Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether 80(2)(o) causes section 80 to apply to only 1 of several joint debtors with respect to portion of debt forgiven.
Position:
Yes.
Reasons:
Provision causes section 80 to apply to one debtor with respect to reasonable portion of debt which is forgiven; remainder of debt continues with respect to other debtors and other debtors will not have section 80 apply with respect to the forgiven amount.
XXXXXXXXXX 972542
Attention: XXXXXXXXXX
October 2, 1997
Re: Paragraph 80(2)(o) of the Income Tax Act (the "Act")
This is in reply to your fax of September 22, 1997, in which you ask for our views on the application of the above-noted provision to a hypothetical fact situation. Our comments follow.
We agree with your analysis and conclusion that where a particular person is jointly liable with one or more other persons for a commercial debt obligation, and the particular person is forgiven his or her proportionate share of the obligation, paragraph 80(2)(o) of the Act results in section 80 only applying to the particular person for his proportionate share. The words in the provision cause the settled amount to be settled only once and "not at any subsequent time" and, therefore, section 80 of the Act will not apply with respect to the settled amount to any of the other debtors other than the particular person.
Although the foregoing comments are not binding on the Department, we trust they will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
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