CFM31140 | Loan relationships: related transactions: extinguishing debt

Extinguishing debt

A company may extinguish its rights by

• surrendering

• redeeming, or

• releasing

the debt. These methods are listed in CTA09/S304(2).

A company that formally waives a debt, releasing the debtor from its obligation to pay, is no longer party to a loan relationship. This disposal is a related transaction.

A company may simply give up pursuing a debt, and write off the debt in its books. This does not involve extinguishing a debt and is not a related transaction.