Income Tax Act — I-3.3 80.01
Definitions 80.01 (1) In this section, commercial debt obligation has the meaning assigned by subsection 80(1); ( créance commerciale ) commercial obligation has the meaning assigned by subsection 80(1); ( dette commerciale ) debtor has the meaning assigned by subsection 80(1); ( débiteur ) distress preferred share has the meaning assigned by subsection 80(1); ( action privilégiée de renflouement ) forgiven amount has the meaning assigned by subsection 80(1) except that, where an amount would be included in computing a person’s income under paragraph 6(1)(a) or subsection 15(1) as a consequence of the settlement of an obligation if the obligation were settled without any payment being made in satisfaction of its principal amount, forgiven amount in respect of that obligation has the meaning assigned by subsection 6(15.1) or 15(1.21), as the case may be; ( montant remis ) person has the meaning assigned by subsection 80(1); ( personne ) specified cost at any time to a person of an obligation means, (a) where the obligation is capital property of the person at that time, the adjusted cost base at that time to the person of the obligation, and (b) in any other case, the cost amount to the person of the obligation. ( coût déterminé ) Application (2) For the purposes of this section, (a) paragraphs 80(2)(a), 80(2)(b), 80(2)(j), 80(2)(l) and 80(2)(n) apply; and (b) a person has a significant interest in a corporation at any time if the person owned at that time (i) shares of the capital stock of the corporation that would give the person 25% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation, or (ii) shares of the capital stock of the corporation having a fair market value of 25% or more of the fair market value of all the issued shares of the capital stock of the corporation and, for the purposes of this paragraph, a person shall be deemed to own at any time each share of the capital stock of a corporation that is owned, otherwise than because of this paragraph, at that time by another person with whom the person does not deal at arm’s length. Deemed settlement on amalgamation (3) Where a commercial obligation or another obligation (in this subsection referred to as the “indebtedness”) of a debtor that is a corporation to pay an amount to another corporation (in this subsection referred to as the “creditor”) is settled on an amalgamation of the debtor and the creditor, the indebtedness shall be deemed to have been settled immediately before the time that is immediately before the amalgamation by a payment made by the debtor and received by the creditor of an amount equal to the amount that would have been the creditor’s cost amount of the indebtedness at that time if (a) the definition cost amount in subsection 248(1) were read without reference to paragraph (e) of that definition; and (b) that cost amount included amounts added in computing the creditor’s income in respect of the portion of the indebtedness representing unpaid interest, to the extent those amounts have not been deducted in computing the creditor’s income as bad debts in respect of that unpaid interest. Deemed settlement on winding-up (4) Where there is a winding-up of a subsidiary to which the rules in subsection 88(1) apply and (a) a debt or other obligation (in this subsection referred to as the “subsidiary’s obligation”) of the subsidiary to pay an amount to the parent, or (b) a debt or other obligation (in this subsection referred to as the “parent’s obligation”) of the parent to pay an amount to the subsidiary is, as a consequence of the winding-up, settled at a particular time without any payment of an amount or by the payment of an amount that is less than the principal amount of the subsidiary’s obligation or the parent’s obligation, as the case may be, (c) where that payment is less than the amount that would have been the cost amount to the parent or subsidiary of the subsidiary’s oblig