I-3 - Taxation Act

Section 851.42 Disposition versions

2006-03-01

851.42. For the purposes of this Title, the unpaid principal of an indebtedness is deemed to be a limited-recourse amount unless

(a)  at the time the indebtedness was incurred, bona fide arrangements, evidenced in writing, were made for repayment by the debtor of the indebtedness and all interest on the indebtedness within a reasonable period not exceeding 10 years;

(b)  the indebtedness bears interest at a rate equal to or greater than the lesser of

i.  the prescribed rate of interest in effect at the time the indebtedness was incurred, and

ii.  the prescribed rate of interest applicable during the term of the indebtedness; and

(c)  the interest is payable at least annually and is paid in respect of the indebtedness by the debtor not later than 60 days after the end of each taxation year of the debtor that ends in the period referred to in paragraph a.

2001, c. 7, s. 132.