Redclay Holdings Ltd. v. The Queen, 96 DTC 1207, [1996] 2 CTC 2347 (TCC) -- summary under Paragraph 20(1)(c)

Part of the consideration given by the taxpayer for the purchase by it of a partnership interest was the assumption by it of a portion of the obligations of the vendor under a debenture of the partnership containing a specific covenant to pay interest on the principal amount thereof and on accumulated unpaid interest but containing a stipulation that payments of accumulated interest, current interest and principal were payable only out of 50% of the net cash flow of the partnership. In finding that the taxpayer was not entitled to any interest deduction on the debenture for the subsequent three taxation years (in which the partnership did not have any net cash flow, as defined), Rip J. noted that the word "payable" means "a sum of money that is to be paid or is falling due" or "a sum of money when someone is obliged to pay it" (p. 1218) and that here, because the obligation to pay interest was contingent on a condition being satisfied (the earning of net cash flow), it could not be said that there was a liability in those taxation years for payment of an ascertained amount of interest.