CRA finds that forgiveness of source deductions would occur on income account

CRA considered that in the unusual event of a settlement by it of an amount of unremitted source deductions of an incorporated business for less than the amount owing, this would give rise to s. 9 income to the extent of the forgiveness.

Although such amounts are similar to other accrued liabilities and trade payable arising out of current operations, this position is not necessarily correct given that the settlement would have occurred outside the "normal trading operations of the business" (Queenswood), and by the time of their settlement the unremitted amounts might represent "past due debt incurred in a preceding year") (Oxford Motors, cf. Alco).

Neal Armstrong. Summaries of 2012 Annual CTF Roundtable, Q. 8, 2012-0453381C6 under s. 9 – forgiveness of debt, s. 80(1) – forgiven amount, and s. 12(1)(x).