Principal Issues: Whether replacing an old loan with a new loan from a different arm's-length creditor, to obtain more favourable rates, constitutes a substitution of a debt obligation for the purposes of paragraph 18(9.1)(a).
Position: Question of fact, but in the circumstances described, likely no.
Reasons: The CRA has previously taken the position that where an old debt is repaid and a new debt is obtained from a different arm’s length creditor, the transactions would generally not be considered as a substitution of debt.
