Debt Forgiveness

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;
  • minus:
    • 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.

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