I-3 - Taxation Act

Section 851.22.22 Disposition versions

2006-03-01

851.22.22. The rules set out in the second paragraph apply where a taxpayer is deemed by section 851.22.15 to have disposed of a property in a taxation year, referred to as a “particular year” in the second paragraph, that includes 31 October 1994 and the following conditions are met:

(a)  the taxpayer acquired the property before 31 October 1994 at a cost less than the fair market value of the property at the time of acquisition;

(b)  the property was transferred, directly or indirectly, to the taxpayer by a person that would never have been a financial institution before the transfer if the definition of “financial institution” in section 851.22.1 had always applied; and

(c)  the cost of the property is less than the fair market value because section 518 applied in respect of the disposition of the property by the person referred to in subparagraph b.

The rules to which the first paragraph refers are as follows:

(a)  where the taxpayer would, but for this subparagraph, have a taxable capital gain for the particular year from the disposition of the property, the part of the taxable capital gain that can reasonably be considered to have arisen while the property was held by a person described in subparagraph b of the first paragraph is deemed to be a taxable capital gain of the taxpayer from the disposition of the property for the taxation year in which the taxpayer disposes of the property otherwise than because of section 851.22.15, and not to be a taxable capital gain for the particular year; and

(b)  where the taxpayer has a profit, other than a capital gain, from the disposition of the property, the part of the profit that can reasonably be considered to have arisen while the property was held by a person described in subparagraph b of the first paragraph shall be included in computing the taxpayer’s income for the taxation year in which the taxpayer disposes of the property otherwise than because of section 851.22.15, and shall not be included in computing the taxpayer’s income for the particular year.

1996, c. 39, s. 235.