The benefit an employee receives during the year because of the forgiveness of a debt (whether the debt is a loan or another type of debt) constitutes a taxable benefit.
The value of the benefit corresponds to the amount forgiven when the debt is settled or extinguished. The forgiven amount is equal to:
- the lesser of the following amounts:
- the principal, and
- the amount for which the debt was contracted;
- any amount paid on the principal of the debt, and
- any adjustments.
You have to include the value of the benefit in boxes A and L and, where applicable, in box G of the employee's RL-1 slip (see courtesy translation RL-1-T). For more information, go to the Benefit Provided to an Employee page.