In the course of a general discussion, CRA stated:
Paragraph 80(2)(b) of the Act is a deeming clause, and, in essence, it provides that for the purposes of subsections 80(1) and (3), an amount of interest in respect of a debt shall be deemed to be a debt issued by a taxpayer that has a principal amount. Therefore, subsections 80(1) and paragraph 80(2)(b) of the Act, read together, apply both to the principal amount of a debt in its ordinary sense and the amount of the debt that is made up exclusively of interest deducted or deductible by the debtor.