Debt forgiveness

Are you a practitioner who would like a better understanding of the tax implications of settling a commercial debt obligation for less than the amount owing? If so, this course is for you.

This course will help you identify debt forgiveness and the associated income tax implications to the debtor when a debt owing to a creditor is forgiven or settled at a lower amount than that which is payable.

It consists of two separate modules which highlight key concepts and critical tax compliance issues integrating elearning modules with knowledge checks and scenario activities designed for you to complete at your own pace and revisit when necessary.

This course is based upon enacted Canadian income tax legislation as of March 31, 2021.

• identifying when a debt is forgiven in a non-directed fact scenario
• applying the definitions and ordering rules in s.80 to a forgiven amount, and computing the adjusted tax attributes in a directed fact scenario
• describing the tax implications to the debtor when a debt is forgiven
• explaining when a taxpayer can transfer a forgiven amount
• identifying an eligible transferee
• apply the relevant debt forgiveness rules when a transfer is made to an eligible transferee
• describing the availability of a reserve against the income inclusion that arises on a debt forgiveness
• identifying common scenarios where a deemed settlement has occurred
• identifying when a debt becomes a parked obligation
• explaining the implications of debt parking
• identifying the implications to the debt forgiveness rules when issuing and settling distressed preferred shares

• professional accountants who require an in-depth understanding of the tax rules that come into play when a debt is forgiven
• tax practitioners who require a refresher on the tax rules that need to be navigated following when a debt is forgiven