An adult son was lent $100,000 by his father under a demand promissory note. The prescription period under the Quebec Civil Code was three years, so that after that point, the note ceased to be enforceable in a legal action.
CRA confirmed that s. 80.01(9) did not apply as the debtor and creditor were related. Respecting whether the debt forgiveness rules nonetheless could apply on general principles as a result of the prescription, CRA stated (TaxInterpretations translation):
[A] debt is settled or extinguished if there is an extinguishment or settlement of the debt at law. The question as to whether the Note could otherwise be extinguished in the situation described above depends on the relevant facts and the applicable civil law.