding taxation year;
(b) the debtor’s farm 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 farm loss for the year, and
ii. does not, because of this section, reduce the debtor’s farm loss for a preceding taxation year; and
(c) the debtor’s restricted farm 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 restricted farm loss for the year, and
ii. does not, because of this section, reduce the debtor’s restricted farm loss for a preceding taxation year.
485.4. Where a commercial obligation issued by a debtor is settled at any time, the 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, in section 485.5 referred to as the debtor’s "ordinary non-capital loss at that time for the year", that would be the relevant loss balance at that time for the obligation and in respect of the debtor’s non-capital loss for the year if paragraph a of section 728.0.1 were read without reference to "his allowable business investment losses for the year,", and
ii. does not, because of this section, reduce the debtor’s non-capital loss for a preceding taxation year;
(b) the debtor’s farm 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 farm loss for the year, and
ii. does not, because of this section, reduce the debtor’s farm loss for a preceding taxation year; and
(c) the debtor’s restricted farm 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 restricted farm loss for the year, and
ii. does not, because of this section, reduce the debtor’s restricted farm loss for a preceding taxation year.
