,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,settle;t ( ,debts on ! ,w9d+-,up (a
  ,corpor,n
,numb]3 ,,it-#adb;,r#c
,date3 ,janu>y #aa1 #aihh
,ref];e3 ,subsec;n #hj7#c7 7al sec;n
  #ba1 subsec;ns #aj7#a71 #ab7#c71
  #ab7#f71 #ah7#b71 #ah7#c.a71 #hj7#a71
  #hj7#d71 #hh7#a7 & #bdh7#a774

               ,applic,n
    
  ,? bullet9 replaces & c.els ,9t]pret,n
,bullet9 ,,it-#adb;,r#b dat$ ,may #bb1
#aihd4 ,curr5t revi.ns >e designat$
0v]tical l9es4



                                      #a
                ,summ>y              a#a
    
  ,? bullet9 d1ls ) an elec;n t may 2
fil$ 0a p>5t corpor,n ": 9t]-company
debt is settl$ or ext+ui%$ on ! w9d+-up
( xs subsidi>y "u subsec;n #hh7#a74 ,!
elec;n g5],y op]ates 65sure t subsec;n
#hj7#a7 w n apply un.s ! co/ am.t (!
debt is less ?an bo? ! pr9cipal am.t (!
debt &! am.t = : x 0 issu$4

          ,4cus.n & ,9t]pret,n
    
#a4 ,on ! w9d+-up (a subsidi>y corpor,n
  96xs p>5t1 a debt or oblig,n [+ 0!
  subsidi>y 6xs p>5t or 0! p>5t 6xs
  subsidi>y may 2 settl$ or ext+ui%$
  7a7 )\t any pay;t1 or
  7b7 0pay;t ( an am.t t is less ?an bo?
    ! pr9cipal am.t 7see #d7a7 & 7b7 2l7
    (! debt or oblig,n &! am.t t wd h
    be5 ! co/ am.t 7see #d7c7 & 7d7 2l7
    6! p>5t or subsidi>y1 z ! case may
    be1 (! debt or oblig,n at ! "t t is
    immly 2f ! w9d+-up4               #b
             ,,it-#adb;,r#c          b#a
#b4 ,": an 9t]corporate debt z 5visag$ 9
  #a abv is settl$ or ext+ui%$ af #aihc
  9 ! circum/.es describ$ 9 #a7a7 or 7b7
  abv &! w9d+-up has be5 e6ect$ 9
  a3ord.e )! rules 9 subsec;n #hh7#a71 !
  p>5t c elect "u subsec;n #hj7#c7 6h !
  debt or oblig,n deem$ 6h be5 settl$ or
  ext+ui%$ 0pay;t ( an am.t t wd h be5
  xs co/ am.t 7see #d7c7 & 7d7 2l7 6!
  p>5t or ! subsidi>y1 z ! case may be4
#c4 ,reg>d.s ( : corpor,n is ! debtor or
  cr$itor1 only ! p>5t corpor,n c elect
  69voke ! deem+ provi.n ( subsec;n
  #hj7#c74 ,! elec;n m/ 2 made 9
  prescrib$ =m 7,t#bjbg7 on or 2f !
--------------------------------------#b
  "d on or 2f : ! p>5t is requir$ 6file
  a return ( 9come =! tax,n ye> dur+ : !
  debt or oblig,n 0 settl$ or ext+ui%$4
#d4 ,=! purpose ( subsec;n #hj7#c71
  7a7 ! 8pr9cipal am.t0 (a debt or
    oblig,n is def9$ 9 subsec;n
    #bdh7#a74 ,briefly1 x is ! maximum
    am.t t is paya# 0! issu] (a       #c
             ,,it-#adb;,r#c          a#b
    debt or oblig,n "u xs t]ms or ! t]ms
    ( any relat$ agree;t1 exclusive (
    all 9t]e/ & adv.e redemp;n premium4
    ,see 7c7 2l =! def9i;n ( 8co/ am.t0
    (a debt or oblig,n4
  7b7 8deem$ pr9cipal am.t04 ,subsec;n
    #hj7#d7 0 5act$ 0,s4,c4 #aihe1 c4#de
    6deem a pr9cipal am.t = c]ta9 9t]e/
    paya# 7ref]r$ 6in ? bullet9 z a
    8deem$ pr9cipal am.t07 9 respect (a
    debt or oblig,n t is settl$ or
    ext+ui%$ af ,may #i1 #aihe4 ,s*
    deem$ pr9cipal am.t is sep>ate &
    4t9ct f ! pr9cipal am.t describ$ 9
    7a7 abv & 3si/s (! por;n ( unpd
    9t]e/ t ! issu] 7i4e41 ! debtor7 (a
    debt or oblig,n has1 9 any tax,n
    ye>1 deduct$ 9 -put+ 9come or t wd h
    be5 s deducti# except = any (
    subsec;ns #ah7#b7 or 7#c.a7 or sec;n
    #ba4 ,see 7d7 2l =! def9i;n ( 8co/
    am.t0 ( s* unpd 9t]e/4
  7c7 ! 8co/ am.t0 (a debt or oblig,n1
    ref]r$ 6in 7a7 abv1 immly 2f !    #d
             ,,it-#adb;,r#c          b#b
    w9d+-up is ! am.t det]m9$ :5 !
    def9i;n ( 8co/ am.t0 9 subsec;n
    #bdh7#a7 is r1d )\t ref];e 6p>agraph
    7e7 "!(4 ,"!=e if a debt or oblig,n
    is a capital prop]ty 6! cr$itor xs
    co/ am.t w 2 xs adju/$ co/ base & if
    ! debt or oblig,n is 9v5tory 6!
    cr$itor xs co/ am.t w 2 xs 9v5tory
    value1 pursuant 6subsec;n #aj7#a71
    =! purpose ( -put+ ! cr$itor's
    9come4
  7d7 ! 8co/ am.t0 (! deem$ pr9cipal
    am.t 9 respect ( unpd 9t]e/1 ref]r$
    6in 7b7 abv1 w 2 det]m9$ "u !
    def9i;n ( 8co/ am.t0 9 subsec;n
    #bdh7#a7 :1 0virtue ( subsec;n
    #hj7#c71 is 6be r1d )\t ref];e
    6p>agraph 7e7 "!(4 ,acly1 s* co/
    am.t w 2 ! am.t ( unpd 9t]e/ t1 at !
    "t t is immly 2f ! "t at : ! debt or
    oblig,n 9 respect ( unpd 9t]e/ is
    settl$ or ext+ui%$1 ! cr$itor has
    9clud$ 9 9come4
                                      #e
             ,,it-#adb;,r#c          c#b
  ,x %d 2 not$ t prior 6! am5d;t ref]r$
  6in 7b7 abv1 subsec;n #hj7#c7 did n
  apply ) respect 69t]e/ on a debt or
  oblig,n4
#e4 ,": ! p>5t corpor,n has elect$ "u
  subsec;n #hj7#c71 ! deem$ pr9cipal
  am.t 9 respect ( unpd 9t]e/ on an
  9t]corporate debt or oblig,n w 2 deem$
  6h be5 settl$ = an am.t equal 6! am.t
  "!( t ! cr$itor has 9clud$ 9 9come
--------------------------------------#c
  7i4e41 xs co/ am.t74 ,s9ce "! is a
  deem$ settle;t1 ! cr$itor w n 2 5titl$
  6any deduc;n1 "u p>agraph #bj7#a77l7
  or 7p71 9 -put+ 9come ) respect 6a3ru$
  9t]e/ receiva#4 ,until ! debt or
  oblig,n has be5 settl$ or ext+ui%$ !
  debtor is una6ect$ ) respect 6!
  deductibil;y ( a3ru$ 9t]e/ paya# z
  provid$ 0! ,act4
#f4 ,a valid elec;n "u subsec;n #hj7#c7
  may prev5t ! applic,n (! rules 9
  subsec;n #hj7#a74 ,h["e1 9 spite ( s*
  a valid elec;n hav+ be5 made1       #f
             ,,it-#adb;,r#c          a#c
  subsec;n #hj7#a7 w / apply 6a debtor )
  respect 6! am.t1 if any1 0: ! pr9cipal
  am.t (! debt or oblig,n exce$s xs co/
  am.t 6! cr$itor4 ,? situ,n c o3ur 2c !
  8pr9cipal am.t0 is an am.t det]m9$ f !
  debtor's viewpo9t :ile ! 8co/ am.t0 is
  det]m9$ f ! cr$itor's viewpo9t & is
  subject 6s* 9flu;es z 9v5tory valu,n
  &! non-applic,n ( subsec;n #ab7#c7 9
  circum/.es describ$ 9 subsec;n
  #ab7#f74
#g4 ,an elec;n "u subsec;n #hj7#c7 0a
  p>5t corpor,n a6ects only ! settl+ or
  ext+ui%+ ( debts or oblig,ns exi/+ 2t
  a p>5t corpor,n & xs subsidi>y
  corpor,n & only :5 ! subsidi>y has be5
  w.d-up 9 a3ord.e )! rules 9 subsec;n
  #hh7#a74
#h4 ,on ! w9d+-up (a corpor,n1
  7a7 ": ! rules 9 subsec;n #hh7#a7 d n
    apply1 or
  7b7 ) respect 6debts or oblig,ns 2t !
    corpor,n 2+ w.d-up & p]sons1 9clud+
                                      #g
             ,,it-#adb;,r#c          b#c
    %>ehold]s o!r ?an ! p>5t1 ":
    subsec;n #hh7#a7 does apply1
  debts or oblig,ns >e "s"ts settl$ or
  ext+ui%$ )\t a =mal pay;t 9 ca%4
  ,n"o!.s1 ":1 z a result (a "picul>
  >range;t made on ! w9d+-up1 a debt c
  r1sonably 2 3sid]$ 6h be5 settl$ = an
  am.t t is n less ?an ! pr9cipal am.t
  "!( \t/&+ &1 ) respect 6debts or
  oblig,ns settl$ or ext+ui%$ af ,may
  #i1 #aihe1 = an am.t t is n less ?an !
  deem$ pr9cipal am.t "!( \t/&+1 pay;t 9
  full is 3sid]$ 6h be5 made &! provi.ns
  ( subsec;n #hj7#a7 (! ,act d n apply4
  ,g5],y1 9 ! case (a %>ehold]1 settle;t
  (! debt is a*iev$ 0adju/+ ! am.t rcvd
  0! %>ehold] z "p (! w9d+-up 4tribu;n
  6reflect ! debt settl$ or ext+ui%$4
#i4 ,examples ( s* >range;ts made on !
  w9d+-up (a corpor,n >e3
  7a7 ,a debt or o!r oblig,n [$ 0a
    %>ehold] 6! corpor,n is (fset ag/ an
    am.t [+ 6t %>ehold] 0! corpor,n4
                                      #h
             ,,it-#adb;,r#c          c#c
  7b7 ,a debt or o!r oblig,n [$ 0!
    corpor,n 6a p]son o!r ?an a %>ehold]
    is assum$ 0a %>ehold]4
--------------------------------------#d
  7c7 ,a debt or o!r oblig,n (! corpor,n
    is assign$ 6a %>ehold] tgr ) prop]ty
    4tribut$ 6t %>ehold]1 = example1 a
    mortgage on a build+4
#aj4 ,": a non-ca% settle;t (a debt on a
  w9d+-up1 s* z ^? m5;n$ abv1 _c 2
  3sid]$ 63/itute full pay;t (! pr9cipal
  am.t (! debt1 ! provi.ns ( subsec;n
  #hj7#a7 apply4 ,see al ,9t]pret,n
  ,bullet9 ,,it-#bic;,r4









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