4 ms·

Probably as a way to get around gift or estate taxes - if you can just "loan" someone money, then forgive it immediately, gift and estate taxes are trivially av

• lonelappde 7y ago
  The gift tax exemption is higher than the amount of unsecured debt most people owe.
  • zaroth 7y ago
    It is now, but this was not always true.
  • ac29 7y ago
    Forget about unsecured debt - if a parent wants to give their child $100,000 there is no way to do that without paying taxes (or spreading it out over many years). If they could simply "loan" their child $100k (with no intention to ever get paid back), then forgive the debt tax-free, they'd have successfully gotten around the gift tax. The same thing could be potentially be used by an employer: instead of paying wages, they could just "loan" (again, not intending to be paid back) their employee money, then forgive the debt tax-free.
• eigenvector 7y ago
  Canada has neither gift or estate taxes.
  • LoSboccacc 7y ago
    this is an oversimplification, you still have to file capital gains, there are some exemption, so it works for debt cancellation and few other things, but it's not as straightforward as "neither gift nor estate taxes"