In Gaumond v R, 2014 TCC 339, an informal procedure case, the taxpayer, as part of a proposal under the Bankruptcy and Insolvency Act, forgave a debt owed to him by a CCPC he controlled. The Tax Court denied the taxpayer’s claim for an ABIL because he had forgiven the debt before the year-end (and so it was not owing to him at the year-end as required by subsection 50(1)), and he had not disposed of the debt to an arm’s length person as required by 39(1)(c)(ii) (he had merely forgiven it, which is deemed to be a disposition but not to an arm’s length person). See also St-Hilaire v R, 2014 TCC 336, another informal procedure case. Query whether the result would have been different if the taxpayers in these cases had simply agreed to postpone their debts to the claims of the other creditors, which would have left the debts outstanding and thus capable of being dealt with under 50(1). Joan Jung, “Effect of BIA Proposal on ABIL Claim” (July 2015) 15:1 Tax for the Owner-Manager 5-6.
