CRA technical interpretation 2018-0757501E5 (September 29, 2020) states that the novation of a debt with accrued but unpaid interest results in the payment of the interest. The author notes that, if this is right (and he questions whether it is), a novation could trigger a withholding tax obligation under Part XIII.
Sammy Cheaib “Novation of debt and payment of Accrued Interest” Canadian Tax Focus 11:2 (May 2021)
