21 April 2008 Internal T.I. 2007-0251761I7 F - Billet à payer -- summary under Subsection 212(1)

Debt owing to the taxpayer following an asset sale provided that interest may be added to the principal of the debt, which is what occurred. The taxpayer considered that it had paid the accrued and capitalized interest each year, and withheld pursuant to s. 212(1)(b) and added the interest, net of withholding tax, to the balance of its debt. In finding that instead, no Pt. XIII tax had been triggered, CRA applied Quebec Cartier Mining to conclude that the taxpayer did not pay the increased and capitalized interest on an annual basis and did not credit the vendor with such interest.