From Marlene Cepparo’s comment on technical interpretation 2015-0568411E5, May 13, 2015, in Canadian Tax Highlights 23:9 (Sep 2015):
The CRA’s view is that a full or partial release of a commercial debt obligation under a consumer proposal generally results in a full or partial forgiveness of the debt at the time of the release, even though the taxpayer may be required to make payments in the future under the consumer proposal and default is a possibility. The CRA says that this position is consistent with IT-293R and with the TCC findings in Lessard (2001 CanLII 640).
The CRA concludes that income tax payable and GST/HST payable do not fall within the definition of “commercial obligations” in section 80 because interest on these balances is not deductible under paragraph 18(1)(t).
