Tax wiki
s. 61.4
PART I — Income Tax · DIVISION B — Computation of Income · SUBDIVISION E — Deductions in Computing Income
Reserve for debt forgiveness for corporations and others
Not yet annotated · Text current to 2026-06-21 · section last amended 2004-08-31
Current text
There may be deducted as a reserve in computing the income for a taxation year of a taxpayer that is a corporation or trust resident in Canada throughout the year or a non-resident person who carried on business through a fixed place of business in Canada at the end of the year such amount as the taxpayer claims not exceeding the least of
the amount determined by the formula
A - B
where
is the amount, if any, by which
the total of all amounts each of which is an amount that, because of the application of section 80 to a commercial obligation (within the meaning assigned by subsection 80(1)) issued by the taxpayer (or a partnership of which the taxpayer was a member) was included under subsection 80(13) in computing the income of the taxpayer for the year or a preceding taxation year or of the partnership for a fiscal period that ends in that year or preceding year (to the extent that, where the amount was included in computing income of a partnership, it relates to the taxpayer’s share of that income)
exceeds the total of
all amounts each of which is an amount deducted under paragraph 80(15)(a) in computing the taxpayer’s income for the year or a preceding taxation year, and
all amounts deducted under section 61.3 in computing the taxpayer’s income for the year or a preceding taxation year, and
is the amount, if any, by which the amount determined for A in respect of the taxpayer for the year exceeds the total of
the amount that would be determined for A in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for any preceding taxation year, and
the amount, if any, included under section 56.3 in computing the taxpayer’s income for the year,
the total of
4/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for any preceding taxation year,
3/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for the year or any preceding taxation year (other than the last preceding taxation year),
2/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for the year or any preceding taxation year (other than the second last preceding taxation year), and
1/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for the year or any preceding taxation year (other than the third last preceding taxation year), and
where the taxpayer is a corporation that commences to wind up in the year (otherwise than in circumstances to which the rules in subsection 88(1) apply), nil.
Source: Justice Laws Website. Not an official version.
Historic text
This section has not been amended since the start of the point-in-time record on 31 August 2004.
Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 61.4 links to the one before it.
Enacting and amending legislation
- 1995, c. 21, s. 20
Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.
Cross-references
Citation
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 61.4.