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.
24(1) 5-900730
Sean Finn
(613) 957-2746 19(1)
Attention
July 24, 1990
Dear Sirs:
Re: Subsection 80(1) of the Income Tax Act
This is in reply to your letter dated May 8, 1990 in which you requested our opinion on the interpretation to be given to the words "settled or extinguished " in subsection 80(1) of the Income Tax Act (the "Act").
As the situation described in your letter appears to involve an actual situation with identifiable taxpayers, we are unable to comment on it specifically except in the context of an advance ruling request. However, we offer the following general comments which may be of assistance to you.
For the purposes of subsection 80(1) of the Income Tax Act, the words "settled or extinguished" are not defined. The determination as to whether a debt or other obligation of a taxpayer is settled or extinguished is a question of common law. It is our view that a debt is settled or extinguished when all liability for its payment is terminated , as stated in paragraph 6 of Interpretation Bulletin IT-293R dated July 16, 1979. Examples of means of settlement of a debt include payment, cancellation, set off, release, confusion of debtor and creditor, substitution of debtors and, as stated in your letter, novation.
To the extent that the release of a joint and several debtor from its obligations under a loan agreement does not give rise to a settlement or extinguishment of any of the remaining debtor's obligations under the agreement , it is our opinion that subsection 80(1) of the Act would not be applicable to the obligations of the remaining debtors.
The above comments are not an advance income tax ruling and accordingly are not binding on Revenue Canada, Taxation as stated in paragraph 24 of Information Circular 70-6R.
Yours truly,
for Director Financial Industries Division Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1990
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1990
Email this Content