UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION




Washington,
D.C.  20549




FORM
40-F




(Check
One)




o           Registration
statement pursuant to Section 12 of the Securities Exchange Act of
1934


or


þ           Annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934




For fiscal year ended:  December 31,
2007                   Commission
File number:  000-49751




CATALYST
PAPER CORPORATION


(Exact
name of Registrant as specified in its charter)





Canada
              (Province
      or other jurisdiction of incorporation or organization)
            2621
              (Primary
      standard industrial classification code number, if
    applicable)
            98-0138030
              (I.R.S.
      employer identification number, if
applicable)





2ndFloor,
3600 Lysander Lane, Richmond


British
Columbia, Canada, V7B 1C3   (604)247-4400


(Address
and telephone number of Registrant’s principal executive office)





CT
Corporation, 111 Eighth Avenue, New York, New York 10011 (212)
894-8700


(Name,
address and telephone number of agent for service in the United
States)





Securities
registered or to be registered pursuant to Section 12(b) of the
Act:                                                                                                                                N/A





Title of
each class:    N/A                                                                           Name
of each exchange on which registered:   N/A





Securities
registered or to be registered pursuant to Section 12(g) of the
Act:   Common
Shares





Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act:  N/A





For
annual reports, indicate by check mark the information filed with this
form:


þ           Annual Information
Form                                                                           þ           Audited Annual Financial
Statements





Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual
report:  214,604,120
Common Shares





Indicate
by check mark whether the Registrant by filing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange
Act”).  If “Yes” is marked, indicate the file number assigned to the
Registrant in connection with such Rule.


Yes           o           82-__________No                                                      þ





Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the Registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.





Yes           þ           No           o











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Matters\Form 40-F 2008\Form 40-F rev3.doc





FORWARD-LOOKING
INFORMATION




All
statements, other than statements of historical facts, included or incorporated
by reference in this annual report on Form 40-F constitute “forward-looking
statements” within the meaning of section 21E of the Exchange
Act.  Statements that address activities, events or developments that
Catalyst Paper Corporation (the “Registrant”) expects
or anticipates will or may occur in the future, including such things as future
cost savings, performance improvements, synergies or capital expenditures
(including the amount and nature thereof), product prices, business strategy and
measures to implement strategy, competitive strengths, goals, expansion and
growth of the Registrant’s businesses and operations, plans, references to
future success and other such matters constitute forward-looking
statements.  When used herein, the words “estimate,” “project,”
“anticipate,” “expect,” “intend,” “believe” and similar expressions are intended
to identify forward-looking statements.  Whether actual future results
and developments will conform with expectations and predictions is subject to a
number of risks and uncertainties, including those considerations discussed in
the “Management’s Discussion and Analysis – Risks and Uncertainties” section of
the Registrant’s annual report for the fiscal year ended December 31, 2007 and
the “Risk Factors” section of the Registrant’s registration statement on Form
F-10/A as filed with the Commission on February 29, 2008.  Important
factors that could cause actual results to differ materially from those implied
by the forward-looking statements include, but are not limited to, availability
of fibre supply, competition from other pulp and paper manufacturers,
fluctuations in foreign exchanges, general economic conditions, cyclical pricing
and market demand for the Registrant’s products and requirements for additional
capital expenditures.




Consequently,
all of the forward-looking statements made herein are qualified by these
cautionary statements and there can be no assurance that the actual results or
developments anticipated by the Registrant will be realized.  The
Registrant undertakes no obligation to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.




CONTROLS
AND PROCEDURES




A.           
Evaluation of Disclosure Controls and Procedures
 The
Registrant conducted an evaluation under the supervision and with the
participation of the Registrant’s management, including the chief executive
officer and chief financial officer, as of December 31, 2007, pursuant to Rule
13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)
of the effectiveness of the design and operation of the Registrant’s disclosure
controls and procedures.  Based on this evaluation, the Registrant’s
chief executive officer and chief financial officer concluded that such
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Registrant in reports it files or submits under
the Exchange Act is (a) recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange
Commission (“SEC”) and (b)
accumulated and communicated to the Registrant’s management including the
Registrant’s chief executive officer and chief financial officer, or persons
performing similar functions, as appropriate, to allow timely decisions
regarding required disclosure.  It should be noted that while the
Registrant’s chief executive officer and chief financial officer believe that
the Registrant’s disclosure controls and procedures provide a reasonable level
of assurance that they are effective, they do not expect that the Registrant’s
disclosure controls and procedures or internal control over financial reporting
will prevent all errors and fraud. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met.




B.
            Management’s Annual Report on
      Internal Control over Financial
Reporting




Management’s
annual report on internal control over financial reporting is included in this
Form 40-F on page 1 of the Registrant’s audited consolidated financial
statements filed as Exhibit 2 and is incorporated herein by
reference.




C.           Attestation
Reports of the Registered Public Accounting Firm




The
attestation reports of the Registrant’s independent auditor are included in this
Form 40-F on pages 2 and 3 of the Registrant’s audited consolidated financial
statements filed as Exhibit 2 hereto and is incorporated herein by
reference.




D.           Changes in Internal
Controls




There was
no change in the Registrant’s internal control over financial reporting that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, its internal control over
financial reporting.




AUDIT
COMMITTEE FINANCIAL EXPERT




The
Registrant’s board of directors has determined that it has at least one audit
committee financial expert serving on its audit committee.  Mr. Thomas
Chambers has been determined to be audit committee financial expert for the
purposes of applicable legislation.  Mr. Chambers is independent as
that term is defined for purposes of audit committee member independence under
the corporate governance standards of the New York Stock Exchange.




CODE
OF ETHICS




The
Registrant has adopted a Code of Corporate Ethics and Behaviour that applies to
all directors, officers and employees, including its principal executive
officer, principal financial officer and principal accounting
officer.  The Code of Corporate Ethics and Behaviour sets out the
standards of conduct that apply to each person’s performance of his or her
duties and is designed so that the Registrant’s affairs are conducted fairly,
honestly and in strict compliance with its legal obligations.  The
Code of Corporate Ethics and Behaviour is available at the Registrant’s website
at www.catalystpaper.com.  In
addition, the Registrant will provide a copy of the Code of Corporate Ethics and
Behaviour to any person at no charge, upon request to the Corporate Secretary at
the Registrant’s principal executive office.













PRINCIPAL
ACCOUNTANT FEES AND SERVICES




External
Auditor Service Fees in Canadian dollars (1):




Year
      Ended
              December
      31, 2007
            
            
            Year
      Ended
              December
      31, 2006Audit
      Fees
            
            $
            1,011,442
            
            
            $
            1,094,000Audit
      Related Fees
            
            
            178,000
            
            
            
            111,600Tax
      Fees
            
            
            95,195
            
            
            
            81,000All
      Other Fees
            
            
            -
            
            
            
            -$
            1,284,637
            
            
            $
            1,286,600





(1)
            The
      exchange rates at December 31, 2007 and 2006, based on the Bank of Canada
      noon spot rate were $1.012 and 0.858 (US$/C$),
    respectively.





The
nature of each category of fee is described below:




Audit
Fees




Includes
services that are provided by the independent auditor in connection with
statutory and regulatory filings, principally for the audit of the annual
financial statements contained in the Form 40-F, Annual Information Form,
Management Proxy Circular and offering memoranda.




Audit Related
Fees




Includes
assurance and related services provided by the independent auditor that are
related to the performance of the audit, principally for general advice on
accounting standards, the audit of the Registrant’s pension plan and the audit
of a wholly owned subsidiary.




Tax Fees




Relates
to tax compliance services provided by the independent auditor, including
assistance with questions regarding tax audits.




The Audit
Committee pre-approves all audit and non-audit services provided by the
independent auditor.  The Audit Committee has delegated to its
Chairman the authority, to be exercised between regularly scheduled meetings of
the Audit Committee, to pre-approve non-audit services provided by the
independent auditor up to a maximum amount of CDN$100,000 in the
aggregate.  All such pre-approvals shall be reported by the Chairman
at the next meeting of the Audit Committee following the
pre-approval.




OFF
BALANCE SHEET ARRANGEMENTS




The
Registrant uses financial instruments to reduce its exposure to foreign currency
and price risks associated with its revenues, costs and long-term
debt.  The Registrant considers these financial instruments important
in terms of future cash flows for their ability to hedge against changes in the
U.S. dollar on which much of its revenues, the prices of its products and energy
inputs are based.  The Registrant also uses interest swaps to reduce
its exposure to long-term interest rates associated with its senior
notes.




At
December 31, 2007, no commodity price hedging instruments were outstanding in
respect of products sold. The following table highlights the Registrant’s
foreign currency options and forward contracts outstanding to sell U.S. dollars
as at December 31, 2006 and as at December 31, 2007:




OptionsPurchased
      US$ put
            
            
            SoldUS$
      call
            
            
            Forward
      ContractsTerm
            
            US$Millions
            
            
            Average
      Rate
              US$/C$
            
            
            US$Millions
            
            
            Average
      Rate
              US$/C$
            
            
            US$Millions
            
            
            Average
      Rate
              US$/C$As
      at December 31, 20070
      to 12 months
            
            $
            496
            
            
            
            0.9688
            
            
            $
            106
            
            
            
            0.9190
            
            
            $
            47
            
            
            
            1.000113
      to 24 months
            
            $
            38
            
            
            
            1.0355
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            -As
      at December 31, 20060
      to 12 months
            
            $
            485
            
            
            
            0.9031
            
            
            $
            205
            
            
            
            0.8606
            
            
            $
            109
            
            
            
            0.872713
      to 24 months
            
            $
            34
            
            
            
            0.8982
            
            
            $
            32
            
            
            
            0.8898
            
            
            $
            -
            
            
            
            -




At
period-end exchange rates, the net amount that the Registrant would receive to
settle the above contracts and options is $32.9 million, which is included in
prepaids and other in the financial statements.






At
December 31, 2007, the Registrant’s long-term debt related forward foreign
exchange contracts to acquire U.S. dollars totalled US$228 million over a
seven-year period, at rates averaging US$/C$0.9360.  At period end
exchange rates, the net amount the Registrant would pay to settle these
contracts is $5.4 million.






The
Registrant also uses financial instruments to reduce the Registrant’s exposure
to energy costs.  At December 31, 2007, the Registrant had natural gas
options to purchase 1 million Gigajoules (“GJ”) at an average contract rate of
C$7.98 per GJ settling between January 1, 2008 and April 30, 2008.  At
year end rates, the net amount the Registrant would pay to settle these
contracts is $0.2 million.






From time
to time, the Registrant enters into interest rate swaps to manage the
Registrant’s exposure to changes in long-term fixed interest rates associated
with its senior notes.  The Registrant entered into fixed-to-floating
interest rate swaps on US$80 million, under which the Registrant will receive a
fixed rate receipt of 7.375%, and pay a floating rate averaging U.S. six month
LIBOR plus an average of 2.0%.  The swaps mature March, 2014, although
US$10 million are cancellable at the counterparties’ option between now and
March 2014, for premiums which mirror the call premiums on the Registrant’s
7.3754% senior notes.  At period end rates, the net amount the
Registrant would receive to settle these contracts is $4.1 million.















CONTRACTUAL
OBLIGATIONS




The
following table presents the aggregate amount of future cash outflows of the
Registrant’s contractual obligations as of December 31, 2007, excluding
amounts due for interest on outstanding indebtedness:




Payments
      due by period
              (In
      millions of Canadian dollars)Contractual
      Obligations
            
            Total
            
            
            Less
      than
              1
      Year
            
            
            1-3
              Years
            
            
            3-5
              Years
            
            
            More
      than
              5
      YearsLong-term
      debt
            
            $
            785.8
            
            
            $
            1.2
            
            
            $
            123.2
            
            
            $
            390.5
            
            
            $
            270.9Operating
      leases
            
            
            72.2
            
            
            
            10.1
            
            
            
            17.0
            
            
            
            13.1
            
            
            
            32.0Other
      commitments
            
            
            9.5
            
            
            
            2.2
            
            
            
            4.4
            
            
            
            2.9
            
            
            
            -Total
            
            $
            867.5
            
            
            $
            13.5
            
            
            $
            144.6
            
            
            $
            406.5
            
            
            $
            302.9






UNDERTAKING
AND CONSENT TO SERVICE OF PROCESS




A.
              Undertaking
  The
Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the staff of the SEC, and to
furnish promptly, when requested to do so by the SEC staff, information relating
to: the securities registered pursuant to Form 40-F; the securities in relation
to which the obligation to file an annual report on Form 40-F arises; or
transactions in said securities.
  B.
              Consent
      to Service of Process
  The
Registrant has previously filed a Form F-X in connection with the class of
securities in relation to which the obligation to file this report
arises.








SIGNATURES




Pursuant
to the requirements of the Exchange Act, the Registrant certifies that it meets
all of the requirements for filing on Form 40-F and has duly caused this annual
report to be signed on its behalf by the undersigned, thereto duly
authorized.




CATALYST
PAPER CORPORATION




By:
            /s/David
      Smales


Name:
            David
    Smales


Title:
            Vice
      President, Finance


and Chief Financial Officer




Date:  March
28, 2008




















EXHIBIT
INDEX




Exhibit No.
            Description99.1
            Annual
      Information Form99.2
            Audited
      Consolidated Financial Statements of Catalyst Paper Corporation as at and
      for the year ended December 31, 200799.3
            Management’s
      Discussion and Analysis99.4
            Consent
      of KPMG LLP99.5
            Certification
      of Richard Garneau, President and Chief Executive Officer, pursuant to
      Rule 13a–14(a).99.6
            Certification
      of David Smales, Vice-President, Finance and Chief Financial Officer,
      pursuant to Rule 13a-14(a).99.7
            Certification
      of Richard Garneau, President and Chief Executive Officer, pursuant to
      Rule 13a–14(b).99.8
            Certification
      of David Smales, Vice-President, Finance and Chief Financial Officer,
      pursuant to Rule 13a-14(b).












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Matters\Form 40-F 2008\Form 40-F rev2.doc