12 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 10, ¶1016)

Where A transferred a non-interest-bearing debt at a loss to its affiliate, B, and B then sold the debt in an arm's length transaction, the loss of B would be denied by s. 40(2)(g)(ii). RC stated that "'we are unable to envision a situation where the purchase of a non-interest-bearing debt by a person could be for the purpose of gaining or producing income'".

Where a non-interest-bearing debt is transferred at a loss between two corporations controlled by the same person, the loss will be added to the cost amount of the debt to the transferee corporation unless the transferor owns shares of the transferee immediately after the disposition of the debt.