I-3, r. 1 - Regulation respecting the Taxation Act

Section 851.22.7r1 Disposition versions

2012-09-01

851.22.7R1. For the purposes of the definition of “transition amount” in section 851.22.7 of the Act, the transition amount of a taxpayer in respect of the disposition of a specified debt obligation, within the meaning assigned by the first paragraph of section 851.22.1 of the Act, means,

(a)  if neither subparagraph b nor c applies, nil;

(b)  if the taxpayer acquired the obligation before its taxation year that includes 23 February 1994, neither section 92.5R5 nor section 92.5R6 has applied to the obligation, and the principal amount of the obligation exceeds the cost of the obligation to the taxpayer, the amount determined by the formula

A − B;

(c)  if the taxpayer acquired the obligation before its taxation year that includes 23 February 1994, neither section 92.5R5 nor section 92.5R6 has applied to the obligation, and the cost of the obligation to the taxpayer exceeds the principal amount, the amount, expressed as a negative amount, determined by the formula

C − D.

In the formula in subparagraph b of the first paragraph,

(a)  A is the total of all amounts each of which is an excess amount that is the amount by which the principal amount exceeds the cost to the taxpayer, referred to in this paragraph as the “discount”, included in computing the taxpayer’s profit for a taxation year that ended before 23 February 1994; and

(b)  B is the total of all amounts each of which is an amount included, in respect of the discount, in computing the taxpayer’s income for a taxation year that ended before 23 February 1994.

In the formula in subparagraph c of the first paragraph,

(a)  C is the total of all amounts each of which is an excess amount that is the amount by which the cost of the obligation to the taxpayer exceeds the principal amount of the obligation, referred to in this paragraph as the “premium”, deducted in computing the taxpayer’s profit for a taxation year that ended before 23 February 1994; and

(b)  D is the total of all amounts each of which is an amount deducted, in respect of the premium, in computing the taxpayer’s income for a taxation year that ended before 23 February 1994.

O.C. 390-2012, s. 64.