Camille Lepage

Can I grant a debt waiver to my subsidiary?

If the subsidiary is not experiencing financial difficulties:

If the subsidiary is not experiencing financial difficulties, then the parent company can waive a commercial debt, as long as:

• It does not constitute an abnormal act of management; and
• It is in the parent company’s commercial interest (for example a distribution centre/supply line).

In the above scenario, the debt waiver is tax deductible for the parent company.

If the subsidiary is experiencing financial difficulties:

If the subsidiary is experiencing financial difficulties, then the parent company can waive a commercial debt, as long as:

• It does not constitute an abnormal act of management.