I-3 - Taxation Act

Section 175.2.3 Disposition versions

2006-03-01

175.2.3. Where at any particular time after 31 December 1993 a taxpayer ceases to carry on a business and, as a consequence, borrowed money ceases to be used by the taxpayer for the purpose of earning income from the business, the following rules apply:

(a)  where, at any time, in this paragraph referred to as the “time of disposition”, at or after the particular time, the taxpayer disposes of property that was last used by the taxpayer in the business, an amount of the borrowed money equal to the lesser of the following amounts is deemed to have been used by the taxpayer immediately before the time of disposition to acquire the property:

i.  the fair market value of the property at the time of disposition, and

ii.  the amount of the borrowed money outstanding at the time of disposition that is not deemed by this paragraph to have been used before the time of disposition to acquire any other property;

(b)  subject to paragraph a, the borrowed money is deemed, after the particular time, not to have been used to acquire property that was used by the taxpayer in the business;

(c)  the amount of the borrowed money outstanding at any time after the particular time that is not deemed by paragraph a to have been used before that subsequent time to acquire property is deemed to be used by the taxpayer at that subsequent time for the purpose of earning income from the business; and

(d)  the business is deemed to have fiscal periods after the particular time that coincide with the taxation years of the taxpayer, except that the first such fiscal period is deemed to begin at the end of the business’s last fiscal period that began before the particular time.

1995, c. 49, s. 51.