The debt forgiveness rules are among the most technical provisions in the Act. When a commercial debt is settled or deemed to be settled, a forgiven amount may arise, which can reduce tax attributes or, in some cases, be included in income. Although the rules are designed to be fair, the material demonstrates that they are intricate, prone to calculation errors, and contain many exceptions and adjustments that must be applied in the correct sequence.

This course provides a straightforward explanation of how the debt forgiveness rules work in practice. You will learn what counts as a commercial obligation, how the forgiven amount is calculated, and which debts are excluded. The program highlights common traps such as trust and inheritance transfers that can unexpectedly trigger a settlement, then walks through the required order for applying forgiven amounts to tax attributes and the options for reducing UCC, resource pools, and ACB. Also covered: Settlements, deemed settlements, debt parking, and the main relief provisions available to insolvent taxpayers and certain individuals, trusts, and non-residents.

Debt Forgiveness builds on the core concepts by showing how forgiven amounts affect a taxpayer’s existing tax attributes. The course explains the required order for applying reductions, beginning with various loss balances and then moving to optional adjustments of UCC, resource pools, and adjusted cost base. Participants learn how these reductions interact with different types of assets and how to approach situations where the taxpayer has limited attributes available to absorb the forgiven amount.

The session also covers how forgiven amounts can be managed after reductions have been applied, including when they may be transferred to a related corporation and when they must be included in income. The material provides a clear explanation of how settlement and deemed settlement rules operate, including shares-for-debt scenarios, debt substitutions, statute-barred debts, and debt parking. Relief measures are explained in a practical way, including insolvency deductions and reserves available to corporations, trusts, individuals, and non-residents carrying on business in Canada. The focus is on helping CPAs understand how to apply section 80 in real situations and avoid common errors.