Income Tax Act — I-3.3 143.2
ness. Repayment of indebtedness (7) For the purpose of this section, the unpaid principal of an indebtedness is deemed to be a limited-recourse amount unless (a) bona fide arrangements, evidenced in writing, were made, at the time the indebtedness arose, for repayment by the debtor of the indebtedness and all interest on the indebtedness within a reasonable period not exceeding 10 years; and (b) interest is payable at least annually, at a rate equal to or greater than the lesser of (i) the prescribed rate of interest in effect at the time the indebtedness arose, and (ii) the prescribed rate of interest applicable from time to time during the term of the indebtedness, and is paid in respect of the indebtedness by the debtor no later than 60 days after the end of each taxation year of the debtor that ends in the period. Limited-recourse amount (8) For the purpose of this section, the unpaid principal of an indebtedness is deemed to be a limited-recourse amount of a taxpayer where the taxpayer is a partnership and recourse against any member of the partnership in respect of the indebtedness is limited, either immediately or in the future and either absolutely or contingently. Timing (9) Where at any time a taxpayer has paid an amount (in this subsection referred to as the “repaid amount”) on account of the principal amount of an indebtedness that was, before that time, the unpaid principal amount of a loan or any other form of indebtedness to which subsection 143.2(2) applies (in this subsection referred to as the “former amount or benefit”) relating to an expenditure of the taxpayer, (a) the former amount or benefit is considered to have been an amount or benefit under subsection 143.2(2) in respect of the taxpayer at all times before that time; and (b) the expenditure is, subject to subsection 143.2(6), deemed to have been made or incurred at that time to the extent of, and by the payment of, the repaid amount. Timing (10) Where at any time a taxpayer has paid an amount (in this subsection referred to as the “repaid amount”) on account of the principal amount of an indebtedness which was, before that time, an unpaid principal amount that was a limited-recourse amount (in this subsection referred to as the “former limited-recourse indebtedness”) relating to an expenditure of the taxpayer, (a) the former limited-recourse indebtedness is considered to have been a limited-recourse amount at all times before that time; and (b) the expenditure is, subject to subsection 143.2(6), deemed to have been made or incurred at that time to the extent of, and by the amount of, the repaid amount. Short-term debt (11) Where a taxpayer pays all of the principal of an indebtedness no later than 60 days after that indebtedness arose and the indebtedness would otherwise be considered to be a limited-recourse amount solely because of the application of subsection 143.2(7) or (8), that subsection does not apply to the indebtedness unless (a) any portion of the repayment is made with a limited-recourse amount; or (b) the repayment can reasonably be considered to be part of a series of loans or other indebtedness and repayments that ends more than 60 days after the indebtedness arose. Series of loans or repayments (12) For the purpose of paragraph 143.2(7)(a), a debtor is considered not to have made arrangements to repay an indebtedness within 10 years where the debtor’s arrangement to repay can reasonably be considered to be part of a series of loans or other indebtedness and repayments that ends more than 10 years after it begins. Information located outside Canada (13) For the purpose of this section, if it can reasonably be considered that information relating to indebtedness that relates to a taxpayer’s expenditure, gift or monetary contribution is available outside Canada and the Minister is not satisfied that the unpaid principal of the indebtedness is not a limited-recourse amount, the unpaid principal of the indebtedness relating to the taxpaye