Income Tax Act — I-3.3 80
particular year ended before the previous time, unless (i) the obligation was issued by the debtor before, and not in contemplation of, the loss restriction event, or (ii) all or substantially all of the proceeds from the issue of the obligation were used to satisfy the principal amount of another obligation to which subparagraph (i) or this subparagraph would apply if the other obligation were still outstanding; ( solde de pertes applicable ) successor pool at any time for a commercial obligation and in respect of an amount determined in relation to a debtor means the portion of that amount that would be deductible under subsection 66.7(2), (2.3), (3), (4) or (5), as the case may be, in computing the debtor’s income for the taxation year that includes that time, if (a) the debtor had sufficient incomes from all sources, (b) subsection (8) did not apply to reduce the amount so determined at that time, (c) the year ended immediately after that time, and (d) paragraphs 66.7(2.3)(a), (4)(a) and (5)(a) were read without reference to the expressions “30% of”, “30% of” and “10% of”, respectively, except that the successor pool at that time for the obligation is deemed to be nil unless (e) the obligation was issued by the debtor before, and not in contemplation of, the event described in paragraph (8)(a) that gives rise to the deductibility under subsection 66.7(2), (2.3), (3), (4) or (5), as the case may be, of all or part of that amount in computing the debtor’s income, or (f) all or substantially all of the proceeds from the issue of the obligation were used to satisfy the principal amount of another obligation to which paragraph (e) or this paragraph would apply if the other obligation were still outstanding; ( compte de société remplaçante ) unrecognized loss , at a particular time, in respect of an obligation issued by a debtor, from the disposition of a property, is the amount that would, but for subparagraph 40(2)(g)(ii), be a capital loss from the disposition by the debtor at or before the particular time of a debt or other right to receive an amount, except that if the debtor is a taxpayer that is subject to a loss restriction event before the particular time and after the time of the disposition, the unrecognized loss at the particular time in respect of the obligation is nil unless (a) the obligation was issued by the debtor before, and not in contemplation of, the loss restriction event, or (b) all or substantially all of the proceeds from the issue of the obligation were used to satisfy the principal amount of another obligation to which paragraph 80(1)(a) or this paragraph would apply if the other obligation were still outstanding. ( perte non constatée ) Application of debt forgiveness rules (2) For the purposes of this section, (a) an obligation issued by a debtor is settled at any time where the obligation is settled or extinguished at that time (otherwise than by way of a bequest or inheritance or as consideration for the issue of a share described in paragraph (b) of the definition excluded security in subsection 80(1)); (b) an amount of interest payable by a debtor in respect of an obligation issued by the debtor shall be deemed to be an obligation issued by the debtor that (i) has a principal amount, and (ii) was issued by the debtor for an amount, equal to the portion of the amount of such interest that was deductible or would, but for subsection 18(2) or 18(3.1) or section 21, have been deductible in computing the debtor’s income for a taxation year; (c) subsections (3) to (5) and (8) to (13) apply in numerical order to the forgiven amount in respect of a commercial obligation; (d) the applicable fraction of the unapplied portion of a forgiven amount at any time in respect of an obligation issued by the debtor is in respect of a loss for any other taxation year, the fraction required to be used under section 38 for that year; (e) where an applicable fraction (as determined under paragraph 80(2)(d)) of the unap